Its Over, page-340

https://www.cnbc.com/quotes/?symbol=US10Y

Whatis giving the market jitters is rising rates. See the above chart in the linkand you can see that US 10 year Treasury has hit 5 year highs at 3.23%.

Andnow there are reports that Italy is starting to look like Greece- its 10 yearItalian Government bond rate is at 3.58% also a 5 year high.

And as if higher rates are not enough, the Fedis now undertaking QT – you have heard of QE i.e Quantitative Easing.

What is QT- well, Quantitative Tightening.Previously the Fed was flooding new money into the banking system but now asthese papers fall due,

theFed is removing much of these credit flows as the economy’s report card showingit to be healthy.

So a QT acting in concert with a rising trend inrates represent a double whammy brake on the economy.

Locally you see that post-banking royalcommission, loans are no longer free flow and curbs are in place under a morestringent lending regime

andwhile official rates have not gone higher, banks are undertaking out of cyclerate hikes.

The tricky point comes when the Fed oversteps inbecoming over-zealous in its rate hike, triggering a potential crisis in emergingmarkets reliant

onUS denominated debts unable to service them.

Why does the Fed need to increase rates?

They need to in good times so that they have themonetary lever to reduce rates when economy starts to cool.

If you recall, they had to do QE because rateswere down to zero.

So now comes unwinding QE (QT) and pushing rateshigher because the economy can afford to.

If you take into account the negativeramifications from the US-China trade dispute that will ultimately lead tolower global trade,

allthese are ingredients to an ugly scenario waiting to pan out.