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100 Years of 100% ProbabilityThis Chart shows the normalized Bollinger Band Width for the US Ten Year Treasury Bond Yield. Basis = 10 Year SMA Upper and Lower Bollinger Bands = 3.0 Standard Deviations from Basis Normalized BB Width = (Upper - Lower) / Basis For the last century, 100% of the time that US Ten Year Yields extended 3 Standard Deviations above their 10 Year SMA while their normalized Bollinger Band width reached this 100 year long trend, rates experienced a sharp and meaningful correction. *** During World War II, width reached the trend line but rates remained at the 10 year average and did not extend 3 Standard Deviations above it.
TVC:US10YShort
by MarkLefevre
SP500 - #SPX melt up targets for cup and handle pattern.BLUE SKIES Would you have believed it If you were told a year ago. When every expert was predicting a recession. (which will come of course but when no one is expecting it ) So the conditions are set for a melt up I believe #Bitcoin bottoms very shortly maybe this week or next (grab some bitcoin miners!) ENJOY THE NEXT few months! #CNBC will trumpeting SOFT LANDING Investors will believe interest rates are falling because of low #Inflation Which is when the next slowdown will hit. This cycle has been crazy and hard to follow the main trend. The stimulus was unprecedented Remember this cycle started in 2009... 15 years ago We are near the end! But first SPX to smash 5000 and than potentially we hit that 6000 number
CME_MINI:ES1!Long
by BallaJi
2
Could South Korea's Currency Crisis Signal a New Economic ParadiIn a dramatic turn of events that echoes the turbulence of 2009, the South Korean won has plummeted to historic lows, breaching the critical KRW1,450 threshold against the US dollar. This seismic shift in currency markets isn't merely a numerical milestone—it represents a complex interplay of global monetary policy shifts and domestic political dynamics that could reshape our understanding of emerging market vulnerabilities in an interconnected world. The Federal Reserve's recent "hawkish cut" has created a fascinating paradox: while lowering rates, it simultaneously signaled a more conservative approach to future reductions than markets anticipated. This nuanced stance, combined with South Korea's domestic political turbulence following President Yoon Suk Yeol's brief martial law declaration, has created a perfect storm that challenges conventional wisdom about currency stability in advanced emerging economies. The won's position as this year's worst-performing emerging Asian currency raises profound questions about the resilience of regional economic frameworks in the face of complex global pressures. What makes this situation particularly intriguing is the response from South Korean authorities, who have deployed sophisticated market stabilization measures, including an expanded foreign exchange swap line of $65 billion with the National Pension Service. This adaptive response showcases how modern economic management requires increasingly creative solutions to maintain stability in an era where traditional monetary policy tools may no longer suffice. As markets digest these developments, the situation is a compelling case study of how developed economies navigate the delicate balance between market forces and regulatory intervention in an increasingly unpredictable global financial landscape.
Long
by UDIS_View
10-year Treasury Yield Surging ahead last FOMC in 2024After a politically charged November, bond markets have shifted their gaze back to economic fundamentals, setting the stage for a crucial Federal Reserve meeting on December 17. Recent data—including a robust jobs report and rising inflation—have reignited debates over long-term yields and the Fed’s future rate trajectory. With the Fed’s dot plot and 2025 outlook in focus, the bond yield rallies ahead of the meeting reflects heightened anticipation of pivotal policy signals. This piece unpacks the dynamics driving Treasury yields and explores a potential trade setup deploying CME Yield futures to navigate the unfolding market environment. MARKETS ARE FOCUSSING ON ECONOMIC DATA AGAIN In November, U.S. Treasury yields were more influenced by political factors than by economic data. The 10-year Treasury yield remained largely unchanged after the 13/Nov CPI report, which showed headline CPI rising to 2.6% year-over-year in October, up from 2.4% in September. While the higher inflation suggested potential risks to bond yields—given that prolonged inflation could lead the Federal Reserve to slow its pace of rate cuts—Treasury yields were mostly unaffected by the data. Instead, yields declined sharply when markets opened on November 25, following President Trump’s announcement of Scott Bessent as his pick for U.S. Treasury Secretary. Bessent, a fund manager, is anticipated to prioritize tax cuts and fiscal caution. The announcement drove the 10-year Treasury yield nearly 30 basis points lower over the next week, reaching its lowest level in over a month. In the past two weeks, however, market focus appears to have shifted back to economic data. The non-farm payrolls report for November, released on December 6, exceeded expectations with 227,000 jobs added. Additionally, October’s dismal figure of 12,000 jobs was revised upward to 36,000, providing further support to the positive sentiment. The improved jobs report soothed investor concerns, signalling that the state of the US economy may not