Why It’s ‘Higher for Longer’ in the Oil Markets, Part II

[] Today's market commentary from TradingPub is here! To view this email as a web page, go [here.]( To view this email as a web page, go [here.]( [] [] [] [Catch me LIVE at 2 p.m. ET]( on Friday, and I’ll show everyone my favorite way to trade the energy crisis. Why It’s ‘Higher for Longer’ in the Oil Markets, Part II Where were you in 2007? Celebrating Nancy Pelosi’s first term as Speaker of the House (I’m kidding). Dismissing the idea that the iPhone could become the next great tech invention (the first iteration came that January when the stock was at $4 per share, split-adjusted) Or, paying $1.20 for a loaf of bread, $1.68 for a dozen eggs, and $2.20 for 12 ounces of strawberries at the grocery store? (And back then, we thought THAT was high). Well, it’s time to party like it’s 2007 all over again! Because the 10-year bond has reached its highest level in 16 years. So, fire up your Myspace account or Internet Explorer, and let’s talk about what 4.9% means for you and the market. Understanding the 10-Year Bond In recent weeks, I’ve discussed the need for the 10-year bond to move above 5% due to ongoing refinancing challenges for the U.S. government in 2024. Remember, the government doesn’t want to pay higher short-term borrowing costs. It wants investors to pile into long-duration bonds, but these investors need an incentive to do so. Should the 10-year rise, investors from around the globe may find a 5% rate simply too appealing and start buying longer-term U.S. debt. That will reduce the government’s need to keep refinancing short-term debt (we have $7.6 trillion in refinancing needs next year). But why does the 10-year bond matter? And how does it impact the equity markets? The 10-year U.S. Treasury bond is a security issued by the U.S. government with a maturity period of – well, come on now – 10 years. The U.S. government uses these bonds to raise capital for its operations (or to buy votes if you’re really pessimistic). Because the U.S. government has a printing press (so it goes), the 10-year bond is considered a risk-free investment because there is virtually no chance of “default.” Yes, we’ve had downgrades – but so long as the Treasury can print, the debt will be paid. This “risk free” rate is a benchmark for other interest rates (both government and private debt). This is important because it serves as a benchmark for determining the minimum return an investor should expect when taking on risk in financial markets. Investors calculate the cost of capital, evaluate investment opportunities, and assess other investments' relative risk and return. So think about it this way… If you generate 5% on this risk-free rate, how much risk are you willing to take to make 8% on a stock or a different type of investment? You compare the 5% return against the risk-reward of other investments. How the 10-Year Affects Equity Markets Now, as I’ve noted, interest rates impact the stock market for a number of reasons. The most important is interest rate sensitivity. When bond yields increase, they can be more attractive to investors since they offer higher returns with lower risk. When rates rise, investors may pull their capital out of stocks and turn to bonds. This can lower the cost of stocks. Meanwhile, higher bond yields affect the discount rates when analyzing future cash flows from companies. In traditional equity analysis, this discount rate is important to quantify how much money the company will generate for investors based on interest rates today. A higher discount rate can fuel lower stock multiples. What Higher Rates Mean When interest rates rise, it can signal various things. • Inflation Concerns: A sustained increase in bond yields often reflects growing concerns about inflation. The Federal Reserve has responded by tightening monetary policy (raising interest rates). This effort aims to cool economic growth, which can weigh negatively on equity markets. • Higher Borrowing Costs: Rising bond yields can lead to higher borrowing costs for governments, businesses and individuals. This can reduce economic activity, potentially hurting corporate profits and causing stocks to underperform. • Increased Volatility: An abrupt rise in bond yields can trigger market volatility as investors react to changing conditions. Equities may experience sharp fluctuations, which can be unsettling for investors, and can fuel major sell-offs due to increasing anxiety over performance. Looking ahead, rates are expected to be much higher as the government attempts to drown inflation and cool consumer spending. Higher rates can and will impact market momentum, and drive capital flows from equities to bonds. There is one place to hide right now in the equity market: energy stocks. As interest rates rise due to inflationary concerns, oil is still in breakout mode. On Friday, I’ll be hosting a live event to teach you how to navigate this market – avoid interest rate risk and capitalize on the booming energy trade. [You can reserve your front-row seat right here.]