Market turmoil ahead?

US equity markets seem ripe for a significant pullback, or even a severe bear market, with bond yields unlikely to fall much before rising again. If so, how will it play out for gold?

The Fed’s 50 basis point cut in its fund rate was more than expected, other than by optimistic equity bulls. But realistically, it means that in the absence of solid statistical information that the US economy is entering a slump, there are unlikely to be further significant cuts in the foreseeable future. Additionally, there are signs that US Treasury yields along the curve are unlikely to fall much from recent lows and could even be turning higher. This would be consistent with a growing funding crisis, which so far has not tested demand for longer maturities other than from US pension funds.