Susan,
Last week, around Monday, when the rates were right at 5.6% the intraday swings between the market and rates were so tight, that it was almost to the minute. At that time, when the rates went up slightly the overall market moved down some and vice versa, until the rates broke below 5.60%. That was intraday and almost to the minute,
so I strongly feel that the equalibrium point between the market and rates is right at 5.60%. In light of that, if the rates stay above 5.60% for the short-mid term, such would put a cap on the market, and
the more the rates get above 5.60% the more negative the market becomes.
At times the rates decouple, but right now I believe there is a strong relation with 5.60% as the pivot point. Check the intraday charts on Monday for the market and rates and it was quite obvious.
How long will that correlation last - I don't know, since at any time
they could decouple again, and the rates may act as a flight to safety
whereby the stock market and interest rates go down together.
seeya |
