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Bonds

How low can bonds go?Months ago, when 10 year bond futures were still 175, this weekly head and shoulders pattern jumped out at me. It looked so big and so bad I almost didn't want to believe it could play out. Now, as we approach 135, this massive, fully triggered pattern may be the best indication of where bonds are headed: 125. Sure, they could bounce a few times as they have done on the way down, but ultimately June 2011 lows are the likely stopping point on this decline. BONUS: As you can see, I didn't count the massive March 2020 wick or include it in the measured move. Better to be prepared for the UB to overshoot the 125 target by a little or a lot before staging any meaningful comeback.
CBOT:UB1!Short
by gr8fultrading
Actual end of an era. And it is happening fast.Western interest rates starting going back up in the end. Looks like the whole "new paradigm" is over. Money is not free anymore. To sum up: - Boomers got 110% of the wealth (other generations are in debt), they are aging and getting more conservative, covid got them even more scared and conservative (risk averse); - Generally investor outlook on the economy which was not even positive for the last 20 years (buybacks and money printing were the bulls) is now rather negative; - Average people are starting to notice the money printing. Memes and permabears are doing their jobs. And those that do not notice want to go far right or far socialist even thought they have no clue why they want to. So central bankers cannot continue to print to infinity; - All the indicators clearly show people are not spending or lending their money since early 2020, they are hodling, no arguing is possible (unless the data is somehow incorrect), it is necessary to somehow entice them (with higher rates) to get that money; - And boy does the west need the money Bonus (technical): - Well just look at it go I'm going to go straight to the point and not go into a lenghty explanation about every point. i doubt many beginners are reading about the bund anyway. A shame, might be easy money... The TA/chart reminds me of the typical textbook stairs up elevator down chart. Reminds me of AUDJPY when the "housewives" were mass buying the AUD because of high rates, and then all ran for the exits in just months. In the case of bonds people are not running for the exits but it's the same idea mirrored. People with $$$ are not as eager to lend it anymore, and euro governments need as much magical ponzi beans as they can get to bounce back from the whole covid thing, and maintain fake prosperity and power for a few more years... or months. Well french president Emmanuel Macron said "abundance is over" and warned we should get ready, so at least he is honest. Germany has been teaching its population to warm itself without electricity last year. France relies on nuclear power but hey guess what french nuclear worker are on strike, french favorite national passtime. People have been spending less as you can see in this chart. So it takes a bigger carrot on a stick to get them to lend it. Reminder: velocity of money is the frequency at which it is spent. Lower value on the chart means people are holding tight on their liquidities more. Hey, people thought the USD not going to zero with all the printing and government spending and usstock bubble getting inflated would have no downside. Ye investors were buying us dollars because they were optimistic and just super bullish on this awesome not-a-scam currency and us economy right. I am also short on oil price will go down but for all the bad reasons, I'm feeling like the barrel price will be low low low but price at the pump will be high high high which won't even matter since the gaz station probably won't even have gaz. Boomers got all the money and boomers are aging, and scared to die soon, they are starting to not care about progress. Average humans stay in denial so long, but once panic starts to hit does it go fast. Any herd thing goes fast. I mean ask anyone that studies crowds. Mindless reptilian brains (85% of the population) at a concert watch a dozen people dancing like they are martians, they think they are so weird, then a few zombies start to dance and it's like a nuclear chain reaction all the zombie-sheep dance in seconds, only a dozen people are not dancing and the zombies stare at them and think they are weird stuck-up psychopaths. One could potentially take at least 5R, even 10-15 if it accelerates down (/up). Does it get harder and harder to find people to lend money (especially as high IR makes people/boomers scaaaared we are becoming Argentina)? Or will the increasing rates convince more and more people to lend? No one actually holds cash do they? Apart from boomers people have between $0 and 50k in debt and I am not making that up (most experienced traders know this). A handful of people we call traders have cash and they definitely are going long the interest rate (short the bund contract) - a few hundred retail traders going countertrend is like a few hundred mosquitoes trying to stop a herd of thousands of raging elephants, ye good luck guys just #HODL. They could continue to monetize the debt and rob poor people, but poor people even thought they have no idea what is going on are starting to get pissed, want to destroy everything and go socialist or far right. When I say poor people I really mean middle class, from low middle class to upper middle class. So every one except hobos collecting food stamps and Bezos & friends. Plus with the democratization of trading in part because of crypto and Robinhood, as well as permabears Peter Schiff and Mike Maloney reaching millions of people on social media, people are starting to figure out what is going on. Even the US socialists have mentionned taxing unrealized gains, I am scared, why do they know about this? Guess what happens when old people hold all the money? Guess what happens when those were promised they would live forever with magical futuristic cyber hearts? Guess what happens when hospitals are getting more and more expensive and they might (immediately) need all the money they have to afford lifesaving intervention (or they could just stop overeating but we all know this is not going to happen). I wonder if covid reminded them of their mortality and they are done investing for the long term, or at all. I wonder if some lost trust in the west capacity to pay back, but I do not have the answer to that it is not part of the analysis. I know "10/10 AAAA++++" France got downgraded years ago. They should all get downgraded really but will they? In 2008 junk bonds did not get downgraded... Well anyway... I don't want to predict the future or be a lifetime permabear I just want to make some money. We are traders we do not care if everything implodes do we?
