Rising bond yields signal higher inflation ahead

(24 February 2021) The Covid speculative bubble continues to blow bigger in 2021 as investors buy up everything from Bitcoin to blue chips.  With the Fed keeping its QE liquidity taps open, stock markets are back in record territory, while home sales soar with the Covid-driven demand for single-family dwellings.  While asset prices have been successfully inflated in keeping with the Fed's mandate, bonds have been the big loser. 

As hopes have grown for an economic recovery following the November vaccine announcements, bond yields have steadily risen as the interest rate on the benchmark 10-year Treasury note is now near 1.4%. (N.B. bond yields/rates vary inversely with bond prices.)   The Fed typically manages short term rates (now at 0%), but longer term interest rates are still determined by the market.  Based on the recent rise in yield, the market is signaling that inflation is coming. 

Higher yields and higher inflation are something of a double-edged sword.   On the face of it, rising yields and rising inflation expectations simply reflect greater economic optimism and the likelihood of stronger growth in the future.  However, the downside is that sharply rising yields can quickly become a barrier to growth as many heavily-indebted companies and over-leveraged consumers are forced to pay higher costs to service their debt. 

No one really knows at what point bond yields will become a problem for the economy and the stock market.  Today's 1.38% is pushing up against some technical resistance that dates from 2019, but it is unclear how much further it may rise before it starts to affect home sales, for example, since mortgages are based on the 10-year interest rate.  So there are really two questions here: 1) how much further are yields likely to rise and 2) at what point could they become a problem?  The first question is probably easier to address than the second. 


The Horoscope of US Treasury Bonds

Using the horoscope of the first public trade of US Treasuries in August 1977, we can see why bonds have been under such stress in recent months.  As a general rule, afflictions to this chart from malefics should reflect falling bond prices and rising yields, while favourable influences from benefics should reflect rising bond prices and falling yields.

First off, we can see that the current dasha Venus-Saturn period (2020-2023) is difficult.  While major dasha lord is benefic Venus, I have found that it is the minor dasha lord that is usually more consequential in the short run.  Saturn is a natural malefic planet, of course, and it is very poorly placed near the equal house cusp of the 12th house of loss.  Moreover, it receives an aspect from malefic Ketu (South Lunar Node).  This is a very bad Saturn placement and is one reason why bond yields have been on the rise.

While dashas are usually not decisive in determining outcomes, they become more important when the dasha lords are clearly good or clearly bad.  That is very much the case here with the Saturn minor dasha lord.  It is worth noting that the Venus-Saturn dasha period will last until September 2023.  

All other things being equal, this is a negative influence on bonds for the next two years which could see yields rise further.  While other factors such as transits will also play a role in shaping the trend in yields (see below), this dasha influence at least suggests that the long term interest rates are less likely to go below zero as has been the case in several other countries.  We can also suggest that bonds are more likely to increase in value -- and yields will fall -- during the Venus-Mercury dasha period in 2023-2026.

The transit picture also provides a plausible explanation for the recent up trend in yields.  The chart is currently suffering from simultaneous afflictions.  We can see that minor dasha lord Saturn (28 Leo) is in exact alignment with the ongoing Saturn-Uranus square, as reckoned by 15 degree multiple aspects (105/165).  Transiting Neptune (26 Aquarius) is exactly opposite the Ascendant and Mercury (27 Leo) and has been a slow-moving but powerful negative influence on bonds for the past 6-12 months.  Finally, the Lunar Nodes are in a 120- degree/trine alignment with their natal position as Ketu is trine natal Ketu and Rahu is trine natal Rahu.  No wonder yields are spiking and rekindling inflation concerns in some quarters. 

Could yields go higher in the near term?   Further upside is possible but the fact that all these afflictions are basically at their maximum impact right now suggests that yields could come down fairly soon as the afflictions lessen.  Not only will the afflicting planets begin to separate after this week, but Jupiter is likely to have a more positive influence on the chart in the month of March.  Jupiter will aspect the MC/Midheaven (i.e. the 10th house cusp) in March and will also conjoin the 6th house cusp in late March.  Jupiter will then enter an alignment with Neptune and may well have the effect of transforming Neptune's ongoing negative effect into a positive effect.  Therefore, bond prices are more likely to rise and yields will fall in March and possibly into April. 

