Over the past 3 weeksJunk bonds are flat/stable and quality corporate and Government bonds performance has been fairly weak….some might say pretty junky!

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Could stable junk bond prices and weak government bonds be a reflection the economy is getting better?  Could this be a positive sign for the stock market?

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10-year yield breakouts from bullish falling wedges, was followed by higher stock prices at (1) over the past two years.  Could the current breakout at (2) pull stocks higher again?

It is too soon to tell if this development will be good for stocks…we do have to keep in mind it has in the past! 

The key to this credit situation in the near term in my humble opinion...what happens to junk bonds from here.  If they fall from here, that would not be a good message for the stock market.

Keep a close eye on this credit market development and how it could impact stocks!

 

 

How The Recent Decline In Stocks Looks "Eerily" Like Major Bear Markets Of The Past