What to Watch for This Week as Bonds Face a Repricing Rollercoaster

Shah Gilani|October 23, 2023

I’ve been talking for a while now about how the bond market influences the stock market, and we’re likely going to get an object lesson in that this week.

With Treasury yields having climbed north of 5% before settling back down just under that today, we’re seeing some serious pain for bonds, given that those rate hikes are all market-driven, and not because of continued interference from the Federal Reserve.

That’s going to put a lot of pressure on a stock market that’s already broken a critical support level—the S&P 500 closed below its 200-day moving average, an indicator that things could go even lower. If it breaks below 4200, watch out, because we’re going to see a lot of margin-selling and capitulation at that point.

And of course, the continuing situation in the Middle East is a looming threat to markets, because while things aren’t as out of control as they could be, any negative change in that situation could speed up the fall of markets already on their way down.

All of this means that we’re going to stay on defense as we wait to see how all of these factors play out, and if some good news can bring investor confidence back up, whether it’s a positive earnings season, GDP growth, or any number of other metrics on the horizon.

Check out this video for my overview of what you need to watch out for this week and why:

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As always, we’ll be looking for opportunities to make smart plays, and we’ll keep you posted as we find them. Be careful out there, and keep an eye out for more updates.