Bond Market 8/26

The bond market seems to be predicting that the drop in the equities market over the past two weeks is just the beginning of what's to come. To many people it's not news that the bond market can be used as a leading indicator in predicting the stock market, the chart below illustrates how the Dow reacts to rises and drops in the bond market, and how the two have correlated over the past three years.

Bond Market as a Leading Indicator for the Equities Market

This fact, combined with the macroeconomic news in the past several months (Housing starts, Eurozone, Debt fears)  leads me to be bearish on the market in general. There are no sectors that I see escaping a drop of 10% or more from current levels over the next 6 months.