Stock and bond prices both here and abroad have been going up and down like a yoyo lately. Some of you must be wondering what the heck is going on here?
Well, here is my opinion. Investors globally have become addicted to newly created free money ever since 2009. Therefore, when Federal Reserve Chairman Bernanke intimated on May 22 that the free money will “Taper”, the markets have been acting similar to how heroin addicts would respond if they knew their drug would not be available anymore.
Specifically stocks and bonds have both been rising and falling depending upon the most recent rumor about when the Fed will Taper. US stocks have gone down 1%+ when it seems as if Tapering is imminent and then rebound 1% when it doesn’t. As to bonds, the 10 year Treasury was yielding well under 2% before the “Taper” comment and now is trading around 2.2%. As a result of the threat of higher interest rates and lower bond prices; bond funds ...
- See more at: http://charlesbiderman.com/2013/06/17/bernanke-said-taper-free-money-addicts-felt-withdrawal-symptoms/?utm_source=feedly&utm_medium=feed&utm_campaign=Feed%3A+TrimtabsMoneyBlog+%28TrimTabs+Money+Blog%29#sthash.ADZ2zYwM.dpuf