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BULLISH SETUP ON HY-IG SPREAD EMERGING. (BEARISH EQUITIES)Back in November of 2022 I wrote about using the HY-IG spread as a potential indicator of 'risk on' vs. 'risk off' sentiment and I will insert that below for readers trying to understand how this spread differential can be utilized. Subsequently I will explain what I currently see emerging on the above chart with the addition of both the RSI and correlation indicators to provide a more robust and predictive analysis than using the HY-IG options adjusted spread alone. Written November 2022 - 'When the spread between High-Yield (HY) debt and Investment Grade (IG) debt contracts or expands, this can be perceived as the market demanding more or less compensation for the risk it perceives to be present in owning the HY debt against the IG corporate debt. (HY-IG) = Risk On/Risk Off market sentiment. Generally speaking HY debt a.k.a. Junk Debt, is considered more risky than IG debt. Because of this increased risk, the market demands a higher yield for taking on HY debt, also known as a ‘risk premium’ or ‘premium’ over the alternative investment opportunities the market provides. This yield premium on HY/JunkBonds can be viewed as ‘extra incentive’ for bids to take on the ‘riskier debt’. When this spread (white) contracts, we can see that the market (yellow) has a tendency to go up (risk on) and when the spread (white) expands we can see the market (white) has a tendency to go down (risk off). This is only one of many indicators I use to gauge ‘market risk sentiment’ and I thought I would share it.' (I have included the link to this piece for reference at the bottom of the page and please excuse the extra charting as I was new to the platform at the time and included the second chart and indicators, but the words remain the same.) Now that the fundamental use case of the HY-IG spread is explained we can dive in to the current situation. As we can see the HY-IG spread called the late October2023 bottom in the AMEX:SPY (orange), as the spread peaked, the broader equity markets found their bottom. This is not always as direct and their is often a bit of a latency where equities will begin to trend upward before the spread peaks due to the forward looking nature of equity markets, however in October of 2023 the spread nailed the bottom. As of today, February 27th, 2024, the HY-IG spread has made a 'lower low' down to 2.27 which gives us a bullish price to RSI divergence on the HY-IG options adjusted spread. The HY-IG spread has made a 'lower low' while the RSI is still printing 'higher lows'. In this particular instance, a bullish divergence on the HY-IG spread could signal a bearish sentiment for broader equity markets ( AMEX:SPY ) at some point over the next 4 to 6 weeks which is the normal time latency between a peak or trough in the options adjusted spread and the time it takes to show up in the price action of equity markets. This divergence theory would be invalidated with an RSI reading below 25 by the HY-IG spread. A reading below 25 would make a lower low on the RSI and would invalidate any divergence. Finally we can look at the correlation (bottom indicator) and see that HY-IG is inversely correlated to the broader equity markets as represented by AMEX:SPY at (-0.92) over the last twenty trading days and has maintained a relatively consistent and significant inverse correlation to AMEX:SPY over the majority of the last year. While I did not include the tech laden NASDAQ:QQQ on the chart, the inverse correlation is still very significant at (-0.87) at the time I am writing this article. This assumes 'corollary significance' is achieved at a greater than or equal to (0.62) level. Given the further contraction in the options adjusted spread down to the 2.27 level, its possible we have a bit more upside room to run in equities, however, assuming the RSI divergence holds with 'higher lows', it's unlikely that we don't see a move to the upside in the HY-IG spread over the next 4 to 6 weeks, which is generally a bearish signal for equities markets. I hope you enjoyed this piece and I welcome any feedback or suggestions you might have so that I might improve further articles. Thank you for reading and happy trading!
FRED:BAMLH0A0HYM2Long
by The_Firewalker
1
Interest rates are moving againWhat is moving this week? Our weekly eyeball into the different markets. Interest rates likely to be breaking its all time high again, get ready for another volatile month ahead. Difference between yield and interest rate: Borrowers take reference from interest rates and lenders take reference on the yield. Interest rates and yield moves in tandem. Minimum price fluctuation: 0.001 Index points (1/10th basis point per annum) = $1.00 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CBOT_MINI:10Y1!Long
by konhow
Gauging Market Sentiment on Risk Using the IG/HY SpreadWhen the spread between High-Yield (HY) debt and Investment Grade (IG) debt contracts or expands, this can be perceived as the market demanding more or less compensation for the risk it perceives to be present in owning the HY debt against the IG corporate debt. (HY-IG) = Risk On/Risk Off market sentiment. Generally speaking HY debt a.k.a. Junk Debt, is considered more risky than IG debt. Because of this increased risk, the market demands a higher yield for taking on HY debt, also known as a ‘risk premium’ or ‘premium’ over the alternative investment opportunities the market provides. This yield premium on HY/JunkBonds can be viewed as ‘extra incentive’ for bids to take on the ‘riskier debt’. When this spread (white) contracts, we can see that the market (yellow) has a tendency to go up (risk on) and when the spread (white) expands we can see the market (white) has a tendency to go down (risk off). This is only one of many indicators I use to gauge ‘market risk sentiment’ and I thought I would share it. (Not financial advice.)
