US10Y
Short term rates still look weak while long term look betterHAPPY NEW YEAR! 🎉
US Treasury markets are more than the combined bond markets of Germany, Japan, China, UK, France, and Italy = HUGE.
This is why US #Bond market is important to keep track of.
Short term #interestrates has been the weakest in a LONG TIME
1Yr & 2Yr charts look similar. US Debt 2ys & less have been weakening & look like they still want to weaken a bit more.
-------------------------------------------------
HOWEVER, long term debt looks to be solidifying a bit.
The 10 & 30Yr #Yield look identical & both look like they want to bounce here. How strong? We'll see. Took small position on Thurs.
This could also be more of a technical set up as both are at support levels, 30yr is at strong long term support.
TVC:TNX #bonds
10 & 30 Year yields are at decent to strong support levelsThe 10 year & 30 Yr #yield are at support levels.
Looking at Daily charts:
The longer term, 30Yr, looks better than TVC:TNX (10Yr)
Looking at Weekly charts:
The 10Yr support level looks strongest @ 3.3%.
All sorts of support levels and trendlines were broken recently.
The 30 Yr trendline is certainly broken & Strong Support is found here.
déjà vuCircle is the most perfect of shapes. It optimizes its area perfectly. An architectural marvel with no point of failure. And it is unique. All circles are similar to each other. Some small, other large. In the end identical.
Cycle is the Hellenic word of Circle.
I purposefully call it "Hellenic" instead of "Greek"
Market cycles are just that, cycles/circles. All of them are identical clones of the original.
Price is after all, nothing more than perfect fractals, the equation of which is, and will forever be, unknown to us.
FED is the all-powerful entity that gives birth and death to bull markets. Its only weapon is yield rates. Don't go against the FED.
Yield rates up = Bull Equity Market
Yield rates down = Bear Equity Market
Many think this is the other way around, that yield rates kill equity markets.
Why do rate hikes help equities though? Because Bonds. Bonds suffer during periods of rate hikes. And they soar when yield rates remain constant or fall.
The usual investment strategy of equities+bonds is creating a rapid shift in flow as we speak.
For a year, massive amounts of wealth was withdrawn from bonds, and invested into equities.
This trend is about to shift rapidly.
And the speed of such a shift is extreme.
While short-term rates are very fast moving, long-term yields represent a heavy market, and thus are more important in our analysis. I will ignore the FEDFUNDS rate because it represents a fraction of the weight of US10Y.
Long-term yields didn't change much in 2007, but the crash was devastating.
In 2018 the same happened, but faster in US10Y. The slope was much higher than in 2007. This resulted in a literal black swan event. The consequences of the 2020 crash are still unknown.
Moving to today, we witness an unparalleled change in yield rates. This has resulted in massive bond crashes as we have shown before, and will most certainly lead to incalculable effects in the equity market.
History has shown that the stronger the rate change, the harder the crash. This makes sense. The higher yield rates go, the greater the incentive to invest in bonds.
Be aware, the market is waiting for the FED to trigger the crash.
Make sure to pick the correct side when the cycle ends again.
Tread lightly, for this is hallowed ground.
-Father Grigori
THREE WORDS THAT YOU SHOULD KNOW — TNX GOES NUTS!Bank of America says the recession and credit crunch could lead to large corporate defaults.
Credit strategists at Bank of America note that the fallout from the recession and credit crunch could see $1 trillion in corporate debt eventually become insolvent.
This is largely due to the fact that banks have already begun to refuse lending conditions after the collapse of Silicon Valley Bank. US debt growth has also slowed in recent years, and a "full blown" recession has yet to be officially declared.
If a full-blown recession does not occur in the next year or two, the restart of the credit cycle will be delayed. For now, analysts still predict that a moderate/short recession is more likely than a full blown recession.
