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Bonds

When this trendline breaks, Japan may hyperinflateJapan's central bank is buying unlimited amounts of Japanese debt in order to maintain yields around 0.25%. This ratio shows yields over the central bank's balance sheet. When this trendline breaks to the upside, it essentially means that Japanese debt is being sold faster than the central bank can buy. Japan may be going through some serious financial events very soon. www.cnbc.com The bank of Japan is selling US treasuries in order to buy more Japanese treasuries. This may cascade into US problem of rising interest rates and unsustainable debt levels being that Japan is the largest foreign holder. www.bloomberg.com
TVC:JP10Y
by rrmhearts
10 yr yield VS Inverted S&P 500It appears 10 yr yields have peaked which should be great for equities. Interestingly when you flip the S&P 500 you pretty much get the yield curve. We have seen clear inverse correlation. Oil and Nat gas also looked like they topped so I suspect peak inflation has been reached for a while and the fed may begin to pivot and either hike much less (25 bps), stop hiking, or lower the rates as rates follow bond yield. This will make for excellent tailwinds in asset markets.
SP:SPX
by ceesounds
2
Dead Cat Bounce for Bonds?Bonds have pressed higher following the Fed's 75bps rate hike. We have broken out of 115'29 back into the 116 handle, topping out at our level at 116'20. A red triangle on the KRI suggests that we are facing resistance here. We do appear to be seeing a bull wedge consolidation pattern, but the Kovach OBV has leveled off, so it is likely we will fall from here. Watch 115'29 or 115'03 for support. If we are able to break out further, the next target is 117'08.
CBOT:ZN1!Short
by quantguy
Out The MoneynessThe 2yr yield is inverted to emphasize value rather than yield. The untethering of the DXY from the treasuries are something to watch. There's a lot to see here. Im viewing it from the lenses of liquidity and solvency. This is developing. The purpose of this post is to serve as a repository of notes along the way regarding this topic. DXY shows relative strength of the dollar. But the bonds sell off seems to show it as contextually weak albeit stronger (and in this case the most liquid). I would view this more as a moment of underperforming by the least in a group of underperformers rather than outright comparative outperformance. Notable Events since the 6/10 CPI print Yield curve inversion along multiple points of the curve as the short end yields higher than the long end 75 bps being priced in, market wide, some stating as early as this Wednesday's announcement for June. Consensus give 95% probability for July. ~175bps being priced in with high probablility to september. WSJ piece by Timiraos re the coming hikes. Celsius (large cap crypto lender) becomes defacto insolvent during what looks like a bank run. Dollar withdrawals are suspended. www.washingtonpost.com Binance briefly halts dollar withdrawals from the BTC network. One of its networks briefly down due to a "stuck transaction" twitter.com ECB Fragmentation is popping up with increased frequency in the 10y sovereigns. Draghi's "whatever it takes" comments see the Italian 10yr sell off at a rate leading the euro area sell offs. In the beginnings of the overnight session South Korea warns "The financial markets and economy are in critical condition." President Yoon: " The government intends to use all supply-side tools to keep inflation under control" - Yonhap Meanwhile the BoJ amidst zero-bid scenarios on their 10y sovereigns and declares a backstop bid of 800bln yen at the next auction. The lack of liquidity in its bonds is causing havoc to the Yen. BoJ is expected to step in to defend the currency. This may have implications on its regional emerging market peers. See Further Comments for updates.
TVC:US02Y
by tradingonatoilet
US10Y making H&S topping pattern with long weekly hammer?US10Y TNX may be topping out. It is both a measure of economic activity & inflation expectation. So is the economy starting to slow down or is inflation slowing down shortterm? It will take years for inflation to come down. If the FED can pull inflation down to at least 4% in a soft landing, it will already be a big success. Stagflation (rising inflation in a slowing economy) is still a big risk, which may take years to recover. A hard landing & aggressive rate hikes may be devastating for stocks but the economy may recover faster. More pain more gain. A topping TNX will be good for TLT bonds & growth stocks. Next supports are 3% & the H&S neck at 2.7%. A measured move for H&S may take TNX to the yellow 2% upper pivot zone, retesting the blue wedge or maybe to retest the big red downchannel from 1981. Not trading advice
TVC:US10YShort
by xtremerider8
JNKTLT A bond ratio that could give a perspective on stocksThis is the ratio of High Yield Bond ETF to the 20Y T BOND. Not a ratio seen a lot but on the 1M time-frame it provides some perspective to the periods of high volatility/ correction on stocks. The blue trend-line is the Dow Jones (DJI) index (stocks). As you see, every time the JNKTLT ratio hit its Lower Highs trend-line, stocks have turned sideways at best, undergoing a volatility phase. Last month, the ratio closed above that line for the first time in history. Even though we are on a sharp correction since the start of the year, does that break-out mean that it enters a new bullish trend and completely different pattern? And if so, could it indicate that the correction is about to take a stop? What do you think? -------------------------------------------------------------------------------------------------------- ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** --------------------------------------------------------------------------------------------------------
AMEX:JNK
by TradingShot
2
BTC Could Drop On Macro Capitulation (Elliott Wave)So far the bounce off of what I had previously marked wave-c has been very weak and given no confirmation that wave-c is completed. That means wave-c is likely going to take longer and go lower. The later time target for wave-c is around the middle of June and it will probably go as low 30k-22k. This will likely be accompanied by a global macro correction as interest rates increase and the bond market continues its collapse. After this capitulation wave I suspect we'll see a quick recovery back to around the previous all time highs.
