SPX and US yield cuve analysis for recession warnings...SPX and US yield cuve analysis for recession warnings...
Yieldcurve
US Yield Curve Underpins US Dollar BuyingEver since mid August, the US Dollar has maintained a much stronger correlation with the US yield curve. To illustrate this relationship, in the chart one can see the curve in blue and the DXY index in green, with the red lines the long and short-dated bond yields. As the focus shifts towards re-pricing a more aggressive Fed cycle, expect the US yield curve to hint directional clues. In the case of Monday's price action, we find the dip in the US Dollar not accompanied by a deterioration of the yield curve, and therefore may be conceived as a potential opportunity to engage in long-sided business in the USD at the right price levels, which is obviously dependent on one's trading profile.
Break of TL in Fav Fed Yield Curve, More USD Strength Ahead?Last week, when scoping out the latest movements in the US yield curve, a noticeable pattern arose. It came to our attention, via a report by Morgan Stanley, that it was the first time this year that the US Dollar index had been depreciating during a flattening of the curve, represented by a blue rectangle (yellow rectangles show the flattening of the curve not altering USD value).
This is significant as it implied a slowdown in US capital inflows, which paved the way for a case in which it would allow us to assume, until proven wrong, the utilization of the curve as a more accurate predictor of the state of demand and supply for credit in the US, with an increase of the curve meaning higher demand for credit and lesser supply of capital by reduction in savings, and viceversa.
Barring no further distortion in the interpretation of the US yield curve via re-shift in capital inflows, it suggests that for now, with the steepening of the curve once again, the market is turning more positive on both the USD and the economy. Visually, one can notice that each recent break of the trendline has served as the trigger for the correction higher in the curve.
Shortsqueeze in JPM.We are approaching sellers, I'd like to see their hand before I put my chips on the table.
This happened after earnings which makes it significant.
Bonds Remain IrrationalRegarding today's bond market behavior, I am reminded of the following words of wisdom mostly attributed to the economist John Maynard Keynes:
"The market can remain irrational longer than you can remain solvent."
From Trump's successful efforts in negotiating an end to a 70 year North/South Korean war, and denuclearization of NoKo, to the Fed raising interest rates hawkishly, to the ECB finally declaring an end to QE, everything seemed to support the bond market collapsing further.
My original profit target in ZN1! was right about where the red arrow is. I anticipated it to retrace the entire move from the FOMC meeting. Perhaps it is because the bond market is historically bearish. Perhaps it is because big players are cashing out of their net short positions, or because insiders know something we don't, but US treasuries have stabilized and have formed a range, if not a bull flag.
The Kovach Indicators (at the bottom) show a solid bullish trend, and we have broken numerous levels of resistance. Perhaps we need more data events like the Empire State Manufacturing Survey, or Consumer Sentiment tomorrow to help this sleeping giant awaken once more.
Global risk increases?I have been looking at this for a while. This pair is very highly correlated with the SPX but it is a way of expressing global growth and or risk. Right now, it isn't looking so good. I am bearish but I would like to take a position very close to the support if it shows me the necessary price action. The position is shorting Gold and going long the GDow index simultaneously.
10-year yield curve US-German comparison...10-year yield curve US-German comparison. The comparison aims at further understanding the EURUSD track. The DE10Y yield curve shows that the decreasing correction structure (red line) is shorter. But it can also be seen that the size of the fractals (green wave) before them is getting smaller. It can have two consequences. The first is that a drop in yields is expected in the short term. Then there will be a very flat rise in yield. Conversely, the US10Y yield curve surpassed 3% and showed a strong upward trend. Currently it has a target level of 3.75%. This difference may favor the dollar. The conclusion is that the US dollar may continue to strengthen in the short to medium term.
Preparing for the next Crisis!Before every crisis have to see bubble first.
Dot com bubble in 2000 and crash!
Hamburger crisis in 2008.
Today is 25 April 2017. 8 years for bullish market since 2009.
Which year will be next crisis? How about your idea?
.
How can we check.
You can learn from history in the past.
1. Please see link as below for checking yield curve.
stockcharts.com
2. Technical Analysis monthly chart.
Keep Calm. Be patient.