Editors' picks
FRED:BAMLH0A0HYM2Education
by The_Firewalker
12
Why Corporate Bonds are not a good option for Retail InvestorsCorporate bonds or tradeable debt instruments issued by corporations are a type of fixed income security. Given the recent media attention and the rising demand for fixed income investments among retail investors, it may come as a surprise that they are not suitable for all investors. Corporate bonds have different risks associated with them than other fixed income investments like savings accounts, money market funds, and even municipal bonds. If you are considering investing in corporate bonds or are already holding some in your portfolio, here is why you should avoid them as a retail investor What is a Corporate Bond? A corporate bond is a debt instrument issued by a corporation to raise money. Corporate bonds typically have a set maturity date after which the outstanding principal will be repaid. There are many kinds of corporate bonds, including investment grade and high yield, government and non-government, and they can be issued in local or foreign currencies. Corporate bonds are often traded on the secondary market, which means they are liquid and can be bought and sold easily. Investors earn a return on corporate bonds by receiving interest payments and by the increase in the bond’s value as it matures. The interest rate on a corporate bond is based on factors like the company’s credit rating, the length of time the bond is outstanding, and the bond yield in the market at that time. Corporate bonds are typically less liquid than stocks, and may have shorter holding periods, especially if you purchase them on the secondary market. Risks of investing in Corporate Bonds Corporate bonds are considered a form of debt financing, and as such, there are risks associated with holding them. The main ones are default, liquidity, and interest rate risk. - Default risk - Investing in corporate bonds entails the risk that the issuing company will default on the payment of interest or the repayment of principal. However, since corporate bonds are issued by companies in different industries, there is a low probability that they will all default at the same time. - Liquidity risk - The risk that you will not be able to sell the investment in a timely fashion at a price that is attractive to you. - Interest rate risk - The risk that if you hold the investment until maturity, you will earn a lower rate of return because interest rates will have risen in the meantime. Why you should avoid Corporate Bonds as a Retail Investor While corporate bonds may be suitable for institutional investors, they are not a good option for the average retail investor. For one, you will have to educate yourself on the various types of corporate bonds, their risks and returns, and what kind of companies you should be investing in. Even if you are successful at taking this on, you are likely to end up with a very concentrated portfolio, which brings us to the next problem. The other issue is that retail investors typically hold a small number of bonds and these bonds are often concentrated in a few issuers. This is not a good strategy because if a company defaults, you could lose a large portion of your capital. This is clearly a bad strategy. So, How about Investment grade debt ETFs? LQD, In a rising interest-rate scenario. The bonds' tenure is clearly working against them, especially since unemployment continues to fall at an astonishing rate. This is not the time to invest in this ETF if the Fed raises interest rates to combat inflation. In order to completely comprehend this analysis we must know how important the duration is, while investing in bonds. Duration is an important topic. It is the bond's effective maturity, which means it is oriented to something lesser than the time of the bond's final payment since part of the bond's value, generally from coupons, happens earlier in the bond's existence. If a bond has a longer effective maturity at a fixed interest rate, it indicates that investors are tied to an interest rate that was once market for a longer period of time, and if rates increase as they are currently, you will be bound to an uneconomical rate for a longer period of time. Simply put, longer term bonds lose value more severely when interest rates increase. How maturity of a these bonds (Duration) is affecting LQD Unemployment has gone down despite the increased rates, which has surprised many analysts. The Phillips Curve is back in force, where low unemployment yields high inflation if inflation is kept down, and contrary to common perception, Consumer spending has declined, but unemployment is so low that it might rise again unless the Federal Reserve, which is committed to lowering inflation, continues its anti-inflation campaign. The Federal Reserve has raised rates as well as given gloomy recession predictions, and more banks are following its lead, including the Bank of England. LQD, which has dropped 14% this year, have long-duration bonds, majority of fixed-rate, which is concering for this ETF. Credit Spread Global Cooperate Bonds in general Corporate bonds continuing their strong performance in July, producing $80 million (+76% year on year).  