When the sovereign bond market bottom falls out the initial reaction will be both global bonds and equities will nosedive. But since this will be a sovereign bond crisis the initial equities crash will be a nice opportunity to buy. Once the smoke clears and investors see the sovereign debt crisis they'll pile into stocks heavily as public debt is trashed vs private debt.
This wealth transfer event will favour equities vs real estate and commodities. Bonds wil be thrown in the dustbin. Those funds that really on the bond market only will lose a lot of money and may even shutdown! Pension funds and savings will be bailed in as governments grab those cookie jar to save the sovereign debt market.
This is why I've resisted to advocate for the money market as equities selloff since this is a false reaction! Capital will definitely fly out of government market into private debt (stocks or corporates bonds etc). We will see a lot of revolts across the globe when govt pension funds get raided.
When this happens equities will reverse their initial selloff and recoup all the losses and stage a major rally for the next decade until the next rotation cycle into commodities or real estate.
I'm putting this here as a reminder for the equities major bottom signal.
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!