Well stocks pushed on higher as high yield credit continued to decline just like before the GFC. When this lets go it will be huge. Stocks will come down, this divergence will close at some point mark my words. The high yield credit market has to be a huge concern to the Fed going into December and that is one of the reasons why I don't believe that they will raise the rate in December. Just have to trade it as it comes. No point trying to make predictions. I am only interested in the week ahead. As they said in the movie Back to the Future: "Where were going we don't need roads."
The 30yr bond yield slipped back below 3% as the 2yr yield rose. I assume that this is the yield curve starting to prepare to normalise if that is possible given how long the distortion has gone on for. The yield curve is currently where it should be if the stock market was in a bottoming cycle, not a top cycle like it is now. This is as a result of the various measures employed by the Fed to help out the Wall St bankers. They have been borrowing at the short end to buy bonds at the long end. I will be watching this closely as the December FOMC meeting draws nearer.
The 10 yr yield has been down from the recent high. Just have to see what this does. I was expecting stocks to come down a bit with the correlation to the 10yr yield but we didn't see it as yet.
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