July was the most profitable month of the year for CBs . Their  revenues in 2022 have exceeded from 2021 ($512 million). Average balances increased by 9.8% year on year, average costs increased by 59% year on year, and usage have increased by 27% year on year. Spreads on non-investment grade and high yield bonds continue to widen as corporate prospects deteriorate owing to weakening consumer demand and stricter financial conditions. In-turns , asset values fall, yields rises, and borrower demand increases. However, CG Debt funds have seen the highest monthly outflows in May and June (-$73.7 billion) In July, High Yield Bonds enjoyed the relieve rally. Interest rates vs Corporate Bonds comparison Alternatives to Corporate Bonds for retail investors For retail investors, the most advisable option is to go with government bonds. Government bonds have historically offered a lower risk profile compared to corporate bonds. The best way to go about investing in government bonds is to go for a diversified bond fund. Using a bond fund reduces the risk associated with investing in bonds further as the fund manager may hold a large number of different bonds. If you are looking at a short-term investment horizon (less than 10 years), then you could also opt for short-term government bonds. If you have a long-term horizon, then you could consider a long-term government bond fund. Savings accounts, money market funds, and short-term government bonds are very liquid forms of low risk investment options. Conclusion It is important to understand that the corporate bond market is not risk-free. When interest rates are rising, corporate bonds are generally falling in price as they are competing against government bonds with lower interest rates. In times of economic uncertainty or when interest rates are rising, the risk of default is generally higher for companies issuing corporate bonds. Thus, it is advisable to invest in corporate bonds only when the economy is growing steadily. For retail investors, the best options are to go with government bonds or short-term government bonds. These are low risk, liquid investments and will help you achieve your financial goals.
Editors' picks
AMEX:LQDEducation
by EQTSHARES
12
TSX and CA10Y-2Y CorrelationThis chart is crude and only correlates most of the time, but it does stand to reason based on the macro outlook we are staring down the barrel of a sizeable market crash. Now the 3 lines were 2 years after the red circles. That means the bottom is likely at the end of 2023 to 2024. The best way to play this is cash, but deflationary bets might also work. Use long-dated puts if you are a gambling addict and size them small. Bear markets aren't forgiving to anyone.
TVC:CA10YShort
by rwoods187
In depth analysis of bond yields & the USD! Macro series pt2Part 2 This is the second part of the macro analysis series. In this part we'll focus on analyzing the current situation around the US bond market and the US dollar, while trying to map out the future depending on how the Fed and the economy move. You can find the rest of the analysis on the links down below. After going in depth about interest rates, the USD, the Fed and the economy, it is time to accompany everything with some charts. In the first chart we have the 2year yields of US government bonds which have been in a downtrend for more than 30 years. Based on technical analysis there is resistance for yields at the 1.3-1.5% zone, as well as 2-2.5%. The fact that we are so close to the first resistance is matching well with the fact that after the first rate hike the Fed might not raise rates again, and rates might actually start falling again. Even if that’s not the case, if the Fed tries to push the narrative that it will raise rates even more, we could see the 2y bond yield go up to 2% and stop there, by respecting the long-term downtrend. That also goes well with the fact that inflation could be potentially coming down and even be below 2% by the end of 2022 or with the fact that at that point markets might start to collapse, forcing the Fed to lower rates again. In the second chart we have the 10year yields of US government bonds, and the downtrend in this one is much cleaner. This one is very close to major resistance already, yet it could climb up to 3-3.5% before it tops. Breaking above the resistance channel doesn’t mean the downtrend is broken until we get a close above 3.5%. It is key to note that both charts are showing major signs of long-term bottoms, which could last for years but until we see these trends break it is early to confirm a reversal. For example, the 10y reclaimed its 2012-2019 lows and is showing some strength, while the 2y has had a perfect round bottom and is currently going up strong. The truth is that their bottoms in March 2020 really look like a proper capitulation bottom, ones that could signal the end of a major downtrend. By looking at the actual price of long-term bonds ($TLT, $UB etc), we can see that they had a proper blow off top. Before we get into our views on bonds though, something we need to clarify for those that don’t know much about bonds, is that bond yields are inversely correlated with the price of bonds, which means that when yields go up, bonds go down and when yields go down, bonds go up. Therefore, the blow off top in bonds could be a major signal that bonds have bottomed for good (yields could be headed