OANDA:DE10YBEURShort
by MrRenev
DJI and Bonds: Get your popcorn ready. In this short video I focus on the UK and US 10 year bond markets in comparison to the DJI. All these markets are linked up in the background - at the speed of light. There are no predictions here - only probabilities and speculation. High volatility is expected at the opening of the markets tonight, 16th Oct 2022. Some are predicting a 'Black Monday' type event next week, which doesn't have to happen on a Monday. I take no sides. I'm only protecting my losses in short positions and happy to let winners run. Stay safe, wash your hands, protect your positions, don't burn your accounts. 😁😂 Disclaimer : This is not advice or encouragement to trade securities or any asset class. Chart positions shown are not suggestions intended to assure you of an advantage. No predictions and no guarantees are supplied or implied. The author trades mostly trend following set ups which have a low win rate of approximately 40%. Heavy losses can be expected if trading live accounts or investing in any asset class. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on speculative opinion expressed here or on my profile and you lose your money, kindly sue yourself.
FOREXCOM:US30
by Captain_Walker
1
Great Trades are Rarely Crowded: Long TLT and Short Twitter IQEveryone is a good trader in a bull market, but in a bear market, these good traders are reduced to hopium-fueled twitter analysts watching core CPI and interest rates. The former and latter data points serve nothing more as useless, out-of-context generalities for the single-celled Wall Street Bet retail enjoyer. But recent activity across the pond has sparked interest in the bond. These traders are now converting en-masse to self-proclaimed bond market experts with the thesis: "The bond market is broken" Except, the bond market is not broken. It is operating as intended, although two lines on a chart may disagree with anyone unfortunate enough to buy at the start of the year. Why is retail sentiment like this? The simple answer is that the fed is late, but a more-elaborate explanation follows: Bond yields rise because bond prices fall. It is the acquisition of a bond at a specific market price that determines that bond's yield, as a function of the difference between that bonds underlying rate (which is fixed) and the resale price. When interest rates rise, bond prices fall because newer bonds spawn with the higher base rate. This makes prior bonds, which have a lower fixed rate, less valuable because they output less extra cheddar. People then resell these bonds for a lower price and the yield rises according to market forces (the fed does not directly control this). Shorter duration treasuries follow interests rates very closely, whereas longer dated treasuries are difficult to influence by rate hikes. Either way these are secondary or tertiary market effects. This phenomenon is what results in an inverted yield curve: you can be paid more money to lend money for a shorter duration than a longer one. But why would something so illogical even happen? The answer is because the treasury market is not just any pig, it's a truffle-sniffing pig. For every brain cell in the equity or corporate credit market, the treasury market has a thousand-fold more. With these one-thousand brain cells, this pig (specifically the longer-dated pig) is rewarded by looking further ahead into the future. What does this pig see when they look that far ahead? An recession that will obliterate the equity market like Exodia. The long dated treasuries have started to price in a recession (very slowly) by pricing in rate cuts. This is why stocks and bonds are still correlated, but the correlation has started showing signs of weakness. The longer tail of the curve is smarter and refuses to sell these bonds like a fire sale. Recessions imply a fed pause and eventual rate cut, so no more high-interest treasuries. This makes bonds desirable, and this process is only starting now. I can already feel the credit market enjoyers seething and muttering: SLR relief expired! Reverse Repo! Basil Tea! No, none of these buzzwords matter. It's true that the pandemic has modified the initial conditions of the bond market. The TLT suffered immensely as the federal reserve promised to not raise rates through forward guidance, broke those promises (as is should have), and