Bond Market Signals Stock Decline

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The bond market's recent surge has been fueled from the fears of inflation caused by the 1.9 trillion stimulus package. Investors are fearful of that this huge package will cause inflation because the demands in the economy will increase without the limited supply which will cause prices to skyrocket and devalue the USD. The only way to combat inflation is to increase interest rates because it will encourage more savings, such as in a bank, and less spending such as taking loans to buy a house.

The U.S. 10 Year Treasury bond has been up almost 40% the past month to 1.572% which further shows the threat of inflation is real because the interest rates rising shows inflation fears are real and needed after all this money being added into the economy. 

The S&P 500 and Nasdaq Composite have been taking some hits in the past few weeks and is starting to show the end of the bull market and the start of the bear market. The Nasdaq has been down almost 10% in the past month and the S&P 500 has been down around 4% in fear of inflation.

Be prepared to better position yourself by selling you've made money and and keep a lot of cash in hand to reinvest after the market reaches the bottom.

Drop any questions about inflation or anything else in the comment section and I will try my best to answer them.

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