So rates are going up...way up. And the markets seem to have accepted the reality of that... So bonds rose...amazingly...even though higher rates will devalue current bond values.
Bonds valued at current rates...simply aren't worth as much as new bonds that pay more because their rates are higher...
BUT THIS SCENARIO COULD BE BAD FOR GOLD AND OIL...AND DISASTEROUS FOR STOCKS!!
If Bernanke now has "permission" to TRASH the stock markets....and drive commodities down with higher rates that increase the "value" of the dollar...that's fine.
But the value of the dollar is also determined by the need to sell ever more bonds to finance the twin deficits... A achieve this second goal...rates will have to go much higher...because the cause of the troubles, THE DEFICITS, is not being addressed...but rather, MERELY FINANCED...WITH A HIGHER "BRIBE" TO HOLD THE EVER MORE "COMMON" DOLLAR.
Will this all work out...? Well, maybe... And maybe not... Time will tell.
Stay tuned...this is going to be very interesting...
