Steven Hochberg, Chief Market Analyst at Elliott Wave International, stated that credit spreads are widening, US bond yields are soaring, and investor sentiment is rapidly deteriorating. He warned that the current bear market is far from over, and deeper financial liquidation is still ahead.

He said, "We are currently in the stage of denial, and based on the development model we have seen in the market, we don't seem to have reached that point yet

At the time of his warning, despite the cooling of inflation, US bond yields remained high. According to the US Bureau of Labor Statistics, CPI rose 2.4% year-on-year in March, and core inflation fell to 2.8%. But the 30-year US Treasury yield is still above 4.5%, close to the highest level in months.

Hochberg said, "There is some kind of misalignment beneath the surface of the bond market, as bond prices rarely fall 10 points in a few days. In my opinion, there seems to be some kind of forced liquidation happening here

He pointed out that the spread on junk bonds is one of the most obvious signs of pressure.

He pointed to the chart released by his company and said, "The credit spread of junk bonds is the relative yield of junk bonds to US bonds of the same maturity. They have really skyrocketed and have already broken the three-year downward trend line. In a short period of time, the spread has almost doubled from around 2.56%, rising by 70%

He added, "When credit spreads start to widen like they do now, they often lead the way ahead of broader financial troubles

Hochberg pointed out that his Elliott Wave International team has been observing the 3.4 year regular cycle of credit spreads, and the timing of this breakthrough is in line with the model.

He said, "This is January, and now it's April, and we're starting to see these issues emerge

He is also concerned about the instability of the broader US Treasury market.

He said, "You can guess that a certain hedge fund may be in trouble or something else. If the market continues to decline, you will receive a call from margin officers, and we need some funds here

When asked if the Federal Reserve would intervene like it did in 2020, Hochberg bluntly said, "To some extent, it's too big to bail out. We have $36 trillion in debt, and $1 trillion annually is just to repay the debt

Normally, the Federal Reserve appears closer to the low point than the high point. The market begins to plummet, interest rates go crazy, yields go crazy, and then the Federal Reserve eventually intervenes. It seems like they are controlling the market, but in reality, it is not

Although some people are optimistic about anti inflation, Hochberg suggests that the greater risk is debt deflation.

He said, "There may be short-term inflation, but I believe the ultimate result is debt deflation. There are too many outstanding debts in our society now that we cannot repay them all

He said, "In our current credit system based on legal tender, deflation is severe. I believe people must be very careful and very safe in this environment

He believes that gold has performed significantly better than stocks since 1999 and is still relatively better than stocks at present. But he pointed out that the weakness of silver is worrying.

The price of gold has risen by over a thousand percentage points, and the Dow Jones Industrial Average may have risen by 400% to 500%. Not many people are aware of the performance of gold. The current problem facing gold is silver, which reached a peak of $50 per ounce in 1980, remained relatively stable in 2011, and has now fallen 38% from its peak in 2011

He added, "I think silver indicates that the economy will weaken in the future

Regarding the stock market, Hochberg stated that many investors still hold onto a bull market psychologically.

He said, "People buy stocks and hold them, not sell them. This tension must be eased at some point

He said, "When the market goes down, the value of cash will be much higher. For investors, safety is crucial

As for the US dollar, he said that its upward trend from 2008 to 2022 is now reversing and may further decline. We have been predicting that the US dollar will depreciate, which is very consistent with our predictions

He said that the Elliott Wave model sees the upcoming decline as a natural psychological rotation. This is psychology, the interaction between all of us, without external triggers, it is more subject to endogenous regulation

He added, "All the psychology that affects the market is generated by people's interactions. We don't know when the low point will come, but when we approach it, we will be able to see it through the indicators we track