Risk Tells in the Currency and Bond Markets Pointing to Further Short-Term Downside
Expect a downtrend from now until October and then a rally into the end of the year.
Overall, the signs are starting to pop up for a correction in risk assets that will finally last more than just a few days. How severe the question will be depends on whether natural market forces will be driving things or whether global central bankers have more tricks up their sleeves. We'll see. I, for one, am looking for a minimum of 5% on the downside for the S&P – maybe a bit more for the "beta" indices. The good news is that from there, we should see some more upside – probably heading into the end of the year.
Before I wrap up, here's a check up on the key European sovereign debt yields:
Much is being made about the happenings in Spain and Greece over the last 48 hours. The fact is, though, that yields on the government debt over there have not really spiked to alarming levels yet. That's not to say they won't – they just haven't yet. Stay tuned!
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