Get started

Yieldcurveinversion

Yield Curve vs SPX We're quickly approaching all time lows on the 10yr-2yr yield inversion chart. However, in the past the rates inverted at the end of the rate hike cycle. This time we inverted from the start of the hikes and aren't even half way to the Fed's goal of 3.5%. So we are in uncharted territory with the bond market. Note, crashes followed the yield inversion, as rates started falling. The crashes happened anywhere from immediately to 2 years after initial inversion, but 6 months seems to be the median. Does that mean we run up and/or chop sideways until rates come down? Perhaps. however it tells me we're due for another crash when the yield turns positive again. I'm not sure what to make of the rate hike bear trend line, but we are about to breakout of it, for sure. Perhaps we get more hikes than we bargained for. However, inflation numbers should improve soon with oil & metal prices falling, while food is about to go through harvest season. I anticipate some bull run off that. Inflation relief might be short lived, however.
FRED:T10Y2Y
by Nicklaus68
4
Yield Curve Inversion Imminent (3M/10Y)Well, it has happened again! We of course see the 2yr/10yr yield curve inversion: It has been like this for some time. However, all I hear is: “But this time it is different!” The U.S. curve has inverted before EACH recession since 1955, with a recession following consistently between 6-24 months after. Only one time in this time-frame has this signal failed. I am hearing now, the only yield inversion that matters is the one the fed is paying attention to. The 3-Month/10-Year. Let’s keep in mind the Federal Funds Rate will continue to rise, most likely at a more modest pace and maybe with less regularity. The point being that the 3month is highly correlated to the federal funds rate: With the federal funds rate rising, and the 10y dropping we can speculate that even this 'curve comparison of curves' will also invert. WHAT DOES THIS MEAN TO ME? Inflation is certainly high, and the federal funds rate rising will reign it in with the sacrifice of jobs & growth The yield curve impacts businesses & consumers The higher borrowing cost will impact car loans, and mortgages We are already getting data indicating a cooling housing market Many Americans live off plastic credit cards. When the short-term rate rises the US Banks raise the benchmark rates for consumer loans, credit cards and other borrowing products. This increases cost for consumers. Many banks love this environment. They enjoy the spread. When the yield curve steepens, banks borrow at lower rates and lend at higher rates. When the curve is flatter their margins are squeezed, which deters lending.
Editors' picks
TVC:US03MY
by ZenMode
35
Long Term Bearish Risk Assets Like Bitcoin and ETH$BTC & $ETH : what “if” scenario. Inv. Yield Curve potentially spoiling the risk-on environment but not without putting on a deceptive bull market first 🙃 More than average, a few months to a year of a growing equity market occurs from when a 2Y and 10Y yield curve inverts. The downturn is a surprise but has more likely occurred a year - to 2 years after the Yield Curve inverts. As Crypto has worn the pants of a "risk-on" asset, it is likely to take on the characteristics of equities and some commodities (especially with a rising strong dollar). Short Term - long Long Term - short
Short
by KennySniper
Good day to as any to welcome the next recession- yield curvesThe US5Y looks ready to break above the US10Y rate for bonds , signaling an inversion of the yield curve, the number one precursor to each recession in the US. The 10 year is sitting 3/1000 of a percent higher right now. When they cross I expect the market to turn red today. The breakout of the US10Y from its cup and handle pattern dating back to June 2019 marked the top of the bull run, and when it backtested and bounced up the selling accelerated. You can learn a lot comparing the US10Y and the SPY or QQQ and how they relate. Anyways, US10Y killed the bull, maybe now it causes a recession and brings back the bears. Happy trading!
TVC:US05YShort
by BrianVS
Should you be concerned treasury yields are rising?The lowest-rated debt keeps outperforming safer securities, with investors apparently more concerned about Treasury yields moving higher than credit risk. Investors are now demanding the least extra yield to own junk bonds over investment-grade notes since 2014. Rising treasury yields implies one of two scenarios is happening or about to happen. 1. Global economic recovery is happening as a result of increasing vaccination and economic activity as countries open up. Inflation is actually rising to Central Banks' targets 2. Markets are about to crash with US FED & ECB struggling to push inflation higher. What are the financial markets telling you? DXY? S&P500? DAX 30? Commodities?
