Get started

Interest

US 10 year yield forecast. Heading to 0?This is an update to previous ideas charted at New Years 2019. The 10 year yield has been following the path of lower yields in a lock step fashion, however the pace of declining yields is concerning. The 3 day looks like Niagara Falls Where do we go from here? Currently, the 10 yr yield is in the middle of the 1 (1.32%) and .786 (1.734%) retrenchment lines with a biased towards heading to 1.32. Two possibilities. 1) Yield punches right through 1.32% and set set new lows. 2) More likely in my view: "China/Trade" news comes along just in time to see yields reach or even briefly penetrate 1.32%, forming a triple bottom reversal, before reversing and heading back up towards 1.73% From here, yields could see a rejection from 1.32% and begin heading back towards 1.734%. RSI is oversold, also suggesting a reversal could come soon. However, said reversal will be fleeting. Sometime by or before reaching 1.734% I would expect yields to run out of steam and resume their decline before testing 1.32% and ultimately breaking lower. There is no such this as a quadruple bottom/top so in this scenario, the yield will crash below 1.32% and 0% becomes a very real possibility in the next 12 months. How does this tie into mortgage rates? The 10 year is a good general barometer for interest rates but Mortgage Backed Securities (MBS), while improving (rates dropping) the rate of improvement has been slower than what we would expect given the halving of treasury yield in just 9 short months.
TVC:US10YShort
by jdharward
XLF is going to take a nosedive as the US turns dovishRight, a bit of a congested chart... In white, we have $XLF, purple, the US unemployment rate, orange is the European bank index and in yellow, we have the effective Fed Funds rate (US interest rate). Recent rhetoric from the Fed has been pretty dovish, and we have had a pause in hiking rates, with there likely to be absolutely no hike this year. If an economy that is apparently 'doing well' cannot afford a rate hike, is there not something seriously wrong? Let's take the European banks... Since the crisis, they've experienced negative rates whilst the US has had positive real rates... See, banks like interest rates. It allows them to make money, and allows for productive lending since there is not adverse selection when it comes to borrowers. The Fed is about to follow the ECB's lead... I think Fed member Williams said they could go to negative rates if needed... Which is crazy, since all they end up doing is creating zombie firms. So let's get this idea set... The Fed are pausing with rate hikes... They're likely to stop the balance sheet run off... And unemployment is at a record low... Every time the Fed has stopped their rate hike cycle, unemployment has increased and XLF has fallen off... Is that a decent enough thesis to get short if we start seeing unemployment data tick up? Well, we already have... we've just had the highest Q1 layoffs in the US since the financial crisis... Buckle up!
AMEX:XLFShort
by FinkPro
I will remain long here with the GBPUSD pair.Here on the GBPUSDcurrency pair i have reason to believe a long position will be very rewarding over the coming months. Based on my technical analysis price has rallied for the bears over the past 3 years and due to recent changes in the economy as well as inflation taking a toll on the DXY, the bulls have now entered the market. My technical analysis indicates that price has no returned to 23%-38% of the bearish rally and is heading to recover even more. I even have the sights of $1.40-$1.60 in mind. Brexit will also [lay a major role in the coming trend changes I have predicted for the GBPUSD. I must say this move will be exiting either way, Happy Trading , manage your risk and don't get caught on the wrong side of the board. THe URban GeNius
Long
by UrbanGeniusOfficial
NZD/EUR LongDon't often look at this pair so I could be missing some fundamentals, however, seems to be forming a bullish candlestick, awaiting daily closure to see if morning star forms. Respecting the support line we could see this pair move to the upside. Across the moving average and create a new higher high, again respecting the resistance line. Entry around 0.6052 would be ok following the daily closure, look for TP target of 0.6150. Let me know what you think! (Trading on demo at the moment.)
Long
by Pabsgainz
Gold reserves measured in years of interest on debtThis chart depicts the US gold reserves divided by the interest on debt. The interest on debt is calculated as a proxy by multiplying the 10 year interest rate with the total federal debt. Whether this is accurate or not is not so important as we just want to compare this ratio with its historic values. It is important to note that official US gold reserves have remained unchanged since the closing of the gold window in the early 70's. This metric has risen and fallen quite a bit. First this metric rose during the stagflation of the late 70's. The gold reserve of 262 million ounces hit a high of 222 billion whilst the yield did a first peak to 13.5% with the debt, barely over 900 billion our proxy interest was about 120 billion and thus the gold reserve was almost able to pay it off twice. It is my belief that the rise in gold prices and with it the value of the US gold reserves is what cooled the debt market causing it to revert course into a 4 decade long bull. Interest rates plummeted, federal debt rose faster, and gold also went down in price. At the turn of the century gold found itself trading at 290 dollar, the gold reserve reduced to 76 billion, the US debt grown to close to 6 trillion and the treasury rate reduced but at times peaking to close to 7%, the ratio hit a low of just 0.2 years of interest on debt that could be paid by the gold reserve. The next 11 years were marked with a continuing of the bond bull run whilst also gold rallied to a new all time high. By 2011 and 2012 the ratio hit close to 2 years again thanks to gold trading at 1800 and the yield as low as 1.5%. Since then, rising yields and declining gold prices have hit this ratio back to about the middle range. Technically, not much can be said where we go from here so we'll have to take a look at the fundamentals. While multiplying the 10yr with the debt is a nice workaround to picture the interest on debt by tradingview the real interest on debt is more difficult to compute. The US debt consists of bonds with various denominations running from 30 year bonds to bonds with maturities of less than 1 year. This means that of the 30 year bonds, most have been issued in the 1990's and 2000's and the interest paid on them is the yield of those bond at the time of issuing. In fact the 30 year bonds that are maturing today have been issued exactly 30 years ago with a yield of almost 9%. When they mature, they are rolled over in new bonds that -even if we had a small tick upwards in the last couple of years) - have a significantly lower interest of just over 2%. The same holds for 10 year bonds which 10 years ago had a yield of 3-4% vs 2.6% today. This effect is what caused the actual interest on debt (www.treasurydirect.gov) to not even double from 214 billion/year in 1988 to just 402 billion/year as recent as 2015 whilst the federal debt exploded over 20 fold from 900 billion to 19 trillion dollars. However, all good stories must come to an end and this one is no different. The bond market has been topping out for the better part of a decade now and yields have seen some upward momentum. This has meant that a lot of treasury auctions saw the treasury forced to roll over their 5, 3 and 1 year bonds into new bonds with a higher yield than the old one. Whilst the treasury can steer and man-oeuvre a little bit by opting to sell short term bonds when yields are high and long term bonds when yields are low there is ultimately no escape from market reality. This has become clearly evident from the last prints of interest expenses on debt outstanding that have risen with 9.1% per year for the last 3 years and show now signs of abating with another 8.6% rise for the first five months of this financial year. This is in stark contrast with the 2.36% increase of the previous 27 years. I would venture to guess that if nothing is done on a policy level to tackle the accumulating debt and rock the bond markets gently to sleep once more we will enter a spiral of increased debt issuance met with stable or declining demand which will push up yields which in turn will create the need of issuing more debt. This viscous circle will only end through a spectacular rise in the price of gold. In a previous analysis I had already outlined a possible scenario of the 10 yr yield hitting its magnet level of 7% by 2025. Given the current debt of 22 trillion, which is increasing at 1 trillion a year, it seems likely that by the start of 2025 we will be looking to a national debt in excess of 30 trillion dollar. At a ratio of 1.8 for our gold reserve to interest expense on debt ratio we learn that the US gold reserve should be valued at 3.8 trillion dollars. For this gold would need to rise to at least 14500 dollar. If for some reason the debt markets stay irrational for a very long time before going in overdrive it could very well be that the US ends up with a 50 trillion dollar debt by 2035 when this scenario fully comes to fruition. In such a scenario I see no reason to expect that the 10 yr yield would only stay limited to 7% but could easily hit the 1980 value of 13.5% again. In order to calm the debt markets at these yields and these levels of debt gold would have to rise to about 45000 dollar to repeat the 1980 scenario. Hold on, its going to be a hell of a ride.
FX:XAUUSD
by fatjohn
1
If BND Ever Does This Again, Beware29th of November, 2007 - bond market experiences a flash crash which is quickly bought up by the FED in an effort to prevent widespread debt defaults. Worked for a few months only for companies to begin defaulting anyway, probably through a series of realized margin or interest spike risks. This is what caused the financial markets to implode in 2008. Watch and study the bond market, it can tell you more about medium to long-term market direction than any other indicator.
NASDAQ:BND
by Derivati_Capital
3
Silver is a Screaming BuyAll long-looking indicators point to silver being undervalued vs gold. Top chart shows silver candlesticks vs gold red line as percentage returns since 1998. Middle indicator is the Trader's Dynamic Index (TDI) which holds a combination of moving average, volatility and momentum trends. Bottom indicator is the infamous Gold:Silver ratio. Silver is sitting on top of the .382 fib level support shown in the chart, which is where the current cost of production resides around $14.75/oz. Low risk, high reward - this is a perfect setup for those interested in making an inflation play going toward negative rates, QE4 and the end of the petrodollar. % Returns Analysis: Silver below Gold -> Silver undervalued Fibonacci Level: Strong support at cost of production near $14.75/oz TDI: Bullish divergence in formation Gold/Silver ratio: 83:1 -> Silver undervalued
TVC:SILVERLong
by Derivati_Capital
1
Precious Metals, the historical safe haven. What can be said about gold and precious metals? Gold has always started out as sound money, followed by monetary expansion, devaluation, and eventual collapse. Take the Roman Empire for example, money started as solid gold coins which eventually expanded with a mixture of base metal, than became worthless. Remember when a quarter was silver, penny was copper, and the rest was a mixture of silver, copper? Now? They are worthless base metals. This trend continued throughout history. Here we are again. This read will go through some of the current economic conditions with some commentary and suggestions. So, let's start with some recent economic news: 7 out of 9 recessions since 1950 came after rate hikes. Auto-Loan Delinquencies are higher today than the peak of 2008 recession. Corporate Debt has doubled since the 2008 recession. National, student, personal, and credit card debt is higher now than 2008. At Record Levels* Germany and Italy GDP Growth Rate is -0.2, Japan GDP Growth Rate is -0.6 New Home Sales fell 19% in 2018. Existing Home Sales have fallen. Auto-Sales are down on average 3%, up to 6% by manufacturer report. Credit Card delinquencies are up 17% since Q1 2016. Derivatives up more than $100 trillion since 2009. China posted two-consecutive contraction in manufacturing. 1 in 3 Americans have less than $5,000 saved for retirement. 69% Of Americans Have Less Than $1000 In Savings So, what's going to happen? - The ugly truth is economic and monetary pain. Global economic weakness and contraction is here. Once the markets finally react to the toxicity of the monetary system, the central banks will react like they have in the passed with slashing interest rates, debt purchasing, and bond buying programs. But this time, resulting in the weakening or even failure of a currency. Let's go back to that monetary trend. Gold, expansion, devaluation, and than collapse. It's obvious where in the trend the monetary system is. We should expect astronomical injection of liquidity, purchasing of debts, and QE.... as a start. There are a few nations which have foreseen this and have been buying gold like never before. So, if they can foresee the problem and offset their exposure to it.. why aren't you? Have you noticed that gold has made a dramatic comeback after the bear market started? Gold has broke $1300 barrier with ease, and continued upward even with the stock market gains. Regardless, the price of gold must keep up with inflation. This tells us that the smart investors are starting to pile into safe havens, regardless what the market or central banks do. The recent actions from the Fed have proven that the stock market is indeed a bubble. The 0% interest rates fueled the bubble, the interest rate hikes popped the bubble. We saw proof of this: *Dec 21st, 2015 - (Dow 17,700) - Interest hiked, Dow fell 2,060 points until the Fed calmed markets by stopping rate hikes until after elections. *Feb 2018 - Dow fell 2,244 points. *Sept-Dec 2018 - Dow fell from 26,828 to 21,792 a drop of 5,036 points. *Feb 2018 - Fed announces pause in rate hikes, Dow jumps 400-points. As you can see, the Fed and interest rates have a direct impact on the stock market. Rising interest rates have put Emerging Markets in a tough spot, as 2018 saw EM Currencies drop anywhere from 20-50%. Recession is on the