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Treasurynotes

TBT Inverse Treasuries ( Long Dates ) LONGTBT is shown here on a weekly chart. It transitioned froma downtrend into the present trend up two years ago with the initiation of the rate hikes to cut down inflation by hitting its knees. Inflation was the direct result of the money printing and stimulus as part of the federal response to the complications of covid and lockdowns. Price is now ascending in a broadening channel ( a megaphone pattern) reflecting increasing volatility as federal action or inaction gets priced into buying decisions at treasury auctions. As for me, i will continue to build a TBT position until it is obvious that the fed has launched an active agenda of rate cuts which will fortify T-bill prices and make TLT the new runner.
AMEX:TBTLong
by AwesomeAvani
1-Treasury bills give the same returns as S&P 500 with less riskWall Street Investment banks are predicting various prices for the S&P 500 close at the end of 2024. But if the current 1-year Treasury Bill Yield is the same as the estimates then why bother buying the S&P 500? It would be safer buying bills and you may get an equal return. This piece of analysis will look at: Historical accuracy of Wall Street Banks S&P 500 estimates for the year ending Current predictions for S&P 500 estimates for year-end 2024 The current yield on 1-year Treasury Bills Comparison between the estimates for the S&P 500 vs. 1-year Treasury bills. Historical analysis According to research done by Bespoke Investment Group and by CNBC. Excluding 2008, the analyst overshoot of the S&P 500 actual performance over the past 15 years goes down from being over 9% off to a miss of 3.4%. And the fact that analysts overshot the actual market performance 12 out of 15 times, means they did undershoot it three times. When looking at their S&P 500 price target prediction, analysts undershot the actual performance in seven of the past 20 years.1 Historically, these forecasts have often underestimated the actual market performance, especially during the bullish period since 2009, when they were off target seven out of nine times. The average annual projection tends to be around 9.3%, aligned with the S&P's historical average gain. 2 So, overall, excluding the outlier of 2008, analysts tended to overshoot their predictions of the S&P 500 performance by a decreasing margin over the past 15 years, moving from an initial overestimation of over 9% to a more moderate miss of 3.4%. Their track record shows a pattern of overshooting the market's actual performance in 12 out of 15 instances, with just three instances of undershooting. Current predictions BMO Capital Markets: $5,100 Deutsche Bank: $5,100 RBC Capital Markets: $5,000 UBS: $4,700 Goldman Sachs: $5,000 Bank of America: $5,000 Barclays: $4,800 Wells Fargo: $4,600 Morgan Stanley: $4,500 J.P. Morgan: $4,200 Average = $4,800 Median = $4,900 Mode = $5,000 1-Year Treasury Bill The current yield on the 1-Year Treasury Bill is 5.061%. The reasons for the yield being somewhat high are: Strong Economic Data: The resilience of the U.S. economy, especially the robustness of the jobs market, has surprised many experts. Despite expectations for a slowdown, the economy continues to perform well, leading to higher yields. The Federal Reserve's cautious approach to cutting interest rates too quickly is another reflection of this strong economic backdrop. Fed's Cautionary Stance: The Federal Reserve is wary of cutting rates swiftly due to concerns about inflation and the tightness of the labour market. They aim to maintain a balanced approach, keeping rates at a level that won't spur excessive inflation but also won't hinder economic growth. The shift in Fed Messaging: Recent messaging from the Fed indicated less aggressive rate cuts in the future than previously expected. This change in outlook, particularly with the Dot Plot showing fewer rate cuts in 2024, has influenced bond market sentiment. Increased Treasury Issuance: The U.S. Treasury's substantial pace of issuing new debt has disrupted the supply-demand equilibrium in the bond market. The unexpected announcement of raising a significant amount of money through bond sales has added pressure to yields as more bonds flood the market. Yield Curve Dynamics: The yield curve, which had previously inverted (short-term yields higher than long-term yields), is now experiencing a lessening of this inversion. Typically, this occurs as short-term rates fall while long-term rates rise. However, the current situation is unique as the long-term yields are increasing