U
by GrizzlyBearBee
Louis Vuitton & Dow Jones Intermarket correlation between Dow Jones and Louis Vuitton , and the fractal correlation between Yield curve ( US 10Y - US 02 Y ) and NZD AUD shift forward 353 weeks ,this technique of moving forward is used by Larry Williams and aims to align the same Wyckoff phases of two out of phase, unrelated graphs. The Yield curve is the most powerful indicator for the stock markets, the inversion of the curve predicts the trend change, I have devised a fractal system that predicts the yield curve, moving the Nzd Aud chart forward I get a fractal correlation that has existed for 25 years, will it continue to exist? if the answer is yes then it is telling us that the yield curve will change direction, but if it changes direction it means that the dow jones will also change direction, if this "law" is maintained, if the fractality is maintained I also have the information that will change the trend for Louis Vuitton too.
EURONEXT:MCShort
by claudioiommi
Prediction of next financial downturn Pt.2Dow Jones dropped over 1200 points in one day, that's the biggest downward move ever happen. Interest rates are going down FED Watch Tool shows over 99% that FED will cut at least 25pts. More cuts will come soon, please check www.cmegroup.com I follow this website and 3-5 days ago there was only 10% for a single interest rate cut. Unfortunately, due to the Coronavirus outbreak global economy suffers and the whole world will soon enter Great Depression!
TVC:US10Y
by Simon_says
2
US10Y - US02Y -- Yield Curve Cycling LowerThis is a Weekly Chart of the US10Y yield minus the US02Y yield. (This composite is sometimes referred to as the Yield Curve and if the spread or difference goes below 0.000, then that phenomena is termed to as Yield Curve Inversion). This spread is widely followed worldwide as any number below or close to 0 tends to indicate impending slowdown in the US Economy, (which is the world's largest) and thus the most important. You will notice that the Yield Curve tends to cycle and that the initial low point, marked as Point 1, was in 1989; when the US Economy suffered a total collapse in domestic manufacturing and started to initiate the concept of outsourcing manufacturing, particularly semiconductor fabrication to Taiwan, heavy shipbuilding to South Korea and automobiles and domestic electronics to Japan. The fall of the Berlin Wall in 1990, which was joyfully called the "End of History" was when US Corporations found themselves in the unique situation of no longer having to give in to their workers demands for unionization and normal humane conditions; in order to pacify them and have them stop demanding the same work and social security conditions of their fellow workers within the Soviet system meant a boom till 1992. Those workers did not have a leg to stand on from 1990 onwards. Point 2 is the dot.com crash of 2000, Point 3 is the Great Financial Crisis or GFC and the collapse of the Mortgage Backed Security or MBS global housing market in 2006/07. These two events were frantic attempts to keep the US Reserve Currency system afloat as well as to inflate the US Stock Markets and keep failing corporations commercially viable. This was achieved by the total and absolute destruction of Iraqi Society and subsequently the total annihilation of Libya as a functioning sovereign nation, in order to keep the Petro-Dollar system concurrent. We are now approaching Point 4, which is a Currency Crisis and a collapse in the US Dollar or the USDX or DXY. This will lead to a massive convergence towards digital currencies and IMF/World Bank sponsored attempts to replace fiat. The question remains; will the debt burden of those same workers within capitalism be written off and if so, will that be initiated via a Bernie Sanders led Administration in the US before the situation gets totally out of hand.