be as bad as previously perceived. The jobs report eventually drove a 5-basis point recovery over the following week. The latest CPI report for November also reaffirmed the trend that investors were focussing attention on economic data as 10Y yields surged after the report, rising nearly 19 basis points from the 09/Dec low. 10Y-2Y spreads have also surged by 8 basis points since 09/Dec. Investors can monitor the yield spreads using CME’s Treasury watch tool . Source: CME TreasuryWatch The tool can also be used to monitor the yield curve. Over the past month, the decline in Treasury yields has been concentrated in shorter-term tenors (2Y, 3Y, and 5Y), while the 30Y yield has remained largely unchanged. In contrast, the increase in yields over the past week has been more uniform across all tenors. Source: CME TreasuryWatch The November report showed inflation rising even further to 2.7%, although in-line with expectations, it suggests that inflation may be more persistent than previously perceived. This has led to expectations of a higher inflation premium for long-term treasuries which may have contributed to the rally in 10Y treasury yields. FED DOT PLOT REMAINS THE HIGHLIGHT NEXT WEEK Markets are almost certain of a 25-basis-point rate cut at the FOMC meeting on 17/Dec, with FedWatch indicating a 97% probability of this outcome as of 16/Dec. However, the primary focus will likely be on the Fed's guidance for the rate trajectory in the coming year. Alongside the rate decision, the Fed is expected to release its dot plot and summary of economic projections at the December meeting. The December meeting is crucial as participants closely monitor the outlook for 2025. At last year’s December meeting, the Fed projected significant rate cuts in 2024, which triggered a substantial equity rally and a decline in bond yields. Source: CME FedWatch Per CME FedWatch, market participants expect an additional 50 basis points of rate cuts in 2025. However, the Fed's September dot plot indicated expectations for 100 basis points of cuts in 2025. If the December dot plot reaffirms the projection of 100 basis points, bond yields could decline sharply. Source: Federal Reserve BOND YIELDS HAVE RALLIED HEADING INTO THE MEETING IN THE PAST The 10-year Treasury yields have rallied ahead of three of the last four FOMC meetings, with the increases notably concentrated in the three days leading up to the meetings. Given the recent trajectory of 10-year yields, a similar pattern may be likely this time. The 10Y-2Y spread has shown a similar trend, increasing ahead of the last three FOMC meetings. However, following the November meeting, the 10Y-2Y spread declined. This suggests it may be prudent to position ahead of the meeting to mitigate potential post-meeting volatility. Hypothetical Trade Setup Market participants are nearly certain of a rate cut at the upcoming FOMC meeting, but the summary of economic projections is likely to carry greater significance. Currently, market expectations for rate cuts in 2025 are more conservative than the Fed's previous dot plot. If the Fed reaffirms expectations for more aggressive rate cuts next year, bond yields could sharply reverse their two-week rally. While the 10-year yield outlook remains uncertain and subject to risk, the 10Y-2Y spread has a more optimistic trajectory. The spread stands to benefit from expectations of further rate cuts and its ongoing normalization trend. Additionally, historical trends suggest that positioning before the FOMC meeting may be advantageous, as the spread corrected after the last meeting. Investors can express a view on the steepening of the 10Y-2Y yield spread using CME yield futures. CME Yield Futures are quoted directly in yield with a 1 basis point (“bps”) change representing USD 10 in one lot of Yield Future contract. This simplifies spread calculations with a 1 bps change in spread representing profit & loss of USD 10. The individual margin requirements for 2Y and 10Y Yield futures are USD 330 and USD 320, respectively, at the time of writing. However, with CME’s 50% margin offset for the spread, the required margin drops to USD 325 as of 16/Dec, making this trade even more compelling. The below hypothetical trade setup provides a reward to risk ratio of 1.94x: Entry: 13.5 basis points Target: 30 basis points Stop Loss: 5 basis points Profit at Target: USD 165 (16.5 basis points x USD 10) Loss at Stop: USD 85 (8.5 basis points x USD 10) Reward to Risk: 1.94x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme . DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CBOT_MINI:10Y1!Long
by mintdotfinance
Markets Slowing Down Ahead of NFP, What To Lookout ForHey There, The dollar has been in demand so far this week, boosted by it being seen as a safe-haven amid political turmoil in both South Korea and Europe as well as ongoing conflicts in the Middle East and Ukraine. With France’s government facing “No Confidence votes” that could spell the end of the short-lived administration of Prime Minister Michael Barnier, pushing the country into uncharted waters of political chaos. Gold Prices rose marginally as political turmoil in South Korea spurred some safe haven demand along with fears of a collaps in the Israel-Hezbollah ceasefire. However, trades continue to remain on the sidelines amid anticipation for more cues on U.S interest rates. But any gains in gold were largely limited by a spike in the dollar as it soared on uncertainty over the long term outlook for U.S rates.
