(Kitco News) - Wednesday, September 27--October Bitcoin futures prices are higher in early U.S. trading Wednesday. While bears still have the overall near-term technical advantage, the bulls have stabilized the market at mid-week.
While a drastic 40% market plunge might not be imminent, the numbers suggest that a significant drop is plausible. If real rates dip and growth remains stagnant, the S&P could potentially fall to 3,500, marking an 18% descent from its September 26 position. The historically low real rates of recent years have inflated PE multiples and driven profit margins to unprecedented highs. As real rates begin to rise, this bubble is at risk.
The US dollar index soared to its peak since November, while the 10-Year Treasury Note yield reached a high not seen since 2007, causing stock markets to plummet. The Fed's recent announcements caught investors off guard, leading to instability in global markets. Both the dollar and the 10-year yield are nearing an alarming "overbought" status, a concerning signal not seen in a year.
Mortgage rates have hit their highest levels in over 20 years, with the 30-year fixed rate reaching 7.41 percent, the highest since December 2000. Consequently, mortgage applications have declined 1.3 percent, according to the Mortgage Bankers Association. Additionally, the volume of mortgage loan applications and the Purchase Index have also seen significant decreases compared to the previous week and the same period a year ago.
China's bullion market has surged, with gold prices in Shanghai rising sharply over international rates. Due to a declining yuan, a slumping property market, and capital control measures, Chinese investors are flocking to gold as a safety measure. This contrasts with earlier in the year when economic uncertainties had people conserving cash.