TVC:US10YShort
by supratimbarman
4
Macro Deep Dive - SPX, Initial Claims, Yield Curve and Fed FundsCharts: - Top left = SPX - Bottom left = Initial jobless claims (unemployment metric) - Top right = US 10 year and US 2 year spread (Yield curve inversion metric) - Bottom right = Fed funds rate (short-term interest rates) It is no secret that US equities are grossly overvalued, from Warren Buffet to Stanley Druckenmiller to Ray Dalio, the smart money has made their case for why US stocks simply cannot justify their valuations indefinitely. Yet Stocks continue higher, largely due to massive CB liquidity, spurred on from fears of a global slowdown and the ensuing economic impact this would have on such indebted nations and consumer, this coupled with the supply chain shock that the Corona-Virus is undoubtedly having on global trade is a recipe for disaster. So what are the macro/ recession indicators saying? They are flashing red. The Initial claims are at record lows, which sounds fantastic, until you realize that most major recessions and even depressions are accompanied with low, not high, unemployment. Recessions strike when everyone is complacent, when they are fat and happy and when they have their blinders on. I will be watching the initial claims and will look for the the claims to spike and reverse trend, as this is a much stronger indicator of structural weakness within the economy. Moving over the the US10y/ US02y spread, it is well known that the yield curve briefly inverted in 2019, however, the initial inversion is not the point to sell, this is due to the yield curve inversion being a leading indicator of recession. Historically, from the point of first inversion to the inevitable decline in equities, is roughly 12 months to 18 months. We are 7 months into the initial inversion and the yield curve looks like it is going to invert yet again. Finally we have the Fed funds rate, the targeted overnight lending rate for the Federal Reserve. The trend is clearly down, down, down with rates this has been rocket fuel for bonds which are now traded akin to equities for capital appreciation, rather than the interest bearing assets they were designed as. Furthermore, and perhaps most interestingly, it is not the point where rates are raised that signal trouble for stocks, but rather once the Fed pivots and reverses course and begins easing and lowering rates, THIS, not the rate hikes is the signal to watch for. It comes as no surprise then, that interest rate cuts have not only begun, but are in full swing, with further rate cuts this year, already being priced in. The macro outlook looks bleak, this bubble CANNOT last forever, however i firmly believe that the Banksters will not let this bubble burst without a fight, a global slowdown, coupled with global equity markets crashing would cause widespread panic and in some places, riots. So keep an eye out for the helicopter drop of money coupled with bail ins, bail outs and of course, more QE. -TradingEdge
TVC:US10Y
by Profit_Link
4
Don't be Fooled - Best Recession Indicator Flashing Red - SPXYes it is nothing new or original, but it bears repeating. The inversion of the 2yr and 10yr US yields still remains the holy grail of predictive indicators, once these yields invert (the 2yr yields more than the 10yr) start your stop watch to recession. DO NOT BE CAUGHT OUT Protect your wealth that you choose to hold within the financial system, think about taking profits now near ATHs. Stay safe out there.
SP:SPXShort
by Profit_Link
3
10Y US TREASURY NOTE|PREMIUM[LONG-TERM]YIELD ANALYSIS|PART 2/2"US10y : Series on Bonds - Sept 20th 2019(7-8 minute read) For the past couple of month yield curves, particularly the 10 year vs the short term maturities have been a popular topic in the mainstream media, mostly because of the yield curve inversion . This analysis aims to provide a well detailed approach to some of the crucial factors regarding the US Treasuries yield curve. Relatively to part one(linked below as #1), this is a much more complex analysis. Before I start analysing the yield on the US10 year treasury, addressing some of the criticism from my previous analysis that they are too complex to understand. If it takes me several hours and even days or weeks to notice a pattern, it should take at least 30 mins to properly understand my charts. Most people on this platform have an unrealistic expectation of understanding an unknown method of chart analysing within 30 seconds . In this yield analysis I am utilizing Elliott Waves, Pitchfork Trends, Ichimoku cloud , Harmonic Patterns and EMA/Moving averages in addition to my fundamental approach. Beginning with this analysis by analysing the pitchfork . It is the most complex and largest part of the analysis. It took me about a month to perfect it and from my thorough understanding, the