Market Meltdown Nears; Fed Soon May Be Forced to Announce QE3 | Survivalist Investor

The financial indicator that traders have watched most for a sign of another Lehman-like swan dive in stocks has suddenly inched to the edge of the abyss in overnight trading.
That indicator is the U.S. 10-year Treasury—the instrument of choice among hedge fund mangers when stocks become vulnerable to that big drop—that long-awaited second shoe thud of the global financial crisis.Sign-up for my 100% FREE Alerts
Greek bonds, again, are swan-diving, driving rates north of 20 percent, and Spanish CDS spreads with German paper reached a record 526 basis points in European trading, according to zerohedge.com.
A crash through important support at 1.8 percent on the 10-year note will most likely give the green light to traders to panic out of stocks and to rush into the next leg of the ride to the very top of the 30-year bond market bull market—which now has reached bubble territory.  Gold will most likely sell off, as banks shore-up capital reserves and hedge funds make client redemptions during an equity market sell off.
“If we see the yield on the U.S. 10-Year Note break below the 1.8 percent level, what it’s to signal to bond traders around the world is that we have a deflationary wave coming,” trader Dan Norcini of JSMineset.com told King World News, Friday.
As far back as September 2011, 1.8 percent has been the rate at which traders have sold bonds and bought back stocks in anticipation of a ‘Bernanke put’, the widely-held belief that the Fed will come to the rescue of the markets in one way or another to prevent another first-quarter 2009 market crash, which took the S&P500 down to 666 in a harrowing scare reminiscent of the Crash of 1987.
Market Meltdown Nears; Fed Soon May Be Forced to Announce QE3 | Survivalist Investor