Long The Dips On BondsWith the markets pricing in a 95% chance of a 25bps to 50bps rate cut, longing 20 year bonds seems like one of the highest confidence trades in the market.
I am bullish on 20 year bonds specifically, and will continue to be until we see a rate hike which I believe is far, far away. We are likely heading into a global recession within the next 12-18 months, so I rather be on the long side of risk-off assets in anticipation of a move higher.
Treasurybonds
TLT LongTLT has pulled back to a very key trend line with additonal supports coming in below. On the hourly chart, we have positive divergence on TLT meaning we should see upside soon in the short term. Given the postures of the markets and how treasuries act as a flight to safety asset, it is reasonable to assume they will go up in price as stocks fall.
For this trade, I advise picking up TMF (x3 leverage) with a stop anywhere from 28.00 to 26.60. I also recommend scaling into the position with 2 or 3 batches comprising your total allocation that you are willing to invest.
Rates Down For a Few More Months...Then Up, Up and AwayThis leading diagonal ended as called earlier appears to be making an ABC correction that should end when C = A at 1.75
Then, the longer term upward correction should continue in a third wave, which I think will be a C wave ending this sub-minuet level correction of the larger minute correction of the larger trend.
C should be equal to A as measured from the end of the ongoing sub-minuet ABC correction.
Long 10 year for a couple months, then short 10 year (as rates rise and price falls) for the next year or so...
Good luck!
10 year T Note: New long term bull cycle emerging?TNX has been trading within a 1M Channel Down since 2000 up until January 2018 when it broke the pattern upwards. The mini uptrend found Resistance on the MA200 and has been declining for the past 7 months. We are currently on the most support tests of all, as it has touched the 2000 Channel's Lower High trend line and will test it as a Support for the first time. If that provides a bounce then we may be at the very beginning of a new very long term bull cycle. A Golden Cross formation should come as confirmation.
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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!
UD1! That's where money went...yield curve explainedCBOT:UD1!
The UD1! is on up trend and explains where all the stock market money has gone the past week...lol. I think I understand yield curve, but missed this one. ; )
#TNX 10 Year Treasury Note Yield What's UP big dump coming maybeWhat's up. Well DAX peaked last year S&P500 and Nikkei225 kept going up. The "Make America Great Again" maybe. Big "Dump-Ala-Trump" coming soon maybe. That's what bonds telling us maybe Will Crypto go into deep freeze and bitcoin go down by another half (50%) Time will tell. No hurry. Note these are Monthly charts
Long US 10year Treasury Bond $ZNWith WTI declining nearly %30 in a short time span and global growth slowing. Investors are long US TBONDS as they are willing to tolerate lower yields from bonds in anticipation of lower inflation and slowing growth.
Bonds rising will have a wide ranging market influence. From yields falling, to equities under performing to Japanese investors seeking domestic risk investment and therefore halting capital exports.
This will mark a turning point in the business cycle for month to come and will challenge active and passive investors and money managers to rethink their portfolios, possibly even rotate into other assets. We are still in the infancy of this turning point , tops and bottoms are ripe for picking.
US10Y - Will the Fed Keep Pushing Rates?I've been watching the 10-year treasury bill yields lately and we can see some very interesting technicals that allow us to draw a few scenarios on what could happen with rates. Above 3.413 we are likely to see a significant rise in yield, while a consolidation here would lead to more "easing" in this and other markets, globally.
Jim Rickard, former general counsel for LTCM, market analyst, and author wrote on his blog "A dollar shortage seems implausible in a world where the Fed printed $4.4 trillion. But while the Fed was printing, the world borrowed over $70 trillion (on top of prior loans), so the dollar shortage is real. The math is inescapable." (due to tradingview policy I cannot pate the link so please manually visit Rickard's post). Based on this observation, there is a real possibility that yield breaks the 3.413 level and triggers a bullish wave in the bond market's yield. Who knows what this will do to equity markets, specifically, the corporate bond market. Junk bonds already look shaky. Will the US' Federal Reserve allow for this scenario? How will this impact China's severely over-indebted economy that has "shorted" the US dollar hard?
Monthly view:
The trend here is clear and we are close to kissing the make it or break it level.
Short Squeeze for the Treasury bearsTypically I have seen that when everyone is on one side of the trade its quite easy for the market to make fools of the participants.
The speculative short position on US treasuries, specifically the 10 year, is massive (and for good reason).
While I remain a longer bear view on these treasuries I think we might end up seeing a short squeeze before we see 3% yields.
The 10 year is showing some signs this could accelerate and hurt alot of bears who need to cover their positions.