10yr
US 10yr Looking to Retest key multi-year trendlingBearish momentum divergence. The rise of long term yields on the Fed meeting was comical and offered a great opportunity to get long US bonds at least for a short term trade.
Global Bond Yields headed higherA test then break of 3 year trend line in RSI weekly. Been bearish bonds since August, this does not look good for gold as the gold story was mostly a yield story. I believe this will end up being a counter trend move with bond yields much lower than they are today, but that remains to seen. Best to stay out of the way and watch this thing play itself out.
Notes are in the Zone!We are in the Trigger Zone on the Notes and will be watching short term time frames for a trigger short. If we get the trigger then our final target will be a break of the lower wedge. REMEMBER: NO TRIGGER, NO TRADE!
Next Fin. Crisis?It's been more than 6 years since the last major financial crisis occured in 2008. If we assume financial crisis come out almost perodically in every 8 - 10 years then I think it's time to start thinking whether we are close to the next one.
10Y US treasury notes have always been preferred investment tool for non-risk takers regardless to the financial environment. But what about 2Yr treasury bonds? Can it tell us tell of something different?
So I looked at how the spread between 10Y and 2Y notes changes. I took the difference of 10Y and 2Y note yields (drawn in blue line) and looked how it changes with time. I marked with green circles where the spread is equal to 0 (10Y yield = 2Y yield) First 1990, second (little one) 1998, third 2000, fourth 2007. I'm sure you're very familiar with these years:) Before every major crisis 2Y note yield became equal to 10Y note yield. Why? Because smart money managers see the uncertainty and the approaching crisis in the market and move their money from short term bonds.
Up to this point maybe that was what you heard before. But can we predict the next crisis time? So when I drew 2Y note yield (red line), I noticed the 2Y note yields at the time of crisis are decreasing linear starting with 9,55% in 1990 and ending with 4,92% in 2007. (the green descending trend line) This confirms today's ongoing deflationary markets in all over the world. If we assume the trend will continue as it is, 3 - 3,5% would be most probably the next 2Y treasury note yield at the time of the next financial crisis. If we look at the FED rate history, we see the fund rate is pretty similar to the 2Y note yield. So did you recall the FED fund rate projections for the next years?? Most of the FED members project the fund rate will be around 3,5% at the end of 2017. Bingo! And also in 2017 we will have had 9 years after the last financial crisis. Be careful in 2017 if the spread of 10Y and 2Y notes yields close to each other..
www.federalreserve.gov
Gold Spikes – Price Action Back in Ascending ChannelGold climbs higher on traders looking for safety, albeit crude, equities, the ECB or Greece. As what was considered a year for the “secular” bull market to continue higher, 2015 is looking to start the year rather tumultuous.
In “Gold $1,200 – A Line in the Sand,” gold began to form a descending channel after breaking through the previous ascending channel. I did not put much credence into the descending channel because there were several key support levels layered throughout.
They, so far, have held. The two separate channels, interestingly, intersected at $1,204.5 – the 2014 open. Price action has closed above this level, and the geopolitical turmoil have spiked prices to resistance found at $1,224 per toz.
Volume continues to show support, trading above the 20-day average. The bearish price action on the daily chart has been waning, and the + DMI bullishly crossed over the – DMI for the first time since late November. In regards to the directional movement indicator (DMI), the price action has been overly bearish since August. If momentum can be sustained, the + DMI would show increasingly positive price action for the yellow metal.
The RSI has been ticking upwards after breaking out of the current downtrend. If gold can close above $1,224, look for prices to continue to $1,231 before hitting major resistance at $1,240 per toz. – a key point for gold prices.
For more on precious metals, please visit: bullion.directory
US 10-YR to test 2013 HighsThe 10-YR is seeing demand as every data point in 2015 has come under expectations, while the slump in US economic data began months ago. Key bond gurus, such as Gundlach and Gross, look at the US 10-Y to reach a 1-handle.
Safe-haven demand will be a major trend in 2015 as volatility increases, which will drive more traders into treasuries. Initially, look for price action to test the October highs before extending gains to the 2013 highs.
For more on the economy and all things considered, please visit: bullion.directory
Gold Sees Major Bids Amid Growing Global ConcernThe US dollar weakens almost one percent on growing uncertainty following worldwide equity sell-offs. The weaker dollar is allowing crude to rebound from below $63 per barrel, but spreads on energy debt have ballooned to 880 bps, an all-time new high as traders deem the high-yielding debt extremely risky. The VIX spikes over 16, creating the worst two-day span in over two months on potential hedging on credit positions. The movement in the “fear” indicator correlate to high-yield debt spreads widening.
Safe havens, like the yen and US 10-year, see action amid growing concern. The Japanese yen gained over 1.25 percent, and the US 10-year yield fell below 2.20 percent. The precious metals complex were big winners following the non-farms payroll anomaly on Friday. Gold, up over three percent, reaching $1,239 per toz. before seeing some profit taking. Silver seen a rare surge higher, up over five percent to $17.12 per toz. When in doubt, gold sees support – as it always has.
Gold, technically, is looking strong. Bouncing nearly $100 per toz. since the $1,140 low of November 30, price action has broken out of the major ascending channel. Key resistance levels of $1,212 and $1,224 look to have been turned into support. The next level of resistance could be a hard nut to crack, but the growing global concern over demand and growth could allow gold to close above $1,240. A close above this level will give gold the opportunity to test the 200-day EMA, a level not tested since August. Price action will likely grind higher into year’s end because the majority of equity investors still remain highly – almost ignorantly – bullish.
The directional movement indicator (DMI) is showing the + DMI ticking upward, signaling bullishness within the price action. A bullish convergence (sending the – DMI below the + DMI) will help gold’s march higher.
I, among a select few, has been forecasting such events for quite sometime. Institutional selling pressure will eventually give in.
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Short Office REITSMacro:
The Short term spike in yields triggered a large selloff in REITS. As mentioned in the 10 Year yield post, The yields are likely to rebound until at least end of year which could put downward pressure on REITS.
Technicals:
USDH is underperforming the S&P which is setting up for a possible short across the board over the next weeks.
The bearish divergence YTD and the recent new low today suggests that price could start reversing from the uptrend YTD.
Ideally, a short position should be entered on a weak stock within that weak industry after a retracement to the 20 DMA and a downtrend confirmation on the day chart.
Initial target: the 61.8% fibo retracement to 148
10 Year Yield reboundTechnicals:
The 10 year T Note is finding support along the 38.2% Fibonacci retracement at 2.38. This level also coincides with the 20 MA on the Monthly chart which is on an uptrend.
The general uptrend movement from 2013 to now suggest that the recent selloff could be a consolidation ahead of a larger break to the upside.
Macro:
The Fed has been hinting towards a possible rise in rates in the near future and the rhetoric may be confirmed during the October 29th meeting. Any suggestion of a reduction in the amount of bond purchases could trigger a rally in yields.
USD/JPY Long to Y103 post NFP on US Dollar/10yr Yield StrengthPrice Action post NFP suggest the USD/JPY still has some topside catch up to play with the US 10 yr Treasury Yield and the gaining USD Dollar Index.
With Stocks still strong and carry trade back on the cards, the USD/JPY should do well from AUD/JPY and GBP/JPY buying.
EUR/USD selling is still a real possibility with the USD strength from this also supporting. A EUR/USD reversal however is see helping EUR/JPY more than hurting USD/JPY directly.
Great Risk Reward Here 12 pips for 38 pip gain.