( [] Chat soon, Garrett {NAME} *This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. [] [] _________________________________________________ [] The War in the Middle East and How It Affects You Oil. [Demand is HIGH… supply is LOW…]( And the next reasonable solution would be to simply produce more oil in our own country, right? But here’s the problem… Over the past two years, we’ve been demolishing refineries here in the states… [] Creating a coming crisis like no one has ever seen before. I’m an energy economist, and according to my research… Not only is a crisis coming… But it’s creating one of the biggest opportunities he’s ever seen in one specific sector. Billionaires like Buffett, Cohen, and Dalio are all piling in… [Here’s Everything You Need to Know]( [] _______________________________________________ [] Market Momentum is YELLOW [] _______________________________________________ [] Want to get a link to my TradingPub articles as soon as they post? I’ve got you covered! Telegram is an entirely free messaging app and getting access is as easy as 1… 2… 3… 1. Download Telegram on your mobile device (Before you can add Telegram to your desktop computer, you must download the application on your phone and create your account: To download to your iPhone, [click here](. To download to your Android device, [click here](. After the download is complete, please create an account. NOTE: You can manage your privacy settings by clicking “Settings,” and then “Privacy & Security.” 2. Download Telegram on your desktop: Once you’ve downloaded Telegram onto your mobile device and created your personal account, you can download it onto your desktop computer. To download onto your PC, [click here](. To download onto your MacOS, [click here](. 3. Then add the TradingPub channel and you’re done: [9_jjnFuAvno0MjNh]( See you there! Garrett [] [] [] [Catch me LIVE at 2 p.m. ET]( on Friday, and I’ll show everyone my favorite way to trade the energy crisis. Why It’s ‘Higher for Longer’ in the Oil Markets, Part II Where were you in 2007? Celebrating Nancy Pelosi’s first term as Speaker of the House (I’m kidding). Dismissing the idea that the iPhone could become the next great tech invention (the first iteration came that January when the stock was at $4 per share, split-adjusted) Or, paying $1.20 for a loaf of bread, $1.68 for a dozen eggs, and $2.20 for 12 ounces of strawberries at the grocery store? (And back then, we thought THAT was high). Well, it’s time to party like it’s 2007 all over again! Because the 10-year bond has reached its highest level in 16 years. So, fire up your Myspace account or Internet Explorer, and let’s talk about what 4.9% means for you and the market. Understanding the 10-Year Bond In recent weeks, I’ve discussed the need for the 10-year bond to move above 5% due to ongoing refinancing challenges for the U.S. government in 2024. Remember, the government doesn’t want to pay higher short-term borrowing costs. It wants investors to pile into long-duration bonds, but these investors need an incentive to do so. Should the 10-year rise, investors from around the globe may find a 5% rate simply too appealing and start buying longer-term U.S. debt. That will reduce the government’s need to keep refinancing short-term debt (we have $7.6 trillion in refinancing needs next year). But why does the 10-year bond matter? And how does it impact the equity markets? The 10-year U.S. Treasury bond is a security issued by the U.S. government with a maturity period of – well, come on now – 10 years. The U.S. government uses these bonds to raise capital for its operations (or to buy votes if you’re really pessimistic). Because the U.S. government has a printing press (so it goes), the 10-year bond is considered a risk-free investment because there is virtually no chance of “default.” Yes, we’ve had downgrades – but so long as the Treasury can print, the debt will be paid. This “risk free” rate is a benchmark for other interest rates (both government and private debt). This is important because it serves as a benchmark for determining the minimum return an investor should expect when taking on risk in financial markets. Investors calculate the cost of capital, evaluate investment opportunities, and assess other investments' relative risk and return. So think about it this way… If you generate 5% on this risk-free rate, how much risk are you willing to take to make 8% on a stock or a different type of investment? You compare the 5% return against the risk-reward of other investments. How the 10-Year Affects Equity Markets Now, as I’ve noted, interest