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Yieldcurve

Is a crash still possible at all?In this screencast I show two charts where crashes could happen. I focus on Wall Street which - affects markets globally including forex markets. On the weekly time frame US Oil is beginning to struggle at a 61.8% Fib retracement. Wall Street is possibly struggling at an important structure level. A whole lot depends on China. But dig deeper. See the CSI300 losing steam with some RSI divergence. So while one bunch of hopefuls are punching north based on news of the China deal coming to fruition, there are distant influences that could come to bear on Wall Street from the Chinese markets. Then enter the 'inverted yield curve'. fred.stlouisfed.org This is the most reliable indicator of recessions (not necessarily market crashes). I am reliably informed that the inverted yield curve has heralded every economic down turn since the second world war. But life is not so simple. Some say that the yield curve needs to remain inverted for 3 months if it is to be meaningful. Well, I don't know. In any event the Wall Street cycle is overdue its 'economic winter' just based on its own cyclical pattern (which is between 5 to 7 years). We're past year 10 at this point in time. Stock markets head south before recessions are realised.
Short
by Captain_Walker
1
Brexit, inversion of yield curve, new sanctions against RussiaLast week ended with the “accompaniment” of the UK news. Theresa May was still able to vote on her plan to leave the EU. However, it would be better if she did not do this, since she suffered a third defeat. In theory, this should have been the final vote. Since the UK was unable to reach an agreement last week, the postponement of Brexit until May 22 is not granted. Sum up the country must either leave the EU on April 12 or request another delay. In case of a delay, it is necessary to participate in the European parliamentary elections on May 23. Meanwhile, The European Union is scheduled for an emergency summit on April 10. On Sunday, the British Prime Minister announced that she would again put her version of the agreement to a vote. This will be the fourth time (!). At the same time, she gave a none-too-subtle hint that if the deputies do not vote “for”, then early parliamentary elections will be called. This week might not be easy to the pound. Last week, the pound was naturally under pressure. However, in our opinion, the situation continues to evolve as it has been doing recently. There is an absolutely conscious inhibition of the process. Obviously, the UK will ask for a reprieve, and the EU will provide it. Our position is unchanged - the descents of the pound, we continue to use for his purchases and earnings. There's a lot of chatter about the inversion of the yield curve among the analysts recently. Last week, the yield on two-year US Treasury bonds was equal to the yield on 10-year. This is a rather atypical phenomenon, often a sign of a future recession in the economy. So concern is growing. Against this background, we continue to believe that buying gold on the intraday basis and in the medium term is a good trading idea. About our trading ideas. Our recommendation on sales of the Russian ruble was just fine on Friday. We have repeatedly noted that the strengthening of the ruble is temporary, because it does not have “the ground”, and the ruble itself is vulnerable. It was confirmed clearly on Friday. New information on US sanctions brought down the ruble. We are talking about the second set of sanctions related to the Skripal case. According to Bloomberg, the sanctions include measures against the Russian banking sector. There is no chance to relax this week. A lot of static information led by statistics on the US labor market on Friday. Brexit news, new sanctions against Russia will not allow to relax. We will inform our readers about the biggest events.
Long
by Trade24Fx
Why The Yield Curve Matters To Utilities & Other Bond ProxiesThis chart of the U.S. 10s/2s curve and the SPDR S&P Utilities Sector ETF (XLU) is interesting. A few days ago, I was reading a blurb by a well-known outlet about utilities getting "smoked" during the Q4 equity route. Like above, performance is relative to time frame. Additionally,  you have to have a deeper understanding about what XLU is and what it can do. It's not enough to just assume utilities as "defensive" thus it protects you from a broad equity sell-0ff. This also coincides with some questions I get from subscribers: why advocate holding XLU and TLT? Yes, XLU is a bond proxy but it is not a bond. Its underlying is composed of equities. The TLT is composed of U.S. 7-10 year treasuries. They both perform well under low interest rate environments when yields trend lower. However, keep in mind that the XLU is still equity-based and won't protect you fully. Notice, XLU didn't blink until the 10s/2s began to steepen. It's been gung-ho since the curve flattened out. And if we went back through periods were the curve began to steepen, it effected other bond proxies much more dramatically like REITs. Flattening of the curve isn't the issue unless you're financials. It's the massive steepening caused by the Fed cutting interest rates that kill markets.