BITSTAMP:BTCUSDShort
by Intuit
5
Jamie Dimon’s Hurricane and the Bond Market in Early JuneIn 2021, as the US central bank and the Secretary of the Treasury continued to call rising inflation a “transitory” and pandemic-inspired event, the bond market declined. Bonds watched prices rise while the economists were pouring over stale data. Meanwhile, the Fed and government planted inflationary seeds that sprouted during the second half of 2020, bloomed in 2021, and grew into wild weeds in 2022. The consumer and producer price data began to flash a warning sign in 2021, with the economic condition rising to the highest level in over four decades. The Fed and the Treasury finally woke up. While the Biden administration was already “woke,” the data awakened them to a point where late last month, Treasury Secretary Janet Yellen admitted “transitory” was a mistake. However, there was no admission and self-realization that monetary and fiscal policies created the inflation, and ignoring the warning signs only made it worse. A storm forecast from JP Morgan Chase’s leader Bonds are sitting near the lows The Fed’s FOMC meets on June 14 and 15 Higher rates are on the horizon Expect lots of volatility in markets The bond market was far ahead of the Fed and the Treasury, which should have been another warning sign. Consumer and producer prices have skyrocketed, and the central bank is using demand-side tools to address the economic fallout. Meanwhile, the war in Ukraine, sanctions on Russia, and Russian retaliation have only exacerbated the inflationary pressures, as they create supply-side issues making demand-side solutions impotent. The Biden administration blames the rise in energy prices on Russia, but they were already rising before the invasion and sanctions. The shift in US energy policy to a greener path is equally responsible for record-high gasoline and other fuel prices. At the end of 2021, a conventional 30-Year fixed-rate mortgage was just below the 3% level, and in less than six months, it rose to 5.5%. On a $300,000 loan, the move increases the monthly payment by $625, a significant rise. We are in the early days of an economic storm that began with the pandemic, continued with a lethargic Fed and government officials, and was exacerbated by the first major war in Europe since WW II. We have not seen the peak of the storm clouds gathering for more than two years. A storm forecast from JP Morgan Chase’s leader Jamie Dimon, the Chairman and CEO of JP Morgan Chase, called Bitcoin a “fraud.” A few short years ago, he said he would fire any trader “stupid” enough to trade cryptocurrencies on the bank’s behalf. As recently as late 2021, he said he believes Bitcoin is “worthless.” So far, he has been dead wrong on the asset class. The financial institution he heads replaced real estate with cryptocurrencies in late May, calling them a “preferred alternative asset.” In his latest comments on markets across all asset classes, Mr. Dimon issued a warning. Quantitative tightening that will ramp up to $95 billion in reduced Fed bond holdings and the Ukraine war led him to tell market participants, “You’d better brace yourself. JP Morgan is bracing ourselves, and we’re going to be very conservative with our balance sheet.” He began by saying, “You know, I said there’s storm clouds, but I’m going to change it…it’s a hurricane.” Mr. Dimon believes QT and the war create substantial changes in the global flow of funds, with an uncertain impact. The leading US bank’s CEO is prepared for “at a minimum, huge volatility.” His forecast on cryptos aside, the warning is a call to action. There is still time to hedge portfolios and establish a plan for the coming storm. Volatility is a nightmare for passive inventors, but it creates a paradise of opportunities for nimble disciplined traders with their fingers on the pulse of markets. Bonds are sitting near the lows Quantitative tightening not only removes the put under the bond market that had supported government-issued fixed income instruments since early 2020, but it also puts downward pressure on bonds and upward pressure on interest rates further out along the yield curve. The long-term chart of the US 30-Year Treasury bond futures highlights the decline to the most recent low of 134-30, declining below the October 2018 136-16 low, and falling to the lowest level since July 2014. At the 135-20 level on June 10, the bonds are sitting close to an eight-year low, with the next technical support level at the December 2013 127-23 low. The Fed’s FOMC meets on June 14 and 15 The market expects the US Federal Reserve to increase the Fed Funds Rate by 50 basis points this week at the June meeting. The move will put the short-term rate at the 1.25% to 1.50% level. The Fed remains far behind the inflationary curve, with CPI and PPI data at an over four-decade high and coming in hotter each past month. While the central bank determines the short-term rate, the bond market has been screaming for the Fed to catch up, warning that inflationary pressures were mounting. The bottom fell out of the long bond futures in 2022 as the Fed began to tighten credit. However, the Fed’s economists will only put the short-term rate at 1.50%, with inflation running at many times that level. A 75 basis move to 1.75% would shock the market, which is not a path the Central Bank wants to follow. Higher rates are on the horizon The Fed may have awakened, realizing it must use monetary policy tools to address inflation, but the central bank remains groggy and slow to adjust rates to levels that would choke off rising prices. The economists do not have an easy job as they face supply-side economic problems created by the war in Ukraine. Had they been more agile in 2021 and nipped the rising inflation in the bud with a series