This Critical Bond Market Indicator Is at a 40-Year Extreme

If you're like most investors, you pay close attention to stocks and the economy. So I don't need to tell you that it seems like things are improving lately... [Chaikin PowerFeed]( This Critical Bond Market Indicator Is at a 40-Year Extreme By Marc Chaikin, founder, Chaikin Analytics If you're like most investors, you pay close attention to stocks and the economy. So I don't need to tell you that it seems like things are improving lately... Jerome Powell hinted that the Federal Reserve could start slowing its interest-rate hikes as soon as next week's meeting. And U.S. shoppers just produced [record-setting spending over Black Friday weekend](. As a result, many folks believe the worst part of the storm is now behind us. It's easy to feel that way – especially after such a brutal year. Any bit of positive news gives discouraged investors a glimmer of hope that we're finally turning a corner. Folks, I don't mean to keep harping on the negatives. But I want you to be prepared... The bond market is singing a different tune right now. You see, bond investors are some of the most sophisticated investors out there. They have money – a lot of it. And they tend to be great predictors of market trends. So when bond market indicators start flashing warning signs, we need to pay close attention. That's happening right now... Recommended Links: [The Market Hasn't Done This in 15 Years]( Wealth's evaporated. Companies are announcing salary freezes and unpaid furloughs. The price of everything keeps climbing, while the values of our most precious assets like our homes and our investment accounts are depreciating. There's a strange reason why, but Wall Street won't tell you about it. [Click here to get the full story](. [Why 2023 Could Kick Off a "Cash Frenzy" in Stocks]( Many mainstream analysts are predicting that stocks will recover soon. But one 20-year market veteran says we'll instead witness a "cash frenzy" unlike anything we've experienced in 21 years before stocks recover. And he's urging Americans NOT to buy a single stock until they see it. [Details here](. The bond market indicator I'm talking about is the "yield curve." Don't worry if you aren't familiar with the yield curve. It's easy to understand... In short, this indicator helps us track the yields of U.S. Treasurys. These government bonds are among the safest investment vehicles in the financial markets. Many analysts pay the most attention to the difference between the 10-year and two-year U.S. Treasury notes. This difference is often called a "spread." In most cases, the longer-term notes yield more (or have a higher "interest rate") than the shorter-term notes. This is a "normal" yield curve. And it signifies a healthy market. On the flip side, an "inverted" yield curve means short-term yields exceed long-term yields. It's rare. But when this happens... watch out. When the yield curve inverts, it means investors can count on a recession. A yield-curve inversion has preceded every recession for the past 50-plus years. And even though stocks are rallying right now, the bond market isn't nearly as optimistic. The yield curve is currently inverted at a historic level. Take a look... [Chaikin PowerFeed] Notice that the "10-2" yield spread is normally well above zero. Again, that means the 10-year U.S. Treasury note usually yields much more than the two-year U.S. Treasury note. But today, that's far from the case. In fact, it's the most inverted yield curve in 40 years. The two-year U.S. Treasury note yields roughly 75 basis points more than the 10-year U.S. Treasury note today. The spread only got this extreme one other time in history – during the inflationary cycle leading into the early 1980s. Let's sum everything up... The "smart money" is moving out of cash and into long-term debt. These folks are betting on a recession. As a result, short-term debt – the two-year U.S. Treasury note – is viewed as a liability right now. And in turn, it yields far more than the longer-duration 10-year U.S. Treasury note. Nobody likes it when the smart money bets on a recession. But these folks earned that nickname for a reason. So we should listen to them and tread lightly for now. With that said, there's a silver lining... Even in the worst bear markets, some businesses still perform well. So until things get clearer, we'll keep using the Power Gauge to help us find the best potential opportunities. Good investing, Marc Chaikin Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 +0.10% 10 19 1 S&P 500 -0.14% 162 265 72 Nasdaq -0.40% 34 47 19 Small Caps +0.58% 641 849 394 Bonds +1.26% Materials +1.10% 3 20 5 — According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish.. Major indexes are mixed. * * * * Top Movers Gainers [rating] ENPH +7.01% [rating] SEDG +4.39% [rating] HII +4.24% [rating] BA +4.03% [rating] FMC +3.33% Losers [rating] PYPL -4.93% [rating] EQT -3.83% [rating] VLO -3.76% [rating] ANET -3.39% [rating] AMD -3.23% * * * * Earnings Report Reporting Today Rating Before Open After Close SAIC No earnings reporting today. Earnings Surprises [rating] CBRL Cracker Barrel Old Country Store, Inc. Q1 $0.99 Missed by $-0.23 * * * * Sector Tracker Sector movement over the last 5 days Communication +3.47% Discretionary +2.33% Health Care +1.92% Materials +1.69% Information Technology +1.32% Staples +1.23% Industrials +1.02% Real Estate +0.44% Utilities +0.13% Financial -0.50% Energy -1.70% * * * * Industry Focus Oil & Gas Exploration & Production Services 11 32 14 Over the past 6 months, the Oil & Gas Exploration & Production subsector (XOP) has underperformed the S&P 500 by -4.93%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #18 of 21 subsectors and has moved down 9 slots over the past week. Indicative Stocks [rating] CNX CNX Resources Corpor [rating] KOS Kosmos Energy Ltd. [rating] VTNR Vertex Energy, Inc. * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. For questions about your account or to speak with customer service, call [+1 (877) 697-6783 (U.S.)](tel:18776976783), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice. © 2022 Chaikin Analytics, LLC. All rights reserved. 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