S&P 500 went into correction territory today, falling 10.13 from its peak.
- Interesting that this correction did not spread to other countries.
- Currently, P/E ratio of S&P is 26.4 (Source: Gurufocus). Not cheap
S&P 500 show declines with each new or unexpected new Trump tariffs.
This reminds me of the market in 2008, where market extended declines with each new negative surprises. The market starts to stablize and then bottom in early 2009, when there is no further negative surprises.
As such, I guess that US market may be in for bumpy ride in April too, as President Trump annuouced the details on reciprocal tariffs and the affected countries retailiate against such tariffs.
Next, there could be a maturity wall in 2025 and beyond (source), where a lot of US bonds / debt will be maturing.
US govt would like to issue new bonds (to repay the matured debt) at low interest rate and at longer tenor than Treasury bills. Hence, the new US administration is focusing on lowering 10-year bond yields.
How do you get lower 10-year govt bond yield?
- If there is higher probablity of recession, the 10-year govt bond yield may go lower, as money flocks to safe haven such as govt bonds in troubled times
- If there is lower fiscal deficit in future, 10-year govt bond yield may go lower.
To me, the current policies of US administration are trying to acheive lower 10-year govt bond yield.
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