of rate hikes, the US Fed would be better positioned to address what has become a no-win situation. The war has caused energy and food prices to soar with no central bank tools to manage the situation. Last week, gasoline rose to a new high, crude oil was over $120 per barrel, natural gas was over $9.65 per MMBtu, and grain prices remained at elevated levels. Rate hikes and lower bond prices are not likely to cause prices to fall as US energy policy, sanctions on Russia, and Russian retaliation are supply-side issues that leave the central bank with few answers. Higher food and energy prices will keep the inflationary spiral going and will continue to push bond prices lower. Expect lots of volatility in markets The US and the world face an unprecedented period that began with the 2020 global pandemic. Artificially low interest rates and the government stimulus that addressed the pandemic were inflationary seeds. The pandemic-inspired supply chain bottlenecks exacerbated the inflationary pressures. A shift in US energy policy increased OPEC and Russia’s pricing power in traditional energy markets. Meanwhile, the war in Ukraine has turbocharged the economic condition, making a solution challenging for the central bank. The current US Treasury Secretary, and former Fed Chair, Janet Yellen, once said that monetary policy works together with the government’s fiscal policies. In the current environment, fiscal policy and the geopolitical landscape have become the most significant factors for rising inflation. Jamie Dimon is worried, and the head of the leading US financial institution is battening down the hatches on his balance sheet for a storm. Even though he was mistaken about cryptos, we should heed his warning and hope he is wrong. Markets reflect the economic and geopolitical landscapes, which are highly uncertain in June 2022. Hedge those portfolios, and make sure you develop a plan for any risk positions. Expect the unexpected because 2022 is anything but a typical year in markets across all asset classes. Fasten your seatbelts for what could be a wild and turbulent ride over the coming months. -- Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility , inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
CBOT:ZB1!Education
by Andy_Hecht
12
US10Y Slowly upwards to the end of year, huge rejection after.The U.S. Government Bonds 10 YR Yield (US10Y) has been trading within a Bearish Megaphone with Higher Highs and Lower Lows since late 2013. The current 1W RSI pattern resembles that of the price Channel Up that in 1 year led to the most recent Higher High in 2018. As a result, we expect a slow Channel Up towards the end of 2022/ early 2023, which will add to the current stock market uncertainty/ volatility, but then strong bearish reversal, if the Higher Highs trend-line/ top of the Megaphone holds. That can fuel a strong bullish reversal on the stock market (S&P500 index displayed in blue on this chart), as it happened in 2019. -------------------------------------------------------------------------------------------------------- ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** --------------------------------------------------------------------------------------------------------
TVC:US10Y
by TradingShot
7
Bond Yields Soar as APAC Prices in CPI and Fed's ReactionBonds have gotten slammed as yields have soared, smashing through several levels below when we've reported last, as the APAC session prices in CPI data from Friday. We smashed expectations for inflation and investors are rushing to price in the Fed's reaction. Barclays thinks that they will raise rates by 75 bps in order to counter these soaring numbers. We sliced through the 117's with ease and are finally finding support at the base of the 116 handle. We have projected another level of support at 115'29 using inverse Fibonacci extension levels since we've simply run out of support levels for the US ten year. The Kovach OBV is abysmally bearish, however we do appear to be finally leveling off a bit, so perhaps this level will hold. If not, expect resistance from 116'20.
CBOT:ZN1!Short
by quantguy
Bonds Stabilize at LowsBonds have found support just above our level at 117'19. We appear to be forming a bear wedge, but the Kovach OBV is flat, suggesting we may range at current levels. After the precipitous decline from 121'00, it is likely that we will establish value in a sideways correction or even a relief rally, before another selloff. If we break down further, then 117'08 is the next level where we should anticipate support. After that, there is a vacuum zone to 116'20. A relief rally could take us as high as 119'01.
CBOT:ZN1!
by quantguy
US10Y Aggressive correction possibleThe U.S. Government Bonds 10 YR Yield (US10Y) has been trading within a short-term Channel Down on the 1D time-frame with the 4H MA100 (red trend-line) as the Resistance and the 1D MA50 (blue trend-line) as the Support. This is turning into a tight squeeze and whatever level breaks first, should give us the direction on the longer term. A break below the 1D MA50 can see the price correct aggressively by filling the gaps on the lower MA levels, the 1D MA100 (green trend-line) and eventually the 1D MA200 (orange trend-line). In that case the 0.618 Fibonacci retracement level would be a fair target. This resembles so far the correction of April - July 2021, which bottomed below the 1D MA200. On the other hand, I expect a bullish extension if the 3.205 High breaks towards the -0.236 Fib. -------------------------------------------------------------------------------------------------------- ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** --------------------------------------------------------------------------------------------------------
TVC:US10YShort
by TradingShot
4