Markets are increasingly nervous about the prospect of a future downturn, with the New York Fed's Recession Probability Index projecting appr. 70 percent chance of a recession hitting by April 2024. The risk comes from the Fed's aggressive 21-fold increase in interest rates over the past 15 months to tame inflation.
The US Federal Reserve, having fired a lot of "HIKE RATE" ammos over the past two years. And certainly has fulfilled its goals.
In fact, in the second quarter of 2023, the rolling 12-month growth rate of the Consumer Price Index (April value = 4.9%) was below the Core CPI (April value = 5.5%).
In human words that means prices of food and energy are deflating year-over-year.
To some extent, the risk is also heightened by the recent banking turmoil, as lenders suffer losses on their "HELD-TO-MATURITY" (and in fact "READY-TO-SELL") portfolios of long-term corporate bonds and US Government bonds, as well as in due to a sharp outflow of deposits.
The technical picture in TVC:TNX says the key trend is still strong, thanks to tailwinds from the first quarter of 2022 and support of Weekly SMA(52).
The second half of 2023 is off to an interesting start.
High quality "AAA" 10-year Bond' yield is back to pain levels corresponding to the collapse of the FTX cryptocurrency exchange last fall, as well as the collapse of regional and cryptocurrency banks as early as this spring, 2023 (like SVB, FRC and others).
At the same time, real (that is, minus inflation) rates are now certainly much higher, against each of those two marks, as inflation is down.
GOLD can be a defensive asset, as geopolitical risks still highCaught in the twin grip of elevated US yields and a stronger USD, Gold may be on the defensive over the near term unless geopolitical risks still escalate.
Escalating geopolitical and trade risks are playing an increasingly supportive role in Gold prices, engineering rallies that are likely to stay high in 2024.
Gold Price Clinging to Highs Under $2'000. The bias remains bullish despite minor retreats.
A new higher high may activate further growth. Only a valid breakdown below the pivot point opens the door for a corrective phase.
The gold price resumed its growth today, reaching the $1,990 level.
The bias is bullish despite minor downside corrections. OANDA:XAUUSD returned higher even though the Dollar Index rallied after the US Flash Services PMI and Flash Manufacturing PMI announced expansion.
Gold has taken its position as a safe haven value asset. Over the past several years Gold trades on positive path, where short-term average (1yr SMA) still above long-term average (5yrs SMA) for a 6th year in a row, since Q1'18.
The main technical graph says, that potentially technical figure known as "Reversed Head and Shoulders" is in progress, with further upside price action in a case of return back, above $2'000 per ounce.
The main graph is for iShares Gold ETF AMEX:IAU that seeks to reflect generally the performance of the price of gold.
US 10Y TREASURY: testing 4.0%Cooling inflation data in the US were the ones which were supporting optimism with market participants, indicating a good time to start purchasing the US bonds. The PCE data were published on Friday, revealing that the index was increased by 0.1% in November. The PCE is one of the favorite Fed's inflation gauges, which indicated to markets that the Fed might start pivoting during Q1, as per market expectations since the beginning of December. For the markets, it was a clear entrance point, where 10Y Treasury yields reached lowest weekly level at 3.83%, while yields finished the week around 3.9%.
At this moment, the market is actually testing the 4.0% support line for the 10Y Treasury bonds. It was more than evident on charts that the reversal point in the bond market started in November this year, while current 4.0% might be seen as a short term stop for yields. There is no question about where the yields will go in the future, however, the market is currently pricing 4.6% anticipated interest rates at the end of the next year. Charts are showing that there is an open path for 3.6% level, however, this would be the case for the year ahead. During the last week of December, it should not be expected to make any significant moves toward either side. The yields will continue to oscillate around the 4.0% level.
The Great SufferingWe all remember The Great Depression. That is a lie.
Very few who live today lived when this monumental event occured.
After the Roaring '20s, a decade of parabolic stock market growth and explosive demand for stocks , the cash-out came. In the Depression, people were giving out stocks for free, burning the titles. Truly a desperate action by many. Demand for stocks has gone to zero.