Patrick HF Patanapas
German 2y Yield to go higher (US2Y vs GE2Y yield sprd too wide?)US 2y yield (blue line) vs GER 2y yield (red line)...The spread is immensely wide as the FED has been in a hiking phase wile the ECB still continues to apply a "whatever-it-takes policy".
Eventually the ECB policy will have to roll back and front-end yields will react by backing up.
I believe the German 2y yield will eventually move higher and lead the narrowing of the US-GER 2y spread gap.
This also makes the case for a Eurozone (i.e. German) curve flattener attractive at these levels.
Flat Yield Curve Equals...Are we headed for a flat Yield Curve? The Yield Curve highlights the spread between short term and long term bonds and is an important indicator of economic growth. We are currently in an uptrend, with short interest rates lower than longer maturities. A flat yield curve can signal an adjustment in the economy and a shift in growth. It precedes an inverted yield/recession. Is this a warning sign? Trading Forex / CFDs is High Risk.
5s10s Yiled Curve Flattener.. ak Short-term gain, long term painThe difference between the US 10 and 5 year yield is down to just 20bps. The market is reflecting short-term growth and short-term Fed tightening, but sees inflation firmly anchored at 2% for the long-term. The fact that inflation is at 2% also keeps equity valuations up, but for how long?
As the curve flattens to 2006 levels, are we 12-18 months away from an inversion and possible recession?
German Yield Curve Flattens as EU Problems Sink inAlthough the fake news would have you believe that the Eurozone is fast on its way to recovery, it is still mired with issues and the failed Euro is taking its toll on German yields. There is still geopolitical tension, a migrant crisis, and a huge stagnation in inflation that extends to the entire developed world.
The Kovach Chande is incredibly bearish and we are testing the lower bound of the Kovach Reversals Indicator. Look for a brief pullback from this lower bound before it presses further.
Check out the Kovach Indicators here !
Yield Curve Below 1%, Racing to the BottomThe yield curve (spread between the 30 year and 2 year spread) just broke below 1%. All indicators suggest this trend to continue. It has been encroaching the lower Bollinger Band of the Kovach Reversals Indicator, with no retracement in sight. A retracement will be confirmed by a green triangle, if an when it happens. The Federal reserve should be very mindful of this in their December meeting.
If you're interested in the Kovach Reversals Indicator and more, sign up for access at quantguy.net!
US Yield Curve ( 2 minus 10 year ) US Yield Curve ( 2 minus 10 year ) - Commitment of Traders - Futures Only - Percent of Open Interest - Legacy Format - Calculation of
10 year Non Commercial Longs minus Non Commercial Shorts with sum of 2 year Non Commercial Longs minus Non Commercial Shorts
US Yield Curve ( 2 minus 10 year ) and some COT analysis US Yield Curve ( 2 minus 10 year ) - Commitment of Traders - Futures Only - Percent of Open Interest - Legacy Format - Calculation of
10 year Non Commercial Longs minus Non Commercial Shorts with sum of 2 year Non Commercial Longs minus Non Commercial Shorts
US Yield Curve ( 2 minus 10 year ) and some COT analysisUS Yield Curve ( 2 minus 10 year ) - Commitment of Traders - Futures Only - Percent of Open Interest - Legacy Format - Calculation of
10 year Non Commercial Longs minus Non Commercial Shorts with sum of 2 year Non Commercial Longs minus Non Commercial Shorts
Fed funds and Treasury Yield Curve RatesWhen fed funds above Treasury Yield Curve Rates and Treasury Yield Curve Rates at zero or negative (inverted).. well new crisis has arrived in the next months... not there yet but getting closer.
US 10-yr yield runs into neckline resistanceWatch out for a failure at the neckline resistance of 2.31% followed by a break below 2.263%. Such a move would signal the corrective rally has ended and the yield is heading towards 2.00%.
Failure at the neckline would also signal a top in the Dollar-Yen and a potential sell-off in the equities.
US 10-year treasury yield - Double top reversalA weekly close below 2.3% would open up downside towards 2.0% (target as per measured height method)
US 2-year yield: Former resistance offering supportThe yield found support at 1.28% (former channel resistance) yesterday and has staged a rebound to 1.33%.
The major averages - 50-DMA, 100-DMA and 200-MA are all sloping upwards and nicely aligned (one below the other) suggesting the long-run view remains bullish.
