China’s Credit Impulse Could Send Shockwaves Through The Stock Market & Gold, Real Yields To Soar (Video)
China’s Credit Impulse Could Send Shockwaves Through The Stock Market & Gold, Real Yields To Soar Video by Silver Report
Trouble is approaching and stocks have NEVER been more expensive compared to earnings. One of the main drivers of the gold bull run has been the decline in real rates as the effective yield on the 10Y was close to -1%. Many are unaware of how dependent on China our economy has become and the move in Real rates in the US can be tracked against China’s credit impulse. There was a major surge for China’s credit impulse as the central bank has just introduced the largest amount of stimulus in its history.
The current correlation between the moves in China’s credit impulse and the 10Y yields would suggest real yields are about to surge 150 bps which could push real yields back into positive territory closer to .50%. When real yields are negative it is a good environment for risk assets and gold as it causes investors to leave in search of yield-bearing assets. The reversal of these forces could have profound consequences for equities as well as Gold prices. With a spontaneous 150 bps move in real yields it’s likely the end of our current bear market rally may be approaching faster than we expected.