BONDS: The Silent Sign That Precedes Every Market Collapse Lighted

[Igor Pereira]

While retail looks at the stock price, the debt market (Bonds) is shouting a warning I haven't seen in years. The graph below shows something that only happens when systemic stress is accumulating below the surface: spread Between the US Treasury bonds of 10 years and 2 years is exploding up.

By Igor Pereira

If you have money invested, stop everything and pay attention. Bonds market does not negotiate narratives; it negotiates survival.

Technical Analysis: What is Spread 10Y-2Y?

What you see in the image is the yield difference (yield) between the long title (10 years) and the short title (2 years).

• The Movement: The chart shows a recent vertical shot, coming out of minimums of ~41 points for 63.17 basis points.

• The translation: When that line goes up fast like that, it means one thing: The Long-Term Risk is being re-enacted. Investors are demanding much more prize to lend long-term money. That is not optimism; it is extreme caution.

History No Mind

Every major financial crisis in recent decades has followed this roadmap. Stress begins at Rates before reaching Stocks.

• 2000: The behavior of the curve changed before the dotcom collapse.

• 2007: The Bonds stress came before the real estate market broke down.

• 2019: Financing markets stopped before any recession was talked about.

Actions are always the last to react. At the moment, short rates remain high, but long rates are rising, indicating that the margin of error for global liquidity is shrinking.

Expert's View

As an analyst, my job is to identify the risk before it becomes obvious. I called the exact top of the market in October, and I'll do it again because that's my job.

This movement in spread indicates that liquidity is getting scarce where it really matters: in the financial "pitch". It doesn't mean a crash tomorrow, but it signals that something will break soon — not immediately, but eventually.

ExpertFX Recommendation: The environment is becoming hostile to passive risk assets. The "risk reprecification" suggests that money should migrate to real assets (Gold/Silver) and leave leveraged positions in Equity. Keep your eyes on the interest curve; it is the canary in the coal mine.

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Igor Pereira Your Financial Market Analyst