Jim Cramer says bonds are ‘in charge’ and aren’t letting the stock market get out of its slump

CNBC’s Jim Cramer on Tuesday said the stock market is currently at the mercy of the bond market. Stocks can’t soar, Cramer said, until bond prices go up and yield rates come down.

“Until rates go down — meaning until bond prices go up in price — this cascade’s going to continue. Do I think it’s overdone? Yes, absolutely. We bought stocks today for the charitable trust because they crushed the Nasdaq, and our provision is always that we buy stocks on these big bad days,” he said. “But if rates keep rising, we’ll lose money on those stocks, because bonds are in charge, and for now, they aren’t allowing stocks to rally. They’re only allowing them to fall.”

Although Cramer admitted the bond market can seem boring, he asserted this bond market is far from it and has an important relationship with the stock market. As rates go higher, investors don’t feel stocks are worth as much as they were when rates were lower, he said.

Cramer used spice and flavor maker McCormick as an example. The company reported what Cramer called an “okay” quarter Tuesday before the open, and by market close it had fallen nearly 8.5%. To Cramer, the company’s stock might have soared in different market conditions, but fared poorly because of a “relentless tsunami of selling.”

“So, instead of rewarding McCormick for its consistent middling growth, we slaughter it because it’s not growing fast enough to justify its valuation in this environment,” he said. “Whatever we used to award McCormick for its bland positive qualities has been washed away thanks to the action in the bonds.”

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