by DeanMuller
4
The Best Explanation of The Bond Market You're Ever Gonna Get12 Month US10Y Bollinger Bands between 2.5 and 2.9 Standard Deviations away from a moving average model greater than 4 years in length, preferably exponential. I haven't optimized this to perfection, but it's close enough to give you the basic idea. The bond market is just a simple oscillator emerging from a complex system and simply does what every other very large and complex system does. It has a trend around which it travels but in decades and centuries not years. It isn't complicated, but it is extremely slow. There are 2 phases and a 5,000 year long trend. It goes up. It goes down. Over the course of centuries it declines. In the down phase, it stays below trend and does the exact opposite in the opposite phase. A kindergartener can trade this thing. Currently the phase is turning over from a down phase that lasted from 1980 to 2020, and entering into a new up phase that will most likely last for 3-4 decades. Trading it: buy secondary market long duration government bonds at the bond yield 3 standard deviation line and sell at the trend. Repeat for the next 30-40 years. Easy peasy.
TVC:US10YShort
by MarkLefevre
2
XAUUSD (GOLD) Reaching 3000$ this yearDear Traders, Here's how gold could potentially reach $3000 (or rather, $3,000) by year-end if more rate cuts occur: Lower Rates Mean Lower Yield on Alternatives: When central banks cut interest rates, bond yields often decrease, making non-yielding assets like gold more appealing as a store of value. Investors may shift toward gold, driving up demand and prices. Weaker Dollar Effect: Rate cuts can lead to a weaker U.S. dollar. Since gold is priced in dollars, a weaker dollar often makes it cheaper for international investors, increasing demand and potentially boosting its price. Economic Uncertainty and Inflation Hedge: With lower rates, there's a risk of rising inflation, as cheaper borrowing often fuels spending. Gold is seen as a traditional hedge against inflation, so as inflation expectations rise, investors may buy more gold to preserve their wealth. Safe-Haven Demand: Rate cuts sometimes signal an economic slowdown or recession risks. In uncertain economic times, investors turn to safe-haven assets like gold, potentially pushing prices higher. If the Fed moves toward significant rate cuts, each of these factors could align, creating strong demand for gold and possibly driving it closer to $3,000. Greetings, Zila
OANDA:XAUUSDLong
by ZILATRADES
1
TLT +50% Every Time This Happens and It's Happening NowTLT/SPX Monthly RSI (8 Period Close) It makes sense to analyze the most common institutional portfolio allocation (Equities and Bonds) rather than Equities or Bonds separately. Most investors focus on Fed Funds, unemployment, the business cycle, rates, to analyze the bond market. But those metrics are poorly correlated to returns at best. When you focus on allocation, as in Bonds plus Equities, you start making some progress. That's exactly what this chart represents; where the money is going and when. Hint: it's going into Bonds. Soon. BBOT (Bonds Blast Off Time) is here
NASDAQ:TLTLong
by MarkLefevre
2
XSO and Interest cutsIt's easy to get caught up in all the hype around interest rate cuts and thinking of all the money that will start flowing back into smaller caps and risk assets in general. Taking a look back at the 3 previous periods of easing rates, we can see that this isn't necessarily the case. This graph is overlaying US cash rates as I believe it's a bit of an early indicator, AUS cash rates will typically follow suit but potentially after markets have peaked. Whilst I do believe that low interest rates are good for small caps, it can clearly be a painful decline before the next leg up. These dips in the market do appear to be bottoming out quicker and quicker but this is mainly due to cash stimulation by the government, ultimately leading back to more inflation. I don't rule out that this time could play out slightly differently, however it's also never bad to mitigate risk and have appropriate risk measures in place.