So while we could see a bit more upside in yields in the coming days, I would expect this Jupiter influence to eventually take yields significantly lower in the weeks ahead.  Now just why that would happen is another question.  It could be the result of some disappointing economic data or the failure to pass the Biden stimulus bill or perhaps even a resurgence in virus infections.


Weekly Market Forecast

Stocks have been more volatile over the past week as inflation worries have weighed on sentiment.  After selling off late last week and early this week, the markets have bounced back once again following more reassurances from Fed Chair Powell today. The pullback was an expected reaction to last week's Saturn-Uranus square but it is unclear how much more of an impact this alignment will have in the short term.

Next week's Mercury-Jupiter conjunction looks largely positive, especially given the alignment with Rahu, the North Lunar Node.  While Rahu is associated with distortions and sudden changes, it can be act as an amplifier when it is aligned with benefic planets such as Jupiter and Mercury. 


For more details, check out my weekly subscriber newsletter which is published every Saturday afternoon (EST).   I outline the key technical and planetary influences for US and Indian stocks for the short and medium term, as well as currencies, gold and oil.

Bitcoin tops 50,000

  (17 February 2021) Propelled by a recent endorsement by Tesla's Elon Musk, bitcoin has resumed its rally here in February, hitting a new record today of 52,000.  The cryptocurrency is riding high these days as more mainstream companies like BlackRock and Mastercard are adopting bitcoin either as an investment or as payment.  While Bitcoin has tripled in price since November, it remains to be seen if this is merely a speculative bubble or the beginning of a sustainable alternative to traditional fiat currencies.

The recent price increase is due, in part, to the favourable transit of Jupiter.  The January pullback coincided with a close 60 degree aspect from Saturn to the natal Moon.  Near the interim low in late January, bearish Saturn weakened as it moved past its aspect, and bullish Jupiter conjoined Rahu (North Node) and the 7th house cusp (14 Capricorn).   Therefore, Jupiter was exactly opposite the most sensitive point in the chart, the Ascendant at 14 Cancer.  This was a very good bullish set-up. 

Today's exact Saturn-Uranus square has so far not generated any turbulence, despite being just one degree away from hitting the bitcoin Ascendant.  Bulls should be careful in the coming days as the Saturn-Uranus square will stay in close proximity while retrograde Mercury backs into a near conjunction with Saturn.  While Jupiter could continue to support sentiment, there is a risk of some downside over the next several days.

 

Some further upside seems more likely in early March as Jupiter aligns with the MC (Midheaven) at 24 Pisces as well as Chiron (24 Capricorn) and Uranus (25 Aquarius). However, Saturn's mid-March conjunction with Rahu and the 7th house cusp -- and opposition to the Ascendant -- looks more negative for bitcoin.  The roller-coaster ride looks like it will continue. 

Weekly Market Forecast

Stocks have stayed mostly bullish in recent days although there are signs that the rally may be weakening.  Of course, our focus here is on the potential impact of today's Saturn-Uranus square aspect.  As I noted last week, this aspect is a generally bearish influence although timing its likely manifestations is not straightforward due to its protracted alignment through its respective retrograde periods across many months. 

Nonetheless, there is a prima facie case for some imminent downside this week as the first Saturn-Uranus square in the sequence can exert a more immediate effect.  Also, we should note the late week Venus-Mars square looks bearish and could well end up acting as a trigger for the Saturn-Uranus alignment.   Next week's Mercury-Saturn conjunction is an additional bearish influence, especially with Wednesday's Moon-Saturn opposition. 

For more details, check out my weekly subscriber newsletter which is published every Saturday afternoon (EST).   I outline the key technical and planetary influences for US and Indian stocks for the short and medium term, as well as currencies, gold and oil.

Saturn-90-Uranus: Is this the final year of the bull market?