higher). To an extend the current drop in bonds could be attributed to the fact that the same way the pendulum swung too much on one side and it is now swinging on the other. This is a pretty reasonable assumption as the bond bull market has been raging for years and in Feb-Mar 2020 it got extremely overbought. Hence shaking out traders who believed and still believe that yields would turn negative soon might have to suffer for a few more months or years before they see their ideas play out, if they ever do. Having said all that is we need to remember that the blow off top was accompanied by some fairly strong actions by the US government and the Fed, in order to save the bond market and the economy, both of which were under immense stress and almost collapsed. Nearly 2 years later and all the support is being withdrawn as the government has cut down its spending, the Fed will raise rates and shrink its balance sheet, and the pandemic seems to be over as Covid has become endemic. These are having notable effects on markets as the 2y yield has been rising faster relative to the 10y and they are now only 60 basis points apart, while in March they were 160 basis points apart. That means that the yield curve has been inverting, which is a major signal that future growth expectations are muted, yet another sign that the Fed might now be able to raise rates much. Essentially the bond market is telling us that there could be some short-term inflationary pressure and growth, but in the long run we won’t have much growth or inflation. Finally, the last key observation is around the Fed doing Quantitative Tightening (QT = shrinking of the balance sheet), which empirically tends to depress long term yields. Usually when the Fed buys bonds, yields go up (when in theory they should go down) and when the Fed sells bonds, yields go down (when in theory they should go up). The reason behind this is that when the Fed buys it creates a risk on environment, so the banks that sold them their bonds go buy other riskier stuff, and when the Fed sells it creates a risk off environment, so the banks that buy the bonds want more bonds. To sum it all up again and put it in a tradeable idea, we could see yields trade higher and higher, and actually peak in March around the time the Fed plans to stop purchasing bonds, a clear buy the rumor sell the news idea. Next chart is the USD Index, or else known as the DXY. I’d like to start by saying that although this isn’t the best way to measure the performance of the USD relative to other currencies, it is the most commonly used one. Just a few days ago the DXY had a major breakout with a lot of strength and it could go higher, despite the fact that we didn’t get immediate continuation. Since 2015 the DXY has essentially been going sideways, and has formed a pattern that looks pretty similar to 2008-2015 period, something someone could call accumulation or in this case re-accumulation. In our opinion the probabilities of the DXY getting to 112-120 first are slightly higher than getting to 80-84, as the short term and long-term trends are bullish, while the medium-term trend is neutral. Of course, it wouldn’t be surprising if it gets to 80-84 to bottom and then go to 112-120 if things get very volatile with Central banks and especially the Fed taking a lot of actions. In case it goes above 105, then the Fed, the US government and other Central banks will seriously have to think of a way to devalue the USD or there is a risk the global economy will face extreme problems. Despite the fact that these problems could be somewhat preventable, taking any sort of action now will probably have a huge political cost. Everyone wants a weaker dollar as most people owe dollars, not own them. The world is short on dollars, banks in and out of the US aren’t really creating many new dollars, the Fed isn’t creating dollars and yet more and more people rely on the dollar as a store of value or as a medium of exchange. Eventually the world needs to get off the ‘dollar standard’, though this is more likely to happen when push comes to shove. Governments and Central banks will eventually find a way to devalue to the dollar and transition to a new system, but they aren’t ready yet and this is more likely to happen after we get another major financial crisis.
TVC:US02Y
by BitcoinMacro
The start of a long train wreakSo in conclusion, with the merals issue, supply issue, housing issue, inflation issue, investors heads in the sand issue, tech issue, incompetent leaders (all of them) issue and FED issue. This chart being a fraction of a fraction of a percent from inversion in 10-7 and already inverted in 30-20 makes more sense then the random PPT rally an hour before close today. The trajectory in my honest opinion is downward for markets and the economy and inversions in the bond market. It appears the bonds are signaling a new black swan, this we will have to wait and see (reference .com, 08, 2014 and the pandemic for more) There will always be gains and plenty of ways of making money during this downturn, always is. Nothing goes straight up or down without the inverse being true too. I am calling for a missive recession, tho this is just my opinion. Let me know what you think? Can the FED save the day? Do you see a recession? I want to hear your thoughts below.