also allowed SLR Relief exemptions to expire. This made bonds less sexy and glamorous for banks like JP Morgan because the expiry affected treasury exemptions: banks didn't need to hold additional collateral to slurp bond yields, and now they again do. It's much easier now to park money with the fed overnight and get a little more back. The RRP is a much better facility than treasuries as a result, so bond indexes have dropped even harder. SLR relief is a cherry on top, but this truffle has always tasted good without it. It's absence, and whether it is reinstated or not, should not be a determining factor in the recovery of bond prices, because: No market has currently priced in a recession, and interest rate expectations demonstrate that without a chart, but when that happens, the bond market will get top billing. Bonds will decouple from stocks and TLT will rise from the ashes like a phoenix in the next quarters, incinerating twitter and reddit soys drawing lines on a chart and shorting the index. Nobody saw it coming, they will say, but good trades are never crowded. Smart money extracts the deep value from TLT in the pre-recessionary market by going long (DCA or otherwise). Degenerate smart money is gambling with TLT long calls. Whereas most of the market is still buying stocks, crypto, and chanting that the markets are broken and the fed will come roaring in. These pigs won't find any truffles in this market. Interest rate expectations are unrealistic and the fed will have to pause sometime early 2023. The recession will destroy demand, taking growth, inflation, and equity market with it, rising bond prices and dropping bond yields. The stock market will crash (I don't consider this current price action a crash yet) and continue burning even as the fed pauses, and dip buyers will be buying a dip that keeps on dipping while you're selling your new truffles on ebay because you lost your job due to mass layoffs across the entire economy.
NASDAQ:TLTLong
by coinhoIio
10
The Bank of England to end gilt purchase programEUR/USD 🔼 GBP/USD 🔽 AUD/USD 🔽 USD/CAD 🔼 XAU 🔽 WTI 🔽 Amidst domestic financial turbulences, the Bank of England announced an emergency program to purchase UK government bonds - which will end on Friday. The decision was made public earlier by the central bank’s governor, a sudden spike in the Claimant Count Change readings to 25,500 was also detrimental to the British Pound, which made GBP/USD plunge below the 1.100 level to 1.0963, losing over 100 pips. EUR/USD first closed at 0.9703 with minor gains, then climbed to a high of 0.9773, currently at 0.9684. The European continent had growing tensions after the Russian retaliation targeted Ukrainian civilians, as a mobilization in Belarus becomes more likely. Fearing a resurgence of the pandemic in China, AUD/USD closed lower at 0.627, and briefly peaked at 0.6342. A possible stall in oil consumption also sees WTI oil futures gradually declining to $89.35 a barrel. Gold was last traded at $1,666.29 an ounce amidst a volatile session. USD/CAD fluctuated to 1.3796, though the FOMC Meeting Minutes will be released early tomorrow morning, the market doesn’t expect new insights to swat the Federal Reserve’s determined hawkish stance.
by Mitrade_official
SLR Policy Decisions the root of InflationThis idea is a primer for ideas on how the FEDs decision to suspend the Supplemental Leverage Ratio for COVID and Implement the Overnight Reverse Repo while printing QE has led to the complete collapse of the bond market and began the era of sticky inflation. If you overlay the 10Y Breakeven Inflation rate with Year over Year then circle the dates when Jerome Powell Eased SLR for covid and when it expired and implemented changes to overnight repo. You get a clear sense of how the policy decisions around SLR/Overnight Repo while continuing to print dollars is a clear driver for a decline in bonds and equities while also driving up inflation, DXY and Commodities. TLT has completed a massive multi-year head and shoulders and over a half dozen daily bear flags. TLT recently broke through 2014 lows and already flagging lower to 2008 levels. More to come. It's a fascinating time to analyze markets. Wish you saw this coming? Hit the like and follow. Below are charts and ideas I created with warning signs over the past 2 years (I didn't know what some of them meant at the time) but I do now.