(10 February 2021) As US stocks hit another all-time high today, one wonders if this 12-year old bull market will ever end.   With the Federal Reserve doing somersaults to keep the bull party going, more observers are talking about the bull market as the default setting for the foreseeable future.  Of course, from an historical perspective, stocks do tend to rise over time.  But previously, bull markets were followed by bear markets as a reflection of the ebb and flow of the capitalist economic cycle. 

But ever since the 2008 meltdown, the Fed has been keen to keep interest rates low and buy bonds and other debt instruments in order to push more investors into risky assets like stocks.  The Fed's stated goal is to generate a "wealth effect" by driving stocks higher so that enriched investors spend more freely and thereby boost the consumer-based economy. 

While we may question whether the Fed is wise to keep pushing markets higher, several planetary alignments this year suggests an end of the rally may at hand.  One in particular is the approaching 90-degree square aspect of Saturn and Uranus next week on February 17.  Saturn and Uranus do not blend their energies very easily as Saturn symbolizes tradition and structure while Uranus represents change and rebellion.  Therefore Saturn-Uranus alignments, especially those in hard aspect (90 and 180 degrees), can be disruptive and signal breaks with the prevailing trend. 

Both of these distant planets are slow-moving and thus their alignments occur very infrequently.  The complete Saturn-Uranus synodic cycle is 45 years, with the more disruptive, hard aspects occurring every 11 or so years.  The last hard aspect was an opposition that took place from late 2008 until mid-2010.  The previous Saturn-Uranus square occurred in 1999-2000.  Typically, these hard aspects are within range for an extended time due to the retrograde cycles of both planets.  Thus, Saturn and Uranus may form three or four exact squares during a 1-2 year period.

Students of stock market history will know that both of these previous Saturn-Uranus alignments had significant correlations with the market.  The 1999-2000 square marked the end of the Reagan-Clinton bull market (1982-2000) and the start of the three-year bear market from 2000-2003.  The 2008-2010 opposition aspect coincided with the end of the financial crisis and start of the current Fed-fueled bull market. 

While there is a clearly bearish overtone in these Saturn-Uranus aspects, there exact aspects do not always correspond to falling markets.  Instead, it seems better to think of the alignments as leading to changes in the prevailing trend.  Even there, the effects may not be specifically associated with exact timed aspects but rather as underlying influences while Saturn and Uranus are within a wider range. 


The Saturn-Uranus square 2021

Next week, Saturn will form a square aspect with Uranus on Wednesday, February 17.  This will be the first of three exact square aspects in 2021, with the other alignments taking place on June 14 and December 23.  Given that stocks have been in a bull market for 12 years, this year's Saturn-Uranus square suggest that change may be in the air.  Volatility seems more likely to increase in the coming months during this protracted alignment, although it is possible some narrow sectors of the market could continue to rise in 2021, just as tech did in early 2000. 

One thing we should note is that the first square aspect in the series may be more bearish than the other two.  The price chart from 1999 actually shows an eerie coincidence of the interim high on the S&P 500 taking place on July 16, just two days before the exact Saturn-Uranus square.  Stocks then fell 10% in the next four weeks.  The correlation also occurs with the first Saturn-Uranus opposition (different angular separation but similar in symbolism) on November 4, 2008 on the same day stocks formed an interim high after October's brutal sell-off and then fell another 25% until the November 20 low. 

So there is some reason for investors to be extra cautious in the coming days.  It is very possible we could see a repeat of the above scenarios since the Feb 17 square will be the potentially more bearish first alignment out of the three set for 2021.  And I would think that the near simultaneous Venus-Mars square late next week would create an even stronger negative resonance between all four planets. 

Given the disruptive energy of Saturn and Uranus pervading through much of 2021, there is some reason to think that time is finally running out for this long bull market. 


For more details, check out my weekly subscriber newsletter which is published every Saturday afternoon (EST).   I outline the key technical and planetary influences for US and Indian stocks for the short and medium term, as well as currencies, gold and oil.

Covid variants complicate pandemic recovery

 (3 February 2021) As the world enters its second year of the pandemic, progress is very much a mixed bag.  On the plus side, several highly effective and safe vaccines are now being rolled out in most countries around the world.  While there have been significant bottlenecks in production and distribution, there is a widespread expectation that herd immunity through mass vaccination can be achieved by the end of 2021 in some countries.