while short-term rates remain relatively stable. The surge in Treasury yields reflects a confluence of factors: a resilient U.S. economy outperforming expectations, the Federal Reserve's cautious approach to rate cuts amid concerns about inflation and a tight labour market, a shift in Fed messaging signalling fewer future rate reductions, increased government borrowing, and the unique dynamics of the yield curve. This unexpected rise in yields diverges from earlier predictions of a decline, shaping the current landscape of the bond market and influencing borrowing rates for consumers and businesses alike. One's prediction of the future yield in a year may be higher or lower. But regardless, when you buy a bond it is stuck at that yield since it represents the interest earned. S&P 500 vs Treasury bills Yesterday's close of the S&P 500 was $4,567.18. If we assume the S&P 500 will reach the average and median estimates that represents a 5.10% and 7.13% return on investment respectively. However, as we have established above looking at the historical analysis of Wall Street estimates they tend to overestimate. Most of the time the S&P 500 closed below their estimate. Wall Street estimates between 2000 and 2018 have an average overshoot of 4.40% from the table above. So there is reason to assume they will do the same this year. If we assume the estate's average and median return of 5.10% and 7.13% respectively are overshooting. That means we might as well invest in 1-year Treasury Bills. Why? Because Treasury bills are safer, and guaranteed return and if they are giving similar returns to the more risker S&P 500 over the next year then why bother with the risker alternative? It makes more sense to just buy 1-year Treasury Bills. Conclusion In the landscape of investment choices for the year ahead, the comparison between the S&P 500 and 1-year Treasury Bills offers compelling insights. The historical analysis of Wall Street's predictions demonstrates a consistent pattern of overestimation, signalling a potential trend that might repeat itself in the current estimates for the S&P 500 for year-end 2024. With the current projections showcasing potential returns for the S&P 500, it's crucial to consider the safety and reliability offered by 1-year Treasury Bills, especially given their current yield, standing at 5.061%. The compelling argument arises when assessing the historical trend of overestimation by financial analysts in forecasting S&P 500 performance. If these estimations continue to overshoot, as historical data suggests, the seemingly safer investment in 1-year Treasury Bills could provide comparable returns with considerably lower risk. The prudent approach might lean toward the Bills, given their guaranteed return and stability, particularly if they yield similar or better returns than the potentially riskier S&P 500. The choice between the S&P 500 and Treasury Bills becomes a contemplation of risk versus stability. While the S&P 500 might offer potential gains, the historical trend and current projections invite consideration of the Bills as a safer and possibly equally rewarding investment option for the upcoming year. Ultimately, it might be prudent for investors to weigh these factors carefully before making their investment decisions for the year ahead. 1 www.cnbc.com 2 seekingalpha.com
SP:SPX
by BlackbearTrader
Elliott Wave View: 10 Year Treasury Notes (ZN_F) at Support AreaSince topping out at 135.15 on July 2012, 10 Year Notes (ZN_F) was in a multi-year decline. It finally found a bottom at 117.13 on October 2018. The 6 year decline was in a large 3 swing, thus the decline was corrective. It has since started to rally again from 117.13 low. The rally has the characteristic of an impulse Elliott Wave structure. In the short term chart below, we can see the impulsive rally from 2018 low ended wave III at 132.13 on September 3. Wave IV pullback has now reached the minimum target to end at the blue box. The pullback unfolded as a double zigzag Elliott Wave structure where wave ((W)) ended at 130.27 and wave ((X)) ended at 131.15. Wave ((Y)) of IV is expected to complete at 129.17 – 129.29. Both wave ((W)) and ((Y)) have an internal subdivision of a zigzag (5-3-5). The Notes should find support from 129.17 – 129.29 and resume higher in wave V or bounce in 3 waves at least. In larger time frame, the Notes may eventually break above July 2012 peak again (135.15). If this happens, the Notes should open more upside in larger degree and we can see bond yields continue to decline across the board.
CBOT:ZN1!Long
by Elliottwave-Forecast