We’re going to talk about bonds today but before we get to that, I want to briefly point out why the Brexit event is impacting US markets so heavily.
As we’ve discussed many times here at DTL, the strength of the US dollar dictates the cost of US goods to our trading partners. When the dollar goes down, our goods go on sale; when the dollar goes up, it’s equivalent to a price hike across the board. And it goes without saying that higher prices stifle demand, which means less revenue, profits, etc.
With Europe thrown back into turmoil, investors are flocking to the US dollar for safety. This is how the dollar reacted on Friday and Monday.
Be sure to read Martin Armstrong’s work: