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Rising Inflation Expectations: TIP vs. IEFIntroduction: With the election concluded, market focus has shifted to bond markets, where recent developments hint at rising inflation expectations. Despite President Trump's campaign emphasis on price control, indicators suggest a shift toward higher inflation. A key metric to monitor is the ratio between Treasury Inflation-Protected Securities AMEX:TIP and 7-10 Year Treasuries $IEF. When (TIP) outperforms NASDAQ:IEF , it signals increasing inflation expectations; conversely, when IEF outperforms, it suggests a decline in inflation expectations. Analysis: Inflation Expectations: The TIP-to-IEF ratio is a reliable gauge of the market's inflation outlook. A rising ratio indicates growing inflation concerns, as investors favor TIPs for their inflation protection over traditional Treasuries. Technical Pattern: Currently, the TIP-to-IEF ratio is breaking out of a descending triangle formation, a continuation pattern that signals the potential for higher inflation expectations. This breakout aligns with a recent surge in interest rates, reflecting heightened inflation concerns in the bond market. Market Implications: This breakout could be the early stage of a sustained trend toward higher inflation, raising questions about whether the recent interest rate surge is a temporary fluctuation or the beginning of a longer-term shift. Conclusion: The bond market is sending signals of rising inflation expectations, as indicated by the breakout in the TIP-to-IEF ratio. This could mark the start of a new phase in the inflation cycle, with potential implications for interest rates and broader market sentiment. Traders should closely monitor this ratio to assess the longevity of the current trend. Do you think inflation expectations are set to rise further? Share your thoughts below! Charts: (Include relevant charts showing the TIP-to-IEF ratio, the descending triangle formation, and breakout targets) Tags: #Inflation #Bonds #Treasuries #TIP #IEF #InterestRates #TechnicalAnalysis
AMEX:TIP
by Richtv_official
Yields are Yelling: Recession is comingIt looks like we are turning over. Coupled with gigantic short positioning of speculators on bonds (highest in history bsed on the COT Data), the chart indicates that yields will fall again. Why would they fall? Because of a flight to saftey and/or a recession. I am keeping it very simple, I just buy Bonds via ETF. I am long TLT, IEF and SHY. With that trade, I am also long USD, since my native currency is EUR. If we have a weekly close above 3,5% on the US10Y, I will exit my positions. It might also be lucrative to go short stocks now, but I wont do that too much. This might be a great trade, but I am viewing it as a set up for an even better one. We might get a great opportunity to buy stocks soon.
TVC:US10YShort
by Cyranus
2
Short $IEF at $101?I think a lot of people are thinking that yields will head lower from here, just like they have previously, but I think that bonds will follow the trend that they did last year (which is down), rather than move higher going forward. If you look at the chart, we're in a bearish trend. We're currently below the key support of $101.58. What looks most likely to me is that we move up to retest that support as resistance, and if we can't break above it, then the most likely path is further down. If you look at the chart we have a long way lower to go. I think we're in a new trading environment. We have ended the 40 year trend of the long bond and now we're going to reverse the other direction for a sustained trend.
NASDAQ:IEFShort
by benjihyam
The Pure Short Interest Rate Play: /GEThe long interest rate play may have been one of the most productive plays of, oh, the last five years or so (maybe more) with shorts in (pick your poison) SHY (1-3 year maturity paper), IEF (7-10), TLT (20+), EMB (emerging market), HYG (junk) being the rage, particularly with the Fed giving the market a fairly good idea of the when. Unfortunately, the point at which the Fed starts considering easing is -- at least at this point -- more fuzzy both in terms of timing and the terminal rate at which we end similarly covered in fur. That being said, it's good to be prepared and to look at the who's, what's, when's, and where's of where you might take the purest form of a bet that rates ease from that point forward and that (at least in my little noggin) is with /GE. Pictured here is /GE, where you can see how fabulous the short was from basically ZIRP to where we are today, with the box wrapped around a potential terminal rate of between 5.25% and 5.75%. My basic notion here is to long /GE in some fashion in this area or ultimately where the terminal rate ends up, particularly when the Fed gives us some sense of the "when" of a potential cut. Chairman Powell has indicated a lack of likelihood for a 2023 cut with the CME Fed Watch Tool reflecting that to some minor extent,* but -- as we've seen repeatedly -- the landscape (inflation, unemployment, yada yada) can change, so the terminal rate may end up slightly (or not so slightly) different from current expectations of 500-550 bps and the timing of any eventual cuts slightly (or not so slightly) different from the markets thoughts on the matter. * -- Currently, the Tool indicates that the market is leaning (but somewhat equivocally) toward a small potential cut in June, but is looking more toward the end of the year toward potential cuts at the moment (i.e., at the November and December meetings) which are similarly equivocal.
GLong
by NaughtyPines
IEF ShortTo begin, I am not a Seasoned Trader; I use this blog for: 1. Record keeping; & 2. Formalizing my thoughts a. If I can't explain simply here, I shldn't engage To begin, my Rules of Engagement ( RoE ) to identify an upside of +3 to 1 Risk to Reward ( “R/R” ); in this case it may yield a 3.1- 3.94 R/R. • Asset | IEF ( iShares 7-20 Year US Gov’t Bond ) • Type | Equity o Alt. Type 1 | Option • Position | Short • Entry | $ 100.46 • Stop Loss ( SL ) | $ 102.05 • Bring SL to Zero | n/a • Target | $ 94.19(-) • Exp. Time Horizon | ~ x2 FED meetings so Mar-end • Allocation | 5.00% • R/R | 3.1- 3.94(+) To begin, I will highlight the reasons why I am apprehensive about the trade ( the Con’s ) & finish up with the reasons why I’m interested in the position ( the Pro’s ). The issues / thoughts that make me uneasy ( the Con’s ) are: • I structured it to allow for further moderate appreciation o I “may” miss hitting the top but I have 1.5 wk’s for that too play out Now, the reasons I am interested in this position ( the Pro’s ): • In my blog, you can see the appendix whereby the 10Y can hover lower than the Fed Funds Rate (Upper) by 100 bps before it turns; we are there now • The FED is either going to raise (25 – 50 bps) or stay fixed in 1.5 wk’s o I believe they will raise; thus pushing the market down • Although the date range for the 10Yr Yield goes further, I am playing with the IEF (ETF) so only goes back to July 2002. Nevertheless, that posts a 1.95 standard deviated move which I’ll see as ~2 if it hits my entry & thus happy with that To summarize, the Tea Leaves & history is telling me to short albeit I may miss it. Financial Disclaimer | To reiterate, I’m not a Financial Advisor. If you engage based on the contents herein, you will lose money. If you interpret that mean by doing the opposite you will make money, that’s incorrect; you will also lose money. Thanks for your time; I hope you have a lovely day.
NASDAQ:IEFShort
by izogawa_trading
1
2's 10's INVERSION - THE TRUTH😲 2's 10's INVERSIO N😲 A journalist's favourite recession indicator, the “2’s 10’s curve” inverted earlier this month… As the story goes, 𝙩𝙝𝙞𝙨 𝙡𝙚𝙖𝙙𝙨 𝙩𝙤 𝙖 𝙧𝙚𝙘𝙚𝙨𝙨𝙞𝙤𝙣 within 12-24months 😲 👉 But this time… it’s different 😅 Here’s the chart -> (FRED-FRED:T10Y2Y) To clarify, I’m not saying there won’t be a recession, or NSDQ100 crash, in fact it’s a real possibility. But the 2’s 10’s chart is not a good indicator to rely on. WHAT IS THE YEILD CURVE ⤴ The yield curve is just a curve plotted on a graph of the interest paid on debt. The X-axis being the duration of the debt (e.g. a 2yr loan and 3yr loan etc.) and the Y-axis being the interest (e.g. 1%, 2%, 3% etc.). 2️⃣ - 2’s is shorthand for the 2 year US Treasury Note (a 2 year loan to the US gov.) 🔟 - 10’s is shorthand for the 10 year US Treasury Note. 🤔 HOW STRANGE It’s an odd phenomenon that a shorter term loan could pay higher interest than a longer term loan - because why would someone want to lend money for a longer time at a lower interest rate 🤷 But this - otherwise accurate signal for a recession - is no longer credible as a market indicator. Currently the yield curve is (heavily) distorted, with central banks around the world purchasing their own bonds (treasury notes). On top of that the FED has clearly stated they expect the funding rate to get to about 3% in 2023 - but expects a long term rate of 2.5%. So the FED is indicating intentional inversion. It’s possible the yield curve could continue flattening or inverting, further fuelling these “recession imminent” articles. It's good to remember a small inversion is not a concern in this case. There are clear signals of what will trigger a recession, I'll cover those in a future post. (remember to add me to a Watchlist to be notified) HOW COULD YOU TRADE THIS You could short the SHY and go long IEF or TLT to take advantage of the curve normalising over time. In fact, from here, the IEF looks good even without the $SHY short position (saving fees and keeping capital free)
FRED:T10Y2YLong
by woozy-laser
1
Bullish Bonds: Technicals vs. NoiseContrarian bet against the onslaught of bond bears. RH Technicals vs. WallStreet - Clean, MACD Bullish Divergence - Descending Triangle, Completed E-wave signals new trend. - 61.8% Fibonacci Retracement hit; Also referred to as the Golden Retracement . It is, after all, based on the Golden Ratio. - And potentially a False Breakdown, likely to mirror the False Breakout of the B wave in the E wave. Implications for the S&P go without saying. Best, RH
CBOT:ZB1!Long
by RHTrading
Yields and Bonds - Where are real interest rates going?3/3/20. Weekly Charts of TLT (20 yr bond ETF) vs TNX (10 Yr Treasury yield) compared. In order to crush high inflation, They raised interest % in late 70's - early 80's. As a result, the rate peaked in 1981 and 10 Yr Yield was near 16% and mortgage rate was 17-18%. People were getting 9% interest on simple CD from the banks. Today, 3/3/20, The 10 Yr yield briefly nose dived below 1% but then came right back up. Bond funds like TLT has been great investment so far but to think the ride is going to last much longer is not practical. Some people talk of negative yields and I always try to remind myself that I must assess Risk vs Reward, not what people say, and I also know that I live in a reality, not a fairy land. Creditors are going to want more return on their money soon or later.
NASDAQ:TLTEducation
by Successful_Inv_Strategies
2