TVC:US30Y
by Joshuakm
The start of a long trainNote: FEEVRWS is only meant to be a analysis and early warning system, and is in no way a substitute for your regular work. Please do your own due diligence and if needed, consult a trusted professional. Today we will be looking at economic correlations and why bonds are moving the way they are. As of right now the 10y and 7y are a quarter of a quarter of a quarter of a percent away from inverting and a inversion percent in the 30y to 20y is as much currently. 30y to 20y is already inverted. There are MANY reasons why and this is not so simple. Bonds are selling off across the board with only the 1mo remaining the same. Tho today seems to be about flat, the trend continues. Housing, rate hikes, savings, inflation, liquidity, fomo speculation and foriagn investments are all tied to this and as a result the analysis will continue with other charts produced today
TVC:US30Y
by Joshuakm
Another monumental momentNote: FEEVRWS is only meant to be a analysis and early warning system, and is in no way a substitute for your regular work. Please do your own due diligence and if needed, consult a trusted professional. Before I get into this I urge everyone who sees this chart to back track to the .com bubble on this chart, then move up to 08, then check out pre lock downs. With that out of the way, lets get into the FEEVR Analysis! As mentioned above you should look at the historical data provided on this bonds chart. Today and over the weekend we saw the 30yr-20yr invert. This is bad for a number of reasons but mostly having to do with debt and inflation. as stated previously, the inversion marks the start of what can only be assumed as a flee from 'safe haven assets'. This is bad because bonds as a percent, tightening, has historically preluded some of the biggest economic and market wide black swans. Looking at the bond market it is repeating this trend and only seems to be starting which would make me assume through an educated guess that we are about 1 1/2 to 2yrs out from another major black swan, market altering event. Please, please, please be careful. We can time this and there is sure to be lots of money made during this time, just DONT be the last one to the exit. I am currently working on a analysis on the Comms sector of the S&P. That will be out tomorrow. Ic alle dit, telecommunications is rocking and internet is failing. I have identified manipulation in this sector on RRG and now I am just trying to nail it down on the charts here for you all to see. Happy monday everyone!
TVC:US30Y
by Joshuakm
Simple Credit Indicator to Watch Out for Equity InvestorThere is a classic saying that credit markets tend to lead equity markets. The rationale is that credit investors are solely more concerned about downside risk (as they worry whether coupons will be paid and whether they will get their principal back at maturity) and measure risks and determine spreads - over the risk free/benchmark rate - by factoring in the probability of default into the spreads amongst other factors. While equity investors, given their ability to participate on the upside as opposed to debt/credit investor, tend to be more forward looking with an optimistic bias (glass half full attitude). Hence, credit tends to turn first when risk is slowly bubbling in the cauldron. That's what I've been told anyway. Without further ado, if you refer to the chart published, you will be able to see how credit has played out during the past few crisis. Data used are S&P500 and ICE BofA US High Yield Index Option-Adjusted Spread (inverted)
TVC:SPX
by RinjaniCapital
2
Bonds and the vitality of the market and overarching economy.In this chart, I find it important to (as an economist) monitor treasuries and bonds, luckily Tradingview has us covered there. The next few charts will be some economic correlations so we can better understand the economy before I get into the meat and potatoes of this system . As you can see, bonds and treasuries are dropping which indicates selling. Big name bond investors are spooked, and looking at it from this perspective I can see why. Take a second to think back to the start of 2020 and the 'thing that wont be named'. Think of ALL the BS that has happened in this timeframe, If I had big money in bonds right now, I would be spooked myself. I will be getting into detail in a later economic chart about just some of the crap that must be on big investors minds.