Then, WWII came around, and demand for money was vital for survival.
In finance, supply and demand dictate everything.
Prices increase when demand increases, and they fall when demand diminishes.
Equities and Currencies are opposite powers, both vital to sustain the eternal cycle of markets.
The aftermath of the Great Depression is full of lessons.
Demand for stocks has never been so high as it was in the Roaring '20s.
This may have two explanations. Most of worlds' debt is denominated in Dollar. The function of the dollar changed substantially after the first QE experiment: Abandoning the Gold Standard.
A modern analogue of the mania that existed in 1920s is Bitcoin.
With that in mind, we may conclude the following for the relationship between Gold and Dollar.
Now, demand for Dollars is at an all-time high level.
Fiat currency is a proof of debt. To make some sense of the scale of demand for dollars, we can calculate the total debt. The World Economic Forum has posted the following article regarding world debt.
www.weforum.org
In short, Global Debt has surpassed 300 Trillion in 2023.
Much of that debt is dollar-denominated. US Debt alone has reached 33T at the time of writing.
The (im)possible serviceability of that scale of debt deserves a conversation on its own.
Many questions arise, more than the conclusions.
If BRICS is to create an alternative reserve currency to dollar, what effect will that have in the strength of the dollar? Some may believe that dollar strength will vanish if an alternative is born. After all, demand for it will surely decrease.
Well, there is a catch to all of that.
Dollar has been artificially weak so as weaker economies can afford to borrow it.
As we talked about, world debt has largely depended on dollars.
Some charts (even slightly wrong ones like the following one) may suggest that a Dollar Milkshake scenario is indeed probable. A simplistic PnF analysis of accumulation gives us the following targets for DXY. Don't forget that DXY is nowhere near its all-time high value. So there is the remote probability that this chart is true.
Until now, the focus of the FED was keeping dollar cheap to promote its' borrowing.
Now their stance has changed dramatically.
Yield rates are decisively high, and money supply is actually being burned.
Money supply is vanishing rapidly. This has given birth to a war, between demand for dollars and demand for other currencies. The FED is doing what it can to stop the mania for equities and crypto.
A pivot has been reached. For decades the benefit of the many (cheap debt) resulted in dollar taking the hit (dixie). With the US indirectly involved in war, it is time for The States to look at their survival....
...keeping the nation, the currency and the economy strong. Now that, is something the FED is unwilling to pivot upon. All charts suggest that the FED is performing actions that will strengthen the US. Inflation is being fought, unemployment avoided and equities being kept in stable levels.
Extra Chart:
If the role of the dollar changes once again, and global demand for it decreases substantially, what effect will that have for the relative demand for equities?
Thought Experiment:
Imagine if you will, a scenario where corporate investment utilizes Bitcoin ETFs.
What effect will that have in the performance of their equities as a result of improved investment strategies?
Tread lightly, for this is hallowed ground.
-Father Grigori
Galloping SPYThis chart is frightening. It suggests that SPY can become a modern-day example of Galloping Gertie, the famous Tacoma Narrows Bridge which collapsed from nothing more than wind.
I have said it before, 2022 was the year when an Equity Crash didn't actually happen, while we were all talking about it.
It is but a scratch. But with a bleeding chopped-off arm, how long can you last in war?
Instead of an equities being killed, a Bond Crash came, and nobody has talked about its ramifications.
This is the European Bond, one of the most stable, until 2021. Imagine what has happened in corporate bonds. We can never know for sure the sheer extent of the destruction...
In stock market, higher is not necessarily better. Higher is riskier.
SPY is considered to be diamonds. JUNK Bonds are, well, junk.
Imagine the balance shift when this trend breaks. And it very much it will.
It is statistics after all. The more times you get heads repeatedly, the rarer the event.
Think, for how long has SPY been diamond, and JNK junk?
With yield rates peaking problems may arise. The bond market will suddenly revive again.
As a byproduct, dollar will get a massive hit. Some charts suggests that its days are numbered.
This chart calculates dollar strength based on the value of its total supply. If a currency manages to get printed a lot and sustain high strength, then it must be good. Especially if it pays out good yield rates. Rate cuts in US isn't good news for Dixie...
Tread lightly, for you are dead. You just don't know it yet.
-Father Grigori
Final thought:
Rate cuts can be a double-edged sword.
If FED announces rate cuts, this gives two messages.
-- Financial strength has weakened and rate cuts must come to keep the economy afloat. Bad news can trigger Black Swans. The 2008 crisis followed after rate cuts, not rate hikes.
-- Rate cuts will trigger a massive flow of money into bonds, emptying the equity market.
Careful what you wish for, and what you prepare for.
US 10Y TREASURY: pricing rate cutsIt was final time for the Fed to align with the market. At the latest FOMC meeting, this was the case, considering that rhetoric about potential rate increases was not at all in the spotlight of Powell's speech, but clearly slowdown of inflation and that FOMC members are perceiving Fed`s rates at 4.6% as of the end of 2024. This was a clear signal for markets that rate cuts are coming during the course of the next year, with current anticipation that it could be already in March next year.
Although 10Y US Treasury yields started the week around 4.28%, they swiftly reverted toward the downside and lowest weekly level at 3.9%. The market is currently testing the $4.0% level, which might impose some volatility in the week ahead around this level. Still, looking at the larger picture, the yields would certainly further test lower levels, currently eyeing 3.8%.
$TLT Resistance at $100 PivotNASDAQ:TLT Resistance at $100 Pivot, Friday December 15, 2023 NY Fed President Williams stated on CNBC, "We aren't really talking about rate cuts right now." This seemed to conflict with Jerome Powell's post-meeting press conference. It does not matter what they say it will show up in the charts and our algorithms.
US10Y ~ Bullish Downtrend Reversal (2H)TVC:US10Y chart mapping/analysis.
US10yr bond yields finding bullish reversal off lower range of descending parallel channel (white) - further momentum pending upcoming 10yr auction + US economic data.
Trading scenarios into EOY:
Bullish reaction to macro economic news = continued momentum to break above descending trend-line (white dashed) towards 38.2% resistance zone.
Bullish extension target(s) = re-test upper range of descending parallel channel (white).
Bearish reaction to macro economic news = reversal back below 50% Fib / 4.10% psychological support level / lower range of descending parallel channel (white) / ascending trend-line (green dotted) confluence zone.
Bearish extension target(s) = Golden Pocket zone / 4% psychological support level / 78.6% Fib.
US10Y vs. SPX ~ Inverse Correlation/Ratio Indicator (Dec 2023)TVC:US10Y versus SP:SPX inverse correlation analysis.
Work in progress indicator for anticipating market trend switches.
Notes:
Emerging correlation identified within US10Y/SPX ratio.
Spikes in ratio (orange vertical line, dotted) aka bond yield ROC/volatility = higher probability of risk-off sentiment (ie big tech & growth stock rotation).
Correlation only valid when market is "hyper-sensitive" to bond market fluctuations, especially during recent US Fed undertaking rate hike cycle.
Should be used in conjunction with other confluence factors to provide conviction in swing/position trades.
Treasury Yields flash bottom signs, early for some + DXY leadingJUST SAYING.......
NOT implying that the party is over BUT heed some signs by treasury.
1Yr #yield is fighting to close above the 10day Mov Avg (RED).
2 Yr has a possible 3rd day trading above the RED Mov Avg.
10Yr fighting to get above the recent trend it broke & Moving Avg's.
US #Dollar has been fighting & looks to be gaining momentum. We'll see how this does over next few days to get barometer.
