Our precious Green-back / Dollar looks very oversold

Step back for a bit and reflect upon the 10-year interest rate and put yourselves in the shoes of foreign holders who now see both the disturbing trend in yields and the fall in the dollar since March it must be increasingly and very painfully (financially) obvious to foreign holders that holding onto dollars almost guarantees they will lose money. 

And the interest compensation on their bonds is very-very inadequate to recompense them for the risks of holding a deteriorating foreign currency (our dollar, one reason why I see it rallying back to $96.00-97.00 in the weeks and months ahead (especially if it double bottoms at $87.50-88.50) and given the acceleration of the FED’s massive wave of monetary inflation, the general loss of capital values for time deposits and fixed interest bonds has been significant. Furthermore, the increasingly immediate prospect of the latter, which is the story being told by the golden cross in the chart above, is likely to quicken the pace of foreign selling of bond holdings, driving yields higher, they would compensate foreign currency holders for future losses of purchasing power. But this is one of those times where a rise in yields worsens the situation for government finances and will require a huge reassessment in the market to even higher yields. In short, foreign sellers of dollars will begin to drive interest rate expectations higher in my opinion, taking over the led role from the FED.

The false safety of equity markets will soon be borne out as an insight into the thinking of central bankers with respect to financial assets...Since 2014 QE has been a dominant feature of monetary policy, and it has become increasingly the means of bolstering bank reserves held at the FED without the pass-through to real investing institutions. QE is an official policy for central bankers to inflate equity markets in order to create a so-called wealth effect. Presumably, the FED is confident that a manipulated equity market can continue to be openly manipulated through QE, dismissing the possibility any policy failure on their part.

The Fed will almost certainly lose control over financial markets as it is forced to hyperinflate the dollar. Foreigners could quickly dump the dollar, fixed interest holdings and equities, reducing their $28.7 trillion exposure to a level of liquidity that relates to more closely to their trading prospects. Stocks are being pumped up by the FED through massive QE (debt) to valuation extremes, a policy set to fail when interest rates are forced to rise. It will almost certainly lead to a nasty bear market.