FRED:DGS30
by Joshuakm
WILL YIELDS DROP? CRAZY MOVES!Hey tradomaniacs, The market is seriously playing games here! 🙈 The blast of yields can not be sustainable as this is going to be a be a thorn in Powells flesh. Why is that? Basically because rising yields will "raise the price of" debts! First of all, this is a BET against the FED and looks like TEST. As often explained, YIELDS are currently rising due to the inflation-worries. BUT here is the thing: In his last testimonial Jerome Powell said the FED is not even close to its inflation-goal of 2%❗️ So you may ask yourself, when will the YIELDS stop rising? Well there are two options: 1️⃣ Yield-Curve-Controle with Bond-Buying-Purchases 2️⃣ To back down and change the current policy Yield-Curve-Controle of long-term-yields would be an option but probably not a solution as the FED would PRINT money in order to buy bonds 👉 More inflation 👉 More worries! Will 10-Year-Yields reject off the resistance and correct? We have to keep in mind that gamblers can bet on rising yields, which will likely take some of their profits. This could cause a retracement, but fundamentally I can`t really say whether the yields will continue to rise or not. One thing is for sure: Rising yields are showing cashflow out of equities into bonds and put stocks under pressure, especially NASDAQ100 and tec-stocks. If equities fall due to rising yields then US-DOLLAR will have a lot of support to change its trend❗️ Today we have got very nice pullbacks for almost all pairs! If we see profit-saves in YIELDS, in other words a correction, then we might see again soem risk-on and great opportunities to follow the trends! Very interesting, but also a very tricky situation for Forex-traders.🙏
TVC:US05
by Trading2ez
4
The correlation: Bond yields indicate SPX CORRECTIONUS treasury yields and the S&P 500 have a positive correlation. The two usually move lockstep to a certain degree and when they diverge, they don't stay divergent for too long. This time, however, at the beginning of 2019, the divergence occurred and has continued for nearly 12 months now. The idea behind the correlation is that bond prices are typically inverse to the equity prices, due to the yield of bonds being related to the SPX. From darkest blue to lightest: 30-year yield, 10-year, 5-year. The area at which the divergence began, the S&P 500 gained over 25% while bonds fell about 35%. This leaves us with three alternatives. 1. The S&P 500 corrects 50% to catch down with the bond yields (least likely) 2. Bond Yields for the 30, 10 & 5Year all rally 50% (not likely) 3. The two meet somewhere in the middle. Meaning bond yields rally 15-25% or so, while the S&P 500 drops 10-15%. (a most likely scenario)
SP:SPXEducation
by TRADEPROAcademy
3
TLT weakness & bond weakness, TLT down to $132TLT is a 20+ year bond ETF that made strong highs throughout the rate-cutting cycle and rightfully so. The inversion of bonds vs the equity market has caused bond yields to drop and because of that since the price of bonds is directly inversely correlated to their yields, prices in TLT and other bonds have been increasing. The low rates have come to a halt as the rate-cutting cycle has stopped, or so we think it has. TLT has since then entered a downtrend in a channel and looks to be continuing in that respect. Bond yields are so low, that the convergence with the SPX is imminent, we've seen a slow increase in yields which will further push the price of TLT down. Another factor is that the equity market is continuously showing strength and looks to be on the rise for the next few months based on FED policy to pump more money into the economy. The volume on TLTto the upside has decreased as well and every swing lower is accompanied by strong volume. Disclaimer: This idea is for educational purposes only, this does not constitute investment advice. TRADEPRO Academy is not liable for any market activity based on this idea.
NASDAQ:TLTShort
by TRADEPROAcademy
The Bond Market - Historical Levels We are currently witnessing levels is the Bond Market that have never been seen before. Again today, the US02Y-US10Y have inverted multiple times. The US01M-US03Y have now also inverted. We currently live in a time where debt is out of control and unfortunately there is no end in sight. History shows, within 6-18 months after a US02Y-US10Y inversion, the US economy falls into a recession. The question now becomes, does history repeat itself once again? We all know that the US Stock Market has been on what many would call a parabolic uptrend. Is the US Stock Market at fair value? Or does it at some point return to fair value? That remains to be unknown at this time as all we can do is allow the future to play out. I've currently been working on a script (Pictured Above), that helps me visualize the Bond Market and Yield Curve in a different way. The moves again today have been very interesting. Best wishes, OpptionsOnly
CME_MINI:ES1!
by UnknownUnicorn5129145
S&P 500, Yeild Curve, Recessions, and BitcoinThe chart below shows the yield spread between the 10yr and 3mo and 10yr and 2yr. When the spread is below 0 (colored in red), the yield curve is inverted. This has been an indicator for coming recessions. The red areas on the SPX are the recession periods. As you can see we saw an inversion last month (march). The next recession is just around the corner and this one is going to be big. With the Fed experimenting with interesting rates and propping the stock market up, and tech stocks, FANG, and the Get Big Fast strategies startups are using, the market is extremely overvalued. I think with the awareness of bitcoin now and the upcoming halving, money could pour into cryptos when stocks start to fall. The confluence of all this makes me think bitcoin will moon. The timing of the halving with a possible market crash is amazing to me. I feel excited for cryptos. I want to buy gold and bonds, safe places for my money, but the prospect of HUGE gains from the crypto market is to enticing. Either bitcoin goes to zero and I lose all my money (all the money I can afford to lose, not my savings or monthly spending) or I become much richer than my parents. Lol. Let me know what your take is on all this!
SP:SPX
by AnotherAnalyst
7