ASX:XSO
by oliver1fraser
Interest Rate Strategies: Trade Smarter with Fed Rate DecisionsInterest Rate Strategies: Trade Smarter with Fed Rate Decisions Trading interest rates may seem straightforward at first: buy when cuts end and sell when they fall. However, this approach often defies expectations, as determining when rate cuts truly end isn't as simple as pointing to a rate pause following a cut. While today’s Federal Reserve rate decisions are made during scheduled (and unscheduled emergency) Federal Open Market Committee (FOMC) meetings, this wasn’t always the case. Before the 1990s, the Fed often made changes outside of meetings. The shift to exclusively deciding rates during FOMC meetings was implemented to provide greater transparency and predictability for markets. Topics Covered: How Are Interest Rates Traded? Three Interest Rate Trading Strategies. Key Insights from Backtesting Interest Rate Trading Strategies. Interest Rate Trading Indicator (Backtest For Yourself). █ How Are Interest Rates Traded? This strategy focuses on trading around Federal Reserve interest rate decisions, including hikes (increases), cuts (decreases), and pauses. These decisions are believed by many to have both short- and long-term effects on the market. Key Strategy Concepts Backtested: Buy on Rate Pauses or Increases: Go long (buy) when the Fed pauses or raises interest rates, typically signaling market stability or optimism. Sell on Rate Decreases: Go short (sell) or close longs when the Fed cuts rates, often indicating economic concerns or slowing growth. Buy on Specific Rate Decreases: Enter trades when the Fed implements specific rate cuts, such as 50 basis points (bps) which represents 0.5%, and analyze market reactions over different time horizons. █ Strategy: Long during Pauses and Increases, Short during Decreases This section examines the effectiveness of going long on rate pauses or increases and shorting during decreases. This strategy performed well between 2001 and 2009, but underperformed after 2009 and before 2001 compared to holding positions. The main challenge is the unpredictability of future rate changes. If you could foresee rate trends over two years, decision-making would be easier, but that’s rarely the case, making this strategy less reliable in certain periods. 2001-2009 Trade Result: 67.02% Holding Result: -31.19% 2019-2021 Trade Result: 19.28% Holding Result: 25.22% 1971-Present Trade Result: 444.13% Holding Result: 5694.12% █ Strategy: Long 50bps Rate Cuts This section evaluates trading around 50 basis point (bps) rate cuts, which is a 0.5% decrease. Large cuts usually respond to economic stress, and market reactions can vary. While these cuts signal aggressive economic stimulation by the Fed, short-term responses are often unpredictable. The strategy tends to perform better over longer timeframes, as markets absorb the effects. 1971-Present Trade Duration: 10 trading days — Average Return: -0.19% Trade Duration: 50 trading days — Average Return: 2.41% Trade Duration: 100 trading days — Average Return: 2.46% Trade Duration: 250 trading days — Average Return: 11.4% 2001-Present Trade Duration: 10 trading days — Average Return: -2.12% Trade Duration: 50 trading days — Average Return: -1.84% Trade Duration: 100 trading days — Average Return: -3.72% Trade Duration: 250 trading days — Average Return: 1.72% 2009-Present Trade Duration: 10 trading days — Average Return: -15.79% Trade Duration: 50 trading days — Average Return: -6.11% Trade Duration: 100 trading days — Average Return: 7.07% Trade Duration: 250 trading days — Average Return: 29.92% █ Strategy: Long Any Rate Cuts This section reviews the performance of buying after any rate cut, not just large ones. Rate cuts usually signal economic easing and often improve market conditions in the long run. However, the size of the cut and its context greatly influence how the market reacts over different timeframes. 1971-Present Trade Duration: 10 trading days — Average Return: 0.33% Trade Duration: 50 trading days — Average Return: 2.65% Trade Duration: 100 trading days — Average Return: 4.38% Trade Duration: 250 trading days — Average Return: 8.4% 2001-Present Trade Duration: 10 trading days — Average Return: -1.12% Trade Duration: 50 trading days — Average Return: -0.69% Trade Duration: 100 trading days — Average Return: -1.59% Trade Duration: 250 trading days — Average Return: 0.22% 2009-Present Trade Duration: 10 trading days — Average Return: -3.38% Trade Duration: 50 trading days — Average Return: 3.26% Trade Duration: 100 trading days — Average Return: 12.55% Trade Duration: 250 trading days — Average Return: 12.54% █ Key Insights from Backtesting Interest Rate Trading Strategies The first assumption I wanted to test was whether you should sell when rate cuts begin and buy when they end. The results were inconclusive, mainly due to the difficulty of predicting when rate cuts will stop. A rate pause might suggest cuts are over, but that’s often not the case, as shown below. One key finding is that the best time to be fully invested is when rates fall below 1.25% or 1.00%, as this has historically led to stronger market performance. But this can be subject to change. █ Interest Rate Trading Indicator (Backtest For Yourself) Indicator Used For Backtesting (select chart below to open): The 'Interest Rate Trading (Manually Added Rate Decisions) ' indicator analyzes U.S. interest rate decisions to determine trade entries and exits based on user-defined criteria, such as rate increases, decreases, pauses, aggressive changes, and more. It visually marks key decision dates, including both rate changes and pauses, offering valuable insights for trading based on interest rate trends. Historical time periods are highlighted for additional context. The indicator also allows users to compare the performance of an interest rate trading strategy versus a holding strategy.
SP:SPXEducation
by TanHef