Here is a chart of the 10-Year Treasury Note all the way from 1981. The downtrend is over, marked with an ending diagonal. The rise in interest rates will continue as we see a sharp impulsive rally, typical for ending diagonals, signaling a reversal and symbolizing the new trend.
The hidden engine behind the market is collective psychology, which goes through different extremes of social mood – from extremely positive to extremely negative. Socionomics helps us define the way of interest rates with great precision. Most people think the FED is in charge of interest rates, but as we look into the chart, the case is different.
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The FED(doted line) follows the bond market(solid line) with lag. FED’s policy is a result of the fluctuations in the bond market, which are governed by social mood.
On this next chart, again we see how FED’s rates follow the bond market with lag. This happens, because social events take time to develop and lag the market. From 1980 to 1982 we have three huge spikes in interest rates in the bond market, marked with solid line. FED’s rate, doted line, follows with great precision the moves of the market.
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In conclusion, we expect to see higher interest rates in the near future, which will be the foundation of FED’s new policy. Unconscious social behavior defines the market. Logic and fundamental factors do not give answers about the future and do not have any forecasting value.