NASDAQ:TLT
by SPYvsGME
When USD Hits Resistance, That's When USDMXN Will Breakdown In today's video I will look into a detail analysis of USDMXN, which is doing quite well compared to the strong USD Index. So my assumption is that when USd index will hit resistance, possibly after the 10 year US notes completed the current fifht wave up, the USDMXN can easily break through the support and will be targeting Feb 2020 pandemic low. Crude oil is also very important for the USDMNX. Price is higher for the last two weeks as the situation between Russia and Ukraine is getting worse. OPEC also decided in its first one-on-one meeting since 2020 to cut production by up to 2 million barrels per day from November. So it appears that EU will not have easy task to limit the energy prices. If you like this video, please leave me a comment below and press like. Thank you Grega
TVC:DXY
by ew-forecast
2
#DXY - WIN or LOSS Hello my Fellow TraderZ, Currently this is the most important chart most of the traders eyeing upon - #DXY. #DXY - an index containing the graphical representation of the strength of $USD against major currencies of the World. We can see the #DXY is enjoying the Parabolic Blow off phase after making DOUBLE BOTTOM in JUNE 2021. Now , after breaking certain important levels, it is approaching towards MONTHLY level of 120 after Dotcom Bubble in 2001. As I can see we could possibly have two scenarios to play in the coming days : 1. GREEN - here #DXY will continue its path to 120 giving more pain to Equity markets. 2. RED - here I'm assuming this one to play (anticipating FED's soft behavior towards Rates' Hike), then we could see a retracement towards the 102 allowing Equities to enjoy relief rally in 3-5 months following a major crash globally which could possibly lead to mark the Cycle BOTTOM. NOTE : - Not a Financial Advice, just my speculation. CHEERS!!!
TVC:DXY
by TRADER-GOKU
2
Bank of England Emergency Bond PurchaseLast week, UK pension funds, which hold highly leveraged bond derivative positions, were facing a nearly $1 trillion loss as bond prices crashed and yields rose. The crash in the bond market has been underway for years, but the tipping point occurred when the UK prime minister pledged to cut taxes at a time when inflation is soaring into the double digits. Cutting taxes worsens inflation because less taxes means consumers have more money to spend on inflating goods. Cutting taxes while inflation is high therefore risks worsening inflation or inducing hyperinflation. Fear of this caused the price of UK bonds to crash and yields to spike. (As many of you know well, bond prices move down when yields rise). This crash caused pension funds with highly leveraged bond positions to experience amplified losses, which caused these funds to need to put up more cash collateral on their losing positions. This could have caused a downward spiral because these funds may have had to sell bonds to raise more cash, which would have had a negative feedback loop that could have sent prices down further, amplifying losses more, and creating the need to raise even more cash collateral. The Bank of England had to make an emergency purchase of bonds. However, by purchasing bonds, the Bank of England has taken an action that will now make inflation worse (there will be a lag effect). Whenever a central bank purchases bonds, it is adding liquidity to the system (when the central bank buys bonds this has the effect of increasing the money supply). Increasing the money supply when inflation is at a multi-decade high is super risky. At best it could risk inflation staying elevated for longer, at worst it could spiral into hyperinflation. In the chart above, reproduced below, you can see that when priced in the British pound, crude oil prices are barely declining (as we would have expected from all the rate hikes). If anything, crude oil is looking poised to increase further. The Bank of England, and other central banks, are trapped. Until they stop monetary easing (adding to the money supply) and tighten the money supply such that rates are higher than core inflation, inflation will continue to get worse. Yet, as we now see in the UK, central banks cannot tighten the money supply sufficiently to accomplish this without causing a financial crisis. The rapidity with which the Bank of England switched back on the money printer, despite double-digit inflation, has me convinced that central banks will choose the hyperinflation route. In fact, hyperinflation is already happening in some countries. Argentina has hiked rates to 75% (not 75 bps, 75% or 7,500 bps) and yet inflation continues to spiral higher. There is actually no limit to how bad inflation can get. When people need to pay $100 trillion dollars for food, as in Zimbabwe in 2008, people usually stop believing that central bank fiat notes are valuable and the system collapses. Look at the chart below. I did not log-adjust the chart so that you can see that hyperinflation is when commodity prices rise exponentially over time. For the chart, I used the Invesco Commodity Index Tracking Fund (DBC) and priced it in Argentine pesos. I used cross plots on a smoothened moving average. This level of hyperinflation always leads to some kind of crisis. Either interest rates must crush demand and cause economic decline, or hyperinflation eventually causes a monetary crisis whereby people stop using the currency altogether. Commodity hyperinflation also leads to political instability and