Predicting the movement in the stock market
May 2017
Most of the top professionals in the investment community have proprietary methodologies that help them predict the trends of the market. These are very complex but it can be broken down simply by looking at the spread between the 10 year and 2 year bond yields. The spread of this bond tells you whether people are nervous about the future or optimistic. Generally, if the spread on the two and 10-year bond is contracting it means people are pessimistic and we may be heading towards a recession, however if the bond spread is increasing it means that people are very optimistic about the future and the stock market will be increasing.