from Macrostory blog:
Credit markets are truly forward looking. Equity not so much. History clearly shows credit should never be ignored. There have been three large divergences between equity and credit since the late 90′s and each time credit forced the hand of equity.
Here we are once again on the eve of a possible breakout in the entire treasury curve to new all time highs (low yields). History does have a way of repeating when it comes to the capital markets.
Below is a 15 year comparison of the 10 year yield and the SPX. Also note the orange circles outlining that huge head and shoulder’s pattern on the SPX that has taken a decade to form. In the words of the Dos Equis man “stay thirsty my friends.”