TVC:US10Y
by TheMacroStrategist
EURUSD Bear Trend Continues DownwardThe euro was one of the worst performers last Friday and continues to head into negative territory. At the weekly view, we can see that the pair is in a long bear trend while moving averages suggest this to be the case as well. Brexit only worsens this as key votes will occur today and tomorrow on whether or not the UK will be able to strike a deal with the common market. Moreover, an inverted treasury yield in the US signals a recession is lurking somewhere around the corner, although when it will pop up is a bit more uncertain. This only furthers speculation that the dollar will in general increase in value against a whole host of currencies as the dollar tends to be a safe haven asset. From a technical perspective, the pair's inability to capitalize on the recent bullish break through a six-month-old descending trend-line resistance and a subsequent sharp rejection slide from 50% Fibonacci retracement level of the 1.0341-1.2556 up-move now points the resumption of the prior well-established bearish trend. While the pair found a way to break up beyond short-term resistance, this appears to have been a flash in the pan with more downward pressure. For more analysis, please check out market updates at www.anthonylaurence.wordpress.com
Short
by WhiskeyTangoFoxtrot3
The Yield Curve of the US Free Markets 10Y-30Y Combination CaseThe Yield Curve of the Free Markets ... 10Y-30Y Combination Case.. - US Bonds maturities of 10 Year and 30 Year (long maturities) are mostly influenced by free market participants and not by the FED Funds ... at present time they are not tightening as most combinations based on more short maturities. The indicator in the chart, the combination 10Year-30Years is steepening, sending a different message a possibility of expanding the duration of current economic cycle.
SP:SPX
by JoaoPauloPires
1
Bonds to sink or flyThe last bond trade was perfect. Since my last post the futures have soared as well as the TLT etf. The 30 year yield fell as low as 2.90 percent. The yield curve inversion continues to stay towards the middle with the 2 and 5 year below the 1 year and 10 year. The long end has held its ground staying continuously higher. The bond looks as though it may have topped out short term. The sequential is sitting at an 8 on the weekly as well as being far from the 8 ema indicating oversold conditions. The stock market appears to have caught a bid short term so this may lead investors to exit safe havens for the time being. Fed chair Powell appears to be dovish on rates now which could drive up us stocks temporarily. I’m looking for another dip buying opportunity in bonds as I believe what ever news is being floated won’t hold stocks up for long. As soon as they crack bonds will be soaring again. I’m looking at 143 as a support due to prior price activity as well as the 50 week moving average sitting at that level.
CBOT:ZB1!
by ThelmaBrowns
Warning- Inverted Yield Curve likelyUS10 US02 This may not look like something to watch and you may not know about it. Only about 2% of investors understand it, however 98% of institutional traders (the “smart money”) watch it like the World Cup finals. Its the 10 year treasury yield to the 2 Year treasury yield ratio/spread. Bottomline: If it goes negative (hits the dotted yellow line) = Inverted Yield Curve = BAD for Stocks and GOOD for Bonds.. I’d reevaluate everything and have stop losses for every trade. Side note: I have no idea what it means for crypto because bitcoin did not exist the last time yield curve went inverted late 2007.
TVC:US10Y
by jgeno
The Next RecessionI've presented a cross comparison between the S&P 500, the 10-2 Treasury Yield Spread, and the FED Funds Rate. The yield curve has been effective at predicting recessions in the past. I think the next will be no different. There is a lot of fear at the present moment that we may be on the verge of a market crash. We have seen a large correction that is likely not over. However, once trade tensions ease the market will forget this fear and continue on. Greed is high at market tops which is why we have not yet seen the top of this market. Now with this large correction under our belt common belief will likely be that we will have plenty of room to run now that everyone has loaded their cheap shares. This will start the next bull run that should lead us right into the next market crash and recession. Based and the analysis in the chart 2020 seams to be a likely year for the start of the next recession. I have heard opinions from multiple economists that have made similar predictions. Considering the credit bubble we have now is even larger than the one of 2007, the next recession will probably be quite severe. I'd love to hear others thoughts and opinions.
TVC:US10Y
by SPresent21
5
The Curve Is Falling, The Curve Is Falling $TLT God bless the legacy financial media because their uselessness is a blessing. Headline to headline is no way to live through live whether you trade oil or bitcoin. The click du jour is how the 2s/5s yield curve is now inverting, and the 10s/2s are at a mere 11 bps. I have been one of the largest flat curve-ers out there. Why? Because my process shows why the decelerating in rate in change in both growth and inflation will sink the back-end and the front steepening eases. On Sept. 6, I wrote in "Cognitive Dissonance: What the Yield Curve Is Saying:" "A lot of headlines have fluttered across the wires on the 10s/2s yield curve on a continuous path to inversion. Neckties on legacy media continue to say a flat or inverted curve doesn't mean much. I reckon, given the directional trajectory of both the curve and MVR inflation matrix that the curve is signaling market's expectations on inflation. Generally, this would make sense given that the steepening from a curve inversion is triggered by the fed's policy stance on interest rates during the end of the cycle." The concerns about increasing U.S. supply in paper is valid, but the concerns of too much debt issuance over demand becomes "where do I put my money" concerns. That's likely treasuries, increasingly so as investment and junk credit continue to breakdown.
NASDAQ:TLTLong
by TheMacroStrategist