CASCADE TO HIGHER INTEREST RATES

AND LATEST BLUNDERS!

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CASCADE TO HIGHER INTEREST RATES

In the last couple weeks, the efforts to hold down US interest rates have collapsed in the face of events:

1. Moody’s cuts the rating- US no longer AAA

2. 30-Year Bond futures yields surpass 5%

3. Latest 20-Year Bond Auction hit (exactly) 5% (the last 20-Year auction in February 2025 was 4.75%)

4. Big Beautiful Bill, while passing (barely) the House, calls for another massive government deficit for 2026

5. Consumer inflation expectations increase

6. US Dollar Index weakens

7. Wars (Ukraine and Mideast) continue

8. Continued US war related sanction policy continues to drain the strength of the US Dollar

9. T-Bonds as the safe place to protect assets lose ground to both gold/silver and, wait for it, Bitcoin

10. Trump tariff policy makes investors nervous

11. Passing the Big Beautiful Bill out of first the Senate and then Congress may take until July

12. The Treasury in the next year has to find buyers for the @ $7 Trillion of US Government debt they have to sell

13. Foreigners (Japan, China, etc) are net sellers of US Government debt

14. The pitch by the US financial press that the Fed has the power to ‘cut’ interest rates in 2025 is collapsing

15. The pitch by the financial press that in the face of a drop in the stock market, the flight to T-Bonds for ‘safety’ will keep interest rates low is collapsing

Our plow here is that rather than having some text on interest rates, We use (what is to us) an enormous list of interest rate factors/events above to overwhelm you skeptics.

We continue to recommend that us speculators should play expected higher interest rates in four ways:

1. Short the 30-Year T-Bond future

2. Short the Japanese 10-Year future (JGB)

3. Short the UK gilts and

4. Buy SOFR March puts

BTW…

…Until President Trump signs into law the Big Beautiful Bill, we expect maximum effort (money and media) from the Administration and its allies will be spent to prop up the stock market. By contrast we don’t expect any comparable effort to prop up the bond market will be effective. Therefore we are good with taking immediate action now to benefit from higher interest rates while postponing, at least for now, shorting stock market futures (like NASDAQ).

PERSONALLY LEARNING FROM TWO BLUNDERS

BLUNDER IN THE STOCK MARKET: In January of 2024, I had been watching the stock of a silver mining company, Endeavour Silver, go down. But I held off buying any. Why? Because the company was unable to start producing from their major Terronera silver mine because they had to raise more money.

And then on Feb 12, 2024, EXK announced they had all the money needed to complete construction of Terronera. And I loaded up. The stock surged from $1.40 to $4.70 by early July. YIPPEE!

BUT

From $4.70 it dropped in a month to $3.00 - a drop of 36%.

What was the blunder? I did not have a sell stop in place to protect my profit after the amazing gain.

BUMMER!

What I learned was that when positions go up enough - say at least a double - then with stocks as liquid like EXK was, you should have a reasonable stop (down 10% maybe) to protect that profit.

NOTE: In doing research for this blunder I came across a bullish article on EXK which as I am bullish now on the stock I include for our readers:

Silver Mining Stocks ARTICLE