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Bond market volatility rocks the EuroData released Thursday showed that U.S. GDP growth slowed sharply to a 2% annualized rate in the third quarter. Meanwhile, investors continued to price in rate increases by the European Central Bank, while dismissing President Christine Lagarde’s effort to push back against such expectations. Market expectations of higher interest rates has brought out bears, with Danske Bank strategists expecting the euro to fall to $1.10 over the next 12 months.
Short
by GrizzlyBearBee
10 Year Treasury Yields on track to reaching a minimum of 1.77Back in August I posted a Descending Broadening Wedge setup where we were at a potential bottom and today it would seem that we have successfully broken out of said wedge and back tested as support and are looking to finish the measure move that will take us to a minimum target of 1.77. If you look on a timeframe like the weekly we have potential to go all the way up to 2.5 if we break above 1.77 but i wont go into charting that yet until we begin to. To see the original idea check the related ideas tab below.
TVC:US10YLong
by RizeSenpai
TLT - 145.25 and it's a confirmed Sell on >TFs.Book Clearing 9/27/2021 TLT Position Closures Today @ > 131.40 ZN Closing 100 x 152 Puts Closing 100 x 151 Puts Closing 100 x 150 Puts Open 100 x 151~ Open 100 x 149 Open 60 x 148 Open 60 x 147 Open 60 x 140 We will closely watch 145.24 Level for the Support Level, should it trade below the trade is cast to 139s with a minor retracement to SELL the ETF. Put ladders will be close in total and gains captured. The 007's are yet to see the light and will Buy the Dip, we will oppose their ST Bid in TLT. Longer-term, TLT Structure looks Negative. FED - What not to say this morning beginning @ 10 AM EST> 8:00 AM EST positioning will provide the Micro Trend into Fed Reserve Bullhorns. The attempt to calm the losing battle with YCC could see on more attempts at gaining the upper hand.
NASDAQ:TLT
by HK_L61
12
USDJPY Breaking Out Of A Triangle USDJPY finally breaks out of a triangle as both SP and US yields rally. Keep in mind that higher Yields are positive for the currency, while risk-on means depreciation of JPY, especially now when BOJ is not ready to take any action on interest rates. Based on their recent statement, they will most likely maintain stimulus in the next few years. Technically I expect USDJPY to see more upside after a completed triangle, so looking for a retest of the 2021, maybe even 2020 highs. JPY crosses are also looking interesting, GBPJPY in particular.
by ew-forecast
TNX Heading Higher?Not really sure what to make of this just yet, but the 10Y yield definitely appears to be heading higher. Ironically enough, this is happening amid a #fed that is committed (at least in the near term) to maintaining low interest rates. My guess is the Fed knows rates will rise on their own, thereby creating a competitive environment among lenders. We will continue to watch this one; for now it looks like we are heading to test 1.75 - 1.77. Neither long, nor short for now. Let's just observe.
TVC:TNX
by ChiefMacro
TLT - 150 Puts - ZN 133.125 TLT continues to Wedge out into the Break Down. Althought the Yield Curve appears to be heading into an inversion into 2022, the Long End of the Curve remains in peril... Countdown to Depression is ticking into Q2-Q3 2022. Fed language and statements are beginning to shift into 2022 indicating they are off balance NOW. Volaility will increase well ahead of the Fed's change in stance. We anticipate a pullback in the VIX Curve into Settlement providing cover for today's Squeeze in the Index Instruments. AAPL and Tesla have been used to provide adjustments to both the ES and NQ, These will be transitory... as Q3 EPS warnigns need a distraction... China incidently decided on MOnday - "there is too much completition in EV's within China" Adios Tesla, Giga Berlin and Texas will have to manage... China closing the doors on Tesla. Confidence will have the intended influence on the Bond Markets, for now it's game on into completion of the Wedge in 10Yr Yields. Risk off dead ahead. There is no recovery in the Economy, rather there are increasingly dangerous issues which will begin to manifest shortly. We will be continuuing to Build Out a Large Put Position in TSLA, APPL, ARKK, AMC. Crypto Scam LiteCoin took the short WalMArt CON to undermine confidence in the space. A 20% decline in LC took chasers downtown in mere seconds. Crimnal Fraud in the Space is an operating axiom.
