Note: After picking Bitcoin in June 2015, when it was trading for just $240, our colleague, tech investor Jeff Brown, is back with an explosive new opportunity.

He believes a new law from President Trump could soon send a handful of AI coins skyrocketing higher, giving you a chance to turn a small stake into a six-figure payout.

To help you prepare, he’s hosting an online strategy session this coming Wednesday, September 24, at 8 p.m. ET. If you want to learn more about this law and the opportunity tied to it, go here to RSVP with one click.

---

Investors are pinning hopes for the bull market rally on one thing: interest rate cuts by the Federal Reserve.

The latest odds show that the market expects six quarter-point rate cuts over the next year.

The last time the Fed cut rates was last December. After keeping rates steady for nine months, the renewed cutting cycle looks to be underway.

But investors are getting too excited too soon…

The economic forces pushing for rate cuts are the same ones that could undo the economy and the stock market.

That’s why, rather than the Fed funds rate, you should watch a different interest rate in the days ahead…

Rates Are Tipping Trouble Ahead

If rate cuts are going to save the economy and stock market, then other corners of the fixed income market should provide confirmation.

Through monetary policy, the Fed controls short-term rates.

But the economic outlook influences longer-term rates. So it’s worth keeping a close eye on the 10-year Treasury yield and its movements. Looking back, the 10-year Treasury yield tends to move in the direction of total gross domestic product (GDP) growth.

That means the 10-year Treasury yield tends to rise when the growth outlook is strong, and it falls when recession fears crop up. We’ve seen that behavior heading into several recessions over the past 30 years.

Here’s the 10-year yield ahead of the recession following the internet bubble in the late 1990s. The arrow shows where the 10-year yield peaked in May 2000.

A recession started in March the following year.

And here’s the 10-year yield heading into 2008’s Great Financial Crisis.

The arrow shows the 10-year yield’s peak in June 2007, ahead of the economic fiasco the following year.

Various forces can impact the level of 10-year Treasury bonds, but the outlook for the economy is a big driver. So what are the current levels of the 10-year Treasury yield telling us now?

Tune in to Trading With Larry Live Each week, Market Wizard Larry Benedict goes live to share his thoughts on what’s impacting the markets. Whether you’re a novice or expert trader, you won’t want to miss Larry’s insights and analysis. Even better, it’s free to watch. Simply visit us on YouTube at 8:30 a.m. ET, Monday through Thursday, to catch the latest.

Is the Fed Too Late?

Core consumer inflation gauges are running near 3.0%, which is well above the Fed’s inflation target of 2.0%. And yet the Fed cut rates anyway this week.

That’s because of growing concerns over the labor market. As I’ve shown you recently, payroll growth in recent months has been much weaker than expected.

At the same time, the prior months’ jobs data have been revised lower. In fact, an annual revision to payrolls wiped 911,000 jobs from the initial estimates… the largest negative revision ever.

That’s why the Fed cut interest rates. But to know if the Fed is too late to act, pay close attention to the 10-year Treasury yield. Here’s the chart:

The 10-year peaked near the 5.0% level back in late 2023 (arrow). It rallied toward that level again earlier this year, but it has pulled back ever since.

That drop likely reflects growing concerns over the outlook. You can see the 10-year yield went from 4.5% in July to 4.04% currently. That lines up with the release of weakening labor market data.

The next level to watch is the highlighted zone on the chart. The high end of the zone is at 4.0%, which served as a support level back in April. A breakdown below that – especially past the lower bound of the zone at 3.65% – would be a warning signal on what’s ahead for the economy.

It would also pressure the stock market’s bull run… and potentially create a volatile environment ideal for traders who are prepared to pounce.

Happy Trading,

Larry Benedict
Editor, Trading With Larry Benedict

Free Trading Resources Have you checked out Larry’s free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just click here to check it out.