horizon, even in Europe. The fear is that the ECB will be powerless to calm any financial turmoil as ECB interest rates are already negative and QE is still being implemented. In the US, the Fed will slash rates to 0% immediately, followed by QE, but, this time the dollar will take a severe hit. -------------------------------------------------------------------------------------------------- What to do from here? You see the storm far off and it's growing as well as coming towards you but where you stand, it's relatively calm. The problem is complacency in the calm or believing the storm is long away from hitting. But, storms are variable and can move any direction and gain speed. So, why not acknowledge the problem and prepare now? Now that gold is not $2,000+/oz. Why not look into gold mining stocks that are up 8-25% since November? Start putting more into precious metals and less into stocks, forex, and crypto. 15%-20% of your portfolio is not enough. Stocks, currencies, crypto can drop 90% in less than a year, but precious metals will always have value. Ask yourself how long it took for the Dow to reach 26,600 points and then ask yourself how long it took to drop 4,000 points? Take a moment to think about that. 10-years to grow to 26,000 vs 4-months to fall 5,036, where is the stability in that? This isn't a case of "eventually it will happen", it's already begun. The gains and drops are volatility that has set in. Gold Price Targets: North of $2,000 / OZ. Realistic, 3-5 Is Cryptocurrency a good investment? No. It is now commonly known as digital fools gold. Without internet, you can't access or spend it. It has no value, its another form of fiat. As long as the people believe crypto is worth something, it has "value" but based on its current price, investors and traders are realizing its true worth. Worthless. Nothing. Nada. What are some good mining stocks? BTG - WRN - ASM - AUY - GLD, most of these stocks are up anywhere from 10%-20% (1-Week to 3-Month). Compare that to stock market, which are down on average 20%. What stage are we at and when could this happen? We're Q1 of 2007, heading into Q2. Remember, Q2 is where all the trouble began when rates adjusted. -------------------------------------------------------------------------------------------------- In conclusion. The numbers are out there, you can see it all for yourself. It doesn't take an expert to see the numbers are bad and the financials are toxic. It just takes effort and interest. If we take all of our financial news from major financial news organizations (stars with C and the other with B), then we're not going to see it until after it hits. Just remember, their "experts" said there was no recession coming and this were great. A recession isn't official acknowledged until its already here. What stage are we at and when could this happen? We're Q1 of 2007, heading into Q2. Remember, Q2 is where all the trouble began.
TVC:GOLD
by WorldEconomics
How the FED Will Pump SilverHistorically, when the FED decides to raise interest rates it ends up breaking the market. This happened in 2000 and 2008 with the solution being interest rate suppression and quantitative easing. Both of these methods produce abnormal rates of inflation, leading the FED to raise interest rates in an attempt to preserve the purchasing power of the dollar - and it breaks once more. It is practically certain that going into this next recession, the FED will once more lower interest rates in an attempt to stimulate the economy. Yet each time they do this, they must start by filling the "bad debt black hole" in order to prevent a complete breakdown in confidence. The black hole grows proportionally to debt, and considering there is more debt now than there ever has been in history, the initial round of QE required this go around must be unprecedented in scale. QE and suppressed interest rates are what caused commodity prices to take off in 2009, notably gold, silver and oil. We can expect the same result this go around. Once the FED is forced to lower interest rates close to or below 0%, there will be no floor on inflation. That point in time will be the perfect setup for silver to shine. When will it happen? It could take another year or so before we see a FED response to a market suffering from debt withdrawals. SLV calls are particularly attractive in such a scenario, as they offer superior leverage for limited risk. Assuming SLV went from $15 to $60 within two years (well within reason), SLV calls offer reward:risk of up to 70:1. Best positioning may be found after a drastic FFR rate cut. Side note: Largest physical holding of silver, and manager of the SLV fund, just so happens to be JPM. JPM also *coincidentally* held the largest net short position in silver on the futures exchange not long ago (cash deliverable only).
AMEX:SLVLong
by Derivati_Capital
2