We still seem to be stuck in an episode of the twilight zone when it comes to the markets. Despite the 2% decline we had in the Dow Jones Industrial Average today the market is clearly not in a panic. With equities prices as high as they are one might be a bit afraid of a sell off getting out of hand but nope, not today!
Yesterday we had a sizable decline in silver for no apparent reason that was around 3% on no news. Gold was down as well about 1% and the Dow finished slightly lower. Today however we saw a much larger drop in equities but very little gains in the safe haven precious metals. I guess no one thinks there is an emergency?
The trend for now remains as it was, a risk on environment. I expect that even if we have bond yields climb higher the Fed will continue to buy them up multiple times during the day to make sure that there is only an orderly decline and not a major sell off. This will probably go on a while longer as market sentiment is still pretty high.
As long as the market remains risk on I see Bitcoin and the other major cryptos continuing higher. The catalyst in the continued rise being the fact that money is going to be pumped into the markets to keep them propped up and this money is going to be spread around to assets that provide higher yields.
Of course everything can change on a dime, especially if there is a geopolitical crisis or terrorist attack. However, with all things being equal and the current course being adhered to I think that equity markets may become more volatile from the jitters but risk trades will stick around a while longer.
Disclaimer: This is not financial advice, it is only my opinion. Whenever making financial decisions please consult your own personal financial advisor.
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