The stock market is finally beginning to react to the combined threat of much higher bond yields and a potentially more widespread crisis in the Middle East. This does not mean that the stock market will fall in a straight line, but it does raise the odds that we’ll see more weakness going forward…even though we’re headed into a seasonal period that is usually a positive one.
The high yield market continues to break down…and it has now been enough to confirm a new downtrend in this asset class. Since the high yield market has been a very good leading indicator for the equity market over the years, this is negative development for stocks.
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