pitchfork base formed after the mild early 90's recession(w) . You can see my initial sketch for this analysis here: ibb.co To my credit, the same pattern can be observed after the FED rates breakout from bullish cone in my previous analysis on the cycles of FED rates(linked as #2) . It is hard to understand the yield curve without a through understand of monetary policy. I will get back to this point on the pitchfork later in the conclusions. After the dot.com bubble, a bullish triangle( wedge ) formed in the US10Y . This pattern lasted until the real beginning of the recovery in 2012, after the financial crisis of 08'. At the same time it formed the bottom in yields labelled as e(z), which still stands as the main support. Since the recovery, thanks to Trump's tax reform , the yields managed to make a top close to the long-term resistance ~3.3% in late 2018 . However, there was a hard rejection near the 200 monthly MA and the pitchfork median . Persistently, since the early 90's, I noticed that the 100 Monthly EMA (blue line) has been the primary resistance, in addition to the ichimoku cloud. On the bearish side in yields, it is important to emphasize here the recent yield curve inversion. The significance of the latest inversion is that is that it has predicted the previous 6 recessions. Now obviously, this pattern may not occur again since we are at such low rates anyways. Personally, I do not see the yield curve as the factor foreshadowing the next recession, it is more of a symptom of a recession. The actual issues that are cooling off the global economy which obviously has a major impact on the US economy, are the downtrend in trade caused by the trade war, Brexit and the economic pessimism in the Euro Zone . I will not discuss these factors in this analysis(you can read about them in my previous posts). To conclude this analysis on the US 10 year treasury note; without a trade deal, it simply illogical to be long in this market . In addition to the drop in yields(Where's the positive correlation kicking in??), with the recent earnings miss from Fedex (FDX) and the poor performance of the transportation sectors and the rise of defensive sectors(XLU) (XLI-Linked as #3); it is very surprising that some of the cyclical equities haven't taken a major bearish hit yet . These are the fundamental factors necessary for a cycle extension and a healthier economy. In case a recession happens and that is obviously inevitable( to FED's/ECB's surprise ), from this analysis after the 10 year note breaks the current support at e(z)~1.3-1.5%, several bottom supports from the pitchfork can be observed . The US10Y is currently in a Bearish Rectangle. Contrary to the negative yields that have occured in a good number of the OECD economies, in my opinion the US yields should follow the drawn pitchfork and form a bottom close to 0, but not necessarily cross the line and turn negative in the medium term. This concludes the two part analysis on the US 10 year Treasury note. Hope that anyone reading this post found it useful and enjoyed it! |Step_Ahead_oftheMarket| P.s. Would appreciate some feedback charts or simple comments expressing your opinion on the bond market, thanks! >>I do not share my ideas for the likes or the views. This channel is only dedicated to well informed research and other noteworthy and interesting market stories.>> However, if you'd like to support me and get informed in the greatest of details, every thumbs up or follow is greatly appreciated ! Some of my popular analysis relevant to the bond market: 1. Part one- ZB1! US 10 Year Treasury note Price analysis : 2. FED Rates SuperCycle Analysis : 3. XLI- US Industrials : Full Disclosure: This is just an opinion, you decide what to do with your own money. For any further references or use of my content for private or corporate purposes- contact me through any of my social media channels.
TVC:US10YShort
by step_ahead_ofthemarket
Why it is still too early for a Market CrashI am short term bearish for the US Markets but I expect a last 5-Wave Impuls Move on the upside in the longer term (look at the SP500 Big Picture Analysis). We are currently seeing an inversion of the US 10 Year Yield and the 2 Year Yield this is a recession signal but remember after this signal we get on average another 22 Months until a bigger correction and another 12% run to the upside in the Markets, this would match well with the EW Counts which also shows me one last Impuls to the upside. We can further see that the inversion level (red line, 0 line) has just been touched there is still plenty of room for the FED to manouver, typically a crash szenario playes out when we have been under the red line (inversion territory) for quite a while and when we start to get out of the inversion territory.
TVC:US10Y
by JonasBenjaminFriedrich
2