Market Report – Feb 8-12, 2010
yield environment of 2 % fixed deposit rates.

yield environment of 2 % fixed deposit rates.
withdraw from the US Dollar/ Yen carry trade which fueled the stockmarket and commodity rally.Dear Traders,
My conclusions for 2010 are:
Long term interest rates in most all countries are headed higher. The shape of the yield curve in the US is the steepest in over 30 years. This is a recovery signal. But it is an uncertain recovery like a sand castle on the beach. The big Tsunami wave can wipe away the castle at any time. 
By the 2nd quarter central banks around the world will be forced to exit their ultra easy monetary policies.
Bond prices in most markets will tumble- this is true for government bonds as well as corporate bonds.
As bond prices drop stocks will move ahead. Commodities, crude oil, gold will rise as inflation increases.
At some point when interest rates on bonds exceed dividends on stocks the Dow will experience a steep correction and pull down markets world wide.

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