On the other hand, several new and more dangerous variants of the SARS-CoV-2 virus have emerged in recent months. The new variants from the UK, South Africa and Brazil are more transmissible and have somewhat higher rates of mortality.  However, the current second lockdown seems to have helped to limit the spread of the virus so that new case numbers are starting to decline.  

It is difficult to say at this point if the current lockdown will be enough to contain these more dangerous mutations of the virus.  Outside their place of origin, the variants are not yet the  dominant strain of the virus.  Therefore, it is too soon to tell if current suppression measures will be sufficient to keep the pandemic under control until full vaccination is reached.


Planets of illness: Saturn and Neptune

Unfortunately, the astrological influences suggest the very real possibility of more disruption throughout this year.  There are three potential trouble spots.  First, malefic Saturn is due to conjoin the South Node of Neptune from April to June at 19 degrees of Capricorn.  Saturn is due to station retrograde on that degree in late May and thus the conjunction will last for an unusually long time.

The combined symbolism of Saturn and Neptune is decidedly difficult.  Saturn represents obstacles, disappointment and suffering, while Neptune symbolizes illness, weakness and liquids.  This is a very appropriate combination for pandemics as Saturn also conjoined the Neptune node in June 1918 during the first wave of the Spanish flu.

The second potential problem is that Saturn (12 Capricorn) is due to form a significant 45 degree alignment with Neptune (27 Aquarius) in September and October.  Here again, Saturn will station at 12 Capricorn and thus provide an unusually long time period for the negative energies of both planets to resonate.   We will recall that a similar Saturn-Neptune aspect was prominent in the New Year's horoscope for 2020 and may well have foretold the pandemic. 

Thirdly, the horoscope of President Joe Biden is heavily afflicted by the Saturn retrograde station in May. As president, Biden's chart takes on a special significance for the US as a whole, and by extension, for the world.   Saturn (19 Capricorn) will station in an exact square with Biden's Mars at 19 Libra.  Like all planets, Mars has both natural and temporal significations.  By its intrinsic nature, Mars represents conflict and war, of course, but Mars' rulership over the 1st and 6th houses in his chart also offers other possible meanings for this Saturn-Mars square.  The 1st house represents the nation as a whole, including its well-being, while the 6th house symbolizes health and illness.  Thus, the Saturn affliction of Mars greatly increases the possibility of suffering and disappointments from illness. 

To be sure, it is possible this health concern could pertain to Biden himself rather than the nation as a whole.  However, the simultaneous conjunction of Saturn to the Neptune node is one reason why we could have a pandemic setback.  We can also see that transiting Rahu will conjunct Biden's Saturn during May.  This is another indication of problems and hardship, either to do with Biden himself, or more likely, with the US generally. 

Taken together, these three configurations in 2021 suggest the road back to normal is unlikely to be a smooth one.  There are several possible manifestations of these alignments, perhaps including a new, and even more dangerous variant, or a variant that is resistant to vaccination which further postpones the end of the pandemic.  


Weekly Market Forecast

Stock markets have been mixed over the past week as the uncertainties raised by GameStop saga appear to have faded for now.  Stocks have rallied thus far this week after declining around last week's Full Moon and the Venus-Pluto-Saturn Node conjunction.   

Thus far, we haven't seen any bearish fallout from this week's Sun-Mars alignment.  Since tomorrow's square will be punctuated by a 90-degree alignment with the Moon, there is an elevated downside risk there.  Friday's Venus-Saturn conjunction is a bit of a wild card, however.  Saturn is usually associated with declines but this conjunction with Venus also aligns with Uranus and Chiron.  These additional influences could mitigate the negative bias of Saturn but I am open-minded about outcomes.  Next week is looking much less positive as Mars is again front and center through its alignment with the Lunar Nodes.


For more details, check out my weekly subscriber newsletter which is published every Saturday afternoon (EST).   I outline the key technical and planetary influences for US and Indian stocks for the short and medium term, as well as currencies, gold and oil.