NASDAQ:TLT
by HK_L61
58
ZN - 10 Yr Note - Continued Move to Higher Yields - ZN TLT ZBTLT is beginning it's terminal phase for the next decline. We Sold to Open TLT this morning, taking our First Position at our Target, with further Sells to 150s Set. Out dated Maturities, we have been suggesting for the past month are due for a large correction in Yields. Day to day noise is just that... Noise. Bond HODLers are convinced they have it figured out. They clearly do not or they would not be supporting an enterprise steeped in criminal activity. 3 Fed Members have now been admitted to Front Running Markets for their own Benefit. CONfidence inspiring.
CBOT:ZN1!Short
by HK_L61
1
10-year Gilts 1-day classic patternsQ: What has the highest probability of occurring? Since early July there have been 4 tests of 132.000 resistance. There is a combination of 2 classic patterns forming at resistance. The double top, where both tops have been rejected at 132.000, is currently valid. The head and shoulders, the head consisting of the double top, would need to break the neckline ~129.750 to become valid. Both patterns equally project 128.250 as the target. Objectively looking at the entire base beginning around the high volume bar in February it is curve-like. Looking to the weekly timeframe it is quite possible this is the formation of a cup with the handle to follow. So there is some conflict in this area which can lead to a large number of market participants getting it wrong and as a consequence more momentum. It is quite probable that market participants have already shorted the double top breakout. Waiting for the head and shoulders to confirm with an ~129.750 neckline breakout before entry is advantageous. Stop placement above what appears to be a right shoulder at ~130.750 yields a 1.5R target. It would also be beneficial to visualise the 1-week handle as a means of guarding against the 1-day head and shoulder pattern failure.
UShort
by xciiitradingco
1
TLT - Longer End 10/20/30 FlatteningSince 2002 when GSCO's Timothy Bitsberger's began his reign as Assistant Secretary of the Treasury. Fiscal Fundings began to move down the curve to under 30 Months and accumulate a large concentration within this timeframe. It placed the burden of Government Finance up on the Short End of the Yield Curve near the region of control for the Federal Reserve and their ability to drive Monetary Policy. During the waning decades to today, the Bond Markets have become 11.2X the size of Equities. Since 2008 we have witnessed a rapid acceleration in Money Stock, one which remains underreported then (as the FED ceased reporting M2) to today where the very life blood of Credit Growth Velocity has dried up and reversed. TARP, TALF and the Yield Swaps accumulated $32 Trillion in Debt. 91% of the American Public was against these Monetary Measure then.... Today they Gag for it as the Global Economy lays in ruin. Independent Producers have been wrecked to the point, recovery is simply not viable. The FED Minutes served to provide several references to moving up the Timeline for Tapering. This provides cover for Powell's (we'll let ya know while we're thinking about thinking) as behind the scenes they are preparing for short duration reduction in the usual suspects - RMBS, CDO, CDO, Corp Debt, Zombie DEBT. Yield Curve Controls became evident as the 1.71 10Yr yield was not permitted to be breached, had it and Swaps would have been grossly offsides and created a large dislocation. At present, The uncertainty over the impact of this Policy change - Potential Policy change - remain in Flux. The Dollar, our target is 9465 ST, remains the wild card as the EU faces retribution for decades of abuse and a failed attempt at Negative Interest Rates - the vote of Confidence ALWAYS flows to the Currency of Seniorege, the US DOLLAR. Capital Flows favor US Markets as China is making it extraordinarily clear, they are closing off the Monetary & Economic Borders well in advance of the UNWIND coming to our shores. A steepening or inverting yield Curve is immaterial. We crossed the Rubicon long, long ago. As we witness the SPX to M2 Stock overthrow the .22 level - there is an important message there, extremely important, which is why we suggested the ES would attempt an over-throw on Friday @ the 4441 level. These actions ahead of Jackson Hole are significant. More to follow within the 5 Part thesis beginning with ES/M2S, TLT, Divergences, Capital Flows and "Resurrections' Trade" HK
NASDAQ:TLT
by HK_L61
2
Is ARKK and Cathie Woods time up? J.Powells' clock is ticking...Whether it is bitcoin, SPACs, shorted meme stocks, Tesla or other heavily priced in Growth stocks (High Price/Book value), all of these speculative assets have one common factor, that is the cheapness/availability of money. However, this may all change if in the next 2-3 readings inflation pressure are proven to be persistent. Relatively, will be a very in-detail idea, but bear with me. Firstly, before I get into analyzing other factors, as the chart shows, the current risk-reward ratio on ARKK is skewed towards the short side with a strategy of directly shorting ARKK, or buying OTM puts @105 or 80