the rise of fascist or communist dictators. Furthermore, when these crises occur on a global scale, they can precipitate conflict, and conflict in turn can worsen commodity shortages. For those who have been thinking that inflation has peaked globally, there is no chart that I have seen which validates that conclusion. Indeed, as shown in the chart below, commodity prices continue to break record highs in some parts of the world. In most currencies, commodity prices appear to be bull flagging. Compare the below two charts. One shows how commodity prices continue to spiral higher in Argentina, despite the central bank hiking rates all the way to 75%, compared to 2008, when commodity prices fell while the central bank raised interest rates to just 12%. This shows that we are dealing with a much more dangerous type of inflation. I posted these figures to show just how bad inflation can get and the risks associated with monetary easing. Many people are believing the pig-in-a-python theory, where they think inflation is transitory and will improve when the massive COVID stimulus passes through the pipeline. However, what they fail to realize is that central banks have been putting an endless stream of pigs in the python for decades through monetary easing. Economies have become totally dependent on monetary easing and central banks are now trapped in needing to maintain it. Yet, if central banks continue monetary easing, inflation cannot come down. It just keeps spiraling higher so long as monetary easing continues, assuming commodity shortages also continue. Commodity shortages are deep-rooted and are due in part to war, deglobalization, aging and less productive populations, and climate change to name several factors. Monetary policy has little efficacy on these supply issues. Sri Lanka was the canary in the coal mine. It was the first central government to fall due to commodity hyperinflation. And yet, even after a central government collapse, commodity prices in Sri Lanka are still high. The chart below shows that commodities appear to be bull-flagging, and poised to go higher. Core inflation which is typically stable in the United States is now exploding to a 40-year high. If the Federal Reserve is to be successful at hiking rates to quell inflation, it must hike rates above the core inflation level. There is virtually no central bank with an interest rate higher than core inflation. Indeed, Japan continues to maintain negative interest rates. As I noted in a prior post, because negative interest rates incentivize the creation of money through credit, negative interest rates reflect limitless growth of the money supply. However, as alluded to above, the Fed is trapped. It must hike rates above core inflation, but it also cannot hike rates above core inflation. Decades of monetary easing have left a highly leveraged economy totally reliant on low interest rates. Hiking rates as far as would be needed to quell inflation would likely lead to an economic depression. Pension funds are already under tremendous strain from the hiking and yet the charts show that the scope of tightening that will be necessary is not even in sight yet. The best-case scenario is that commodity supplies improve and demand softens enough to stabilize rates but not so much that economies decline significantly. Even in this perfect mitigation scenario, stock market returns are likely to be muted for years to come.
TVC:UKOIL
by SpyMasterTrades
65
US10Y Pull-back aiming for the 1D MA50 at least.This is the U.S. Government Bonds 10YR Yield (US10Y) on a 2 year horizon. As you see its aggressive rise can fit only on a Fibonacci Channel. The recent pull-back happened after the price hit the 2.5 Fibonacci extension and the 1D RSI a largely overbought level and the price is already on the 2.0 Fib. As you see, the strongest buys throughout this period have been then the RSI hit the designated Support Zone. Also the strongest pull-backs dropped the price a whole 1.0 Fib level lower. From the previous 2.5 High, the low extension is at 1.5 and that gives us still some room to sell and target at least the 1D MA50 (blue trend-line). Technically it would be best to buy once the 1D RSI enters the Support Zone again, even if that means missing on the lowest possible level. From were we stand today that could be as low as the 1D MA200 (orange trend-line). Regardless of the exact bottom, as long as the 1D MA300 (red trend-line) holds, which has been supporting since January 06 2021, the bullish target is the 2.5 Fib and the 3.0 in extension. If the price breaks below the 1D MA300 though, we will consider this a long-term trend change to bearish and should switch to a sell-the-rebounds strategy. That would affect all asset classes from stocks to Gold etc, but when that happens we will have plenty of time to analyze it. ------------------------------------------------------------------------------- ** Please LIKE 👍, SUBSCRIBE ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support me, keep the content here free and allow the idea to reach as many people as possible. ** ------------------------------------------------------------------------------- You may also TELL ME 🙋‍♀️🙋‍♂️ in the comments section which symbol you want me to analyze next and on which time-frame. The one with the most posts will be published tomorrow! 👏🎁 ------------------------------------------------------------------------------- 👇 👇 👇 👇 👇 👇 💸💸💸💸💸💸 👇 👇 👇 👇 👇 👇
TVC:US10YShort
by TradingShot
3