TVC:DXY TVC:TNX
US 10Y TREASURY: FOMC meeting aheadThe yields on the US Treasuries continued to slow down during the course of the previous week. However, a strong US jobs data posted on Friday, made an impact on 10Y yields to revert a bit toward the higher grounds. Although the US equities were supported by the same news, investors in the Treasury bonds still hold a dose of reserve when it comes to the future economic conditions. Namely, as job data remains strong, there is a fear that the Fed might tighten further in order to sustain their 2% inflation goal.
The 10Y Treasuries started the previous week around 4.29% yield. As the week progressed, yields reached the lowest weekly level at 4.10%. However, at Friday`s trading session, they reverted a bit back, ending the week at 4.23%. Regardless of this small reversal, the markets are still generally oriented toward the downside. The market is still pending testing the 4.0% level, which might occur during the following week or two. At the same time, charts are pointing that some short reversal might lead yields shortly toward the 4.3%, less likely 4.4% level, before they make a final reversal toward the level of 4.0%.
Never disregard those weekly & monthly closeSTHOSE LONG TERM TRENDS ARE IMPORTANT.
Remember how the 10 & 30 Yr #yield BROKE daily trends?
Well, they are both still in play, for TVC:TNX it is in better shape.
Let's see how they close.
30 Yr struggling a bit more to recover that close under the trend.
#mortgage rates have also fallen decently.
BondsUS10Y breaking support. Good entry on bond etf's. Only picking up a small amount to get in the door. ZROZ, EDV, and TLT.
US10Y Is this the end of Bond Yields' 3.5 year run?The U.S. Government Bonds 10 YR Yield (US10Y) is pulling-back towards the 1W MA50 (blue trend-line) and bottom of the Rising Wedge. The pattern is getting too tight and the squeeze will inevitably result in a break-out and new trend/ pattern.
If the Rising Wedge breaks downwards, it will mean the end of the yield's +3.5 year bullish run and will have a high impact both on stocks and Gold. In fact there are high probabilities of that happening as a similar Rising Wedge broke to the downside at the end of 2018.
If that gets materialized, then the first attempt should be on the 3.300% Support 1 level, before the 1W MA200 (orange trend-line) gets closer for the test of its long-term Support status.
-------------------------------------------------------------------------------
** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support us, keep the content here free and allow the idea to reach as many people as possible. **
-------------------------------------------------------------------------------
💸💸💸💸💸💸
👇 👇 👇 👇 👇 👇
Profitable InflationEvery chart describes a story.
Inflation can be tracked using producer-prices and consumer-prices.
Equities are affected by consumer inflation, while commodities by producer inflation.
Many of the worlds largest companies are selling services, not commodities.
The ratio of the two on the chart above, shows that long-term production cost of commodities is gradually reducing. It also shows periods when production inflation is much more pronounced than consumer one. There is an inherent lag between producers and consumers.
First producers take a short the beating...
...then consumers feel the pain. An eye for an eye.
Investors have limited options. There is energy to invest in, commodities, crypto, bonds, equities and money markets. There are probably many more options, but these are some of the most well-known ones. The method to invest in them may be via a mutual fund or a direct investment.
Let's rate these investment options for their viability.
Gold has proven problematic time and time again.
How high can Gold even get for demand to sustain? With production cost increasing, an investment in Gold becomes a dilemma. Approximate Gold profits, described by the Gold/PPIACO ratio, seems like a hard win.
Crude Oil on the other hand may need some time before it shows its true strength.
On the Crypto world, the big boy Bitcoin may dominate.
Crypto also seems to progress against Bonds.
Bitcoin has survived excellently the rate-hike schedule, keeping it afloat against Bonds.
Similarly in the Equity world, the big guys may overperform.
The Industrial part of DOW seems like it will show strength against the others.
For an investor, few are the viable choices.
Bonds don't go well with increasing rates.
Gold fails proving as an inflation hedge.
Instead, crypto shapes into an equity pillow.
Source: @SpyMasterTrades
When equities underperform, Bitcoin stays put.
Once again, we have reached the same conclusion. The equity market is forced to grow.