rates impact the stock market for a number of reasons. The most important is interest rate sensitivity. When bond yields increase, they can be more attractive to investors since they offer higher returns with lower risk. When rates rise, investors may pull their capital out of stocks and turn to bonds. This can lower the cost of stocks. Meanwhile, higher bond yields affect the discount rates when analyzing future cash flows from companies. In traditional equity analysis, this discount rate is important to quantify how much money the company will generate for investors based on interest rates today. A higher discount rate can fuel lower stock multiples. What Higher Rates Mean When interest rates rise, it can signal various things. - Inflation Concerns: A sustained increase in bond yields often reflects growing concerns about inflation. The Federal Reserve has responded by tightening monetary policy (raising interest rates). This effort aims to cool economic growth, which can weigh negatively on equity markets. - Higher Borrowing Costs: Rising bond yields can lead to higher borrowing costs for governments, businesses and individuals. This can reduce economic activity, potentially hurting corporate profits and causing stocks to underperform. - Increased Volatility: An abrupt rise in bond yields can trigger market volatility as investors react to changing conditions. Equities may experience sharp fluctuations, which can be unsettling for investors, and can fuel major sell-offs due to increasing anxiety over performance. Looking ahead, rates are expected to be much higher as the government attempts to drown inflation and cool consumer spending. Higher rates can and will impact market momentum, and drive capital flows from equities to bonds. There is one place to hide right now in the equity market: energy stocks. As interest rates rise due to inflationary concerns, oil is still in breakout mode. On Friday, I’ll be hosting a live event to teach you how to navigate this market – avoid interest rate risk and capitalize on the booming energy trade. [You can reserve your front-row seat right here.]( [] Chat soon, Garrett {NAME} *This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. [] [] _________________________________________________ [] The War in the Middle East and How It Affects You Oil. [Demand is HIGH… supply is LOW…]( And the next reasonable solution would be to simply produce more oil in our own country, right? But here’s the problem… Over the past two years, we’ve been demolishing refineries here in the states… [] Creating a coming crisis like no one has ever seen before. I’m an energy economist, and according to my research… Not only is a crisis coming… But it’s creating one of the biggest opportunities he’s ever seen in one specific sector. Billionaires like Buffett, Cohen, and Dalio are all piling in… [Here’s Everything You Need to Know]( [] _______________________________________________ [] Market Momentum is YELLOW [] _______________________________________________ [] Want to get a link to my TradingPub articles as soon as they post? I’ve got you covered! Telegram is an entirely free messaging app and getting access is as easy as 1… 2… 3… 1. Download Telegram on your mobile device (Before you can add Telegram to your desktop computer, you must download the application on your phone and create your account: To download to your iPhone, [click here](. To download to your Android device, [click here](. After the download is complete, please create an account. NOTE: You can manage your privacy settings by clicking “Settings,” and then “Privacy & Security.” 2. Download Telegram on your desktop: Once you’ve downloaded Telegram onto your mobile device and created your personal account, you can download it onto your desktop computer. To download onto your PC, [click here](. To download onto your MacOS, [click here](. 3. Then add the TradingPub channel and you’re done: [9_jjnFuAvno0MjNh]( See you there! Garrett [] A TradingPub Publication ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. TradingPub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from TradingPub LLC are for your informational purposes only. Neither TradingPub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. TradingPub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by TradingPub 101 Marketside Ave, Suite 404 PMB 318 Ponte Vedra, Florida 32081, United States [] A TradingPub Publication ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. TradingPub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from TradingPub LLC are for your informational purposes only. Neither TradingPub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. TradingPub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by TradingPub 101 Marketside Ave, Suite 404 PMB 318 Ponte Vedra, Florida 32081, United States