Financial Conditions are Still Too Easy for the Bull Market to End

By Rick Kahler Iris.xyz

Investors and traders love to fixate on the absolute level of interest rates.

1. “It’s all over when the 10 year yield reaches 3%”.
2. “It’s all over when the 10 year yield reaches 3.25%”.
3. “It’s all over when the 10 year yield reaches 4%”.
4. “It’s all over when the 10 year yield reaches 4.5%”.

Instead, investors and traders should focus on how interest rates are impacting various aspects of the economy right now. Focus on the RELATIVE relationship.

The reality is that nobody knows when interest rates will start to impact the economy and stock market. But we certainly know that interest rates currently have a minimal adverse impact on the economy and stock market.

The Chicago Fed’s National Financial Conditions Index looks at U.S. financial conditions on a weekly basis. This Index has 3 components.