This chart is a perspective on how (SPX vs Inflation = actual profits) may overperform (Gold vs Commodity Production Cost = actual profits). This shows that equity-profits-after-inflation may be more than any other type of investment. Equities may in fact completely ignore inflation for some years to come.
Many of my charts, like this one, have taken me back to 1994, in the pre-.com bubble world. A massive equity bubble may be brewing as we speak.
Nothing else besides equities is viable as an option now.
Except perhaps money markets. The massive forgotten one. Dollar.
Money strength has been low for too long. Perhaps the dollar hasn't spoken its last word.
This proves once again that crypto may remain strong. Crypto is currency after all.
Tread lightly, for this is hallowed ground.
-Father Grigori
US 10Y TREASURY: Powell and market on opposite sidesFed Chair Powell is speaking, but the market is not listening. Powell was speaking on Friday at Spelman College in Atlanta, noting once again that the current policy might not be restrictive enough, meaning that further rate hikes are possible in case that inflation remains persistent. However, a strong economic output of 5.2% for Q3 and inflation figures which are clearly oriented toward the downside, made the market react quite opposite to Powell`s notes. Almost all assets, including Bitcoin gained during the previous week. Treasury bonds strongly gained during the week, pushing the yields lower.
The 10Y Treasury yields continued with their down trend, starting the week around 4.4% level and ending it at 4.197%. This is more than a clear indication that the market is currently strongly set on rate cuts in the coming period. In case that market perceives that the rate cuts might be higher in 2024, then the 10Y Treasury yields might easily reach the level of 4.0% by the end of this year. Still, for the week ahead, it could be expected that the level of 4.2% is to be tested, with a decreased probability for a reversal toward 4.4% level.
us10YRegarding the ten-year rate, we must say, the first important point that can be seen is in the green box and then the green lines, the resistance formed is also indicated by the red box. We will be in these ranges for a long period.
🍂Fall – Fell – Fallen. S&P500 Technical Perspectives over Q3'23The US government is well on its way to going into lockdown and shutting down the economy as policymakers are deadlocked over the national budget for the next fiscal year.
While leading stock market strategists are not yet terribly concerned about such perspectives, and entertain hopes that investors have a high probability of "getting away with it" with strong performance, in reality the facts tell a different story.
S&P500 SP:SPX is suffering losses, and has already lost about half of its annual growth since the beginning of 2023, and the Nasdaq-100 index NASDAQ:NDX reduced 2023 growth approximately by 30 percent.
To avoid a shutdown, Congress needs to pass all 12 spending bills for the next fiscal year by Sept. 30, something it has historically done rather poorly.
This could create problems for the market, which could immediately, that is, on the same day, be seriously affected by a US Government shutdown, considering SPX seasonality where September is one of the worst calendar month for investments into S&P500.
S&P500 Seasonality Chart
Meanwhile historical back test analysis says, in the past 20 government shutdowns, the S&P 500 stayed relatively flat, with the benchmark index losing an average 0.4% the week before a shutdown and gaining .1% by the end of a shutdown, according to a Reuters analysis of CFRA Research data.
And in some cases, stocks actually ended the shutdown period higher, with the market gaining a net 10% following the 2018-19 shutdown, according to Renaissance Macro.
Shutdowns lasting five days or more have also been known to see a quick market rebound, according to a 2021 Dow Jones analysis. On average, the S&P 500 had already moved into positive territory within one month of the shutdown. Shutdowns themselves are also relatively short. The last government shutdown, which was the longest-ever, lasted for 35 days.
Anyway everything could happened. To stay away, or look beyond the market's twists and turns in the weeks before, during, and immediately following a potential shutdown - this is could be very, very individual investment decision.
Technical pictures illustrates that weekly SMA(52) - 12 months simple moving average near 4150/4200 pp in SP:SPX or Dec'23 Futures CME_MINI:ESZ2023 (depends what are you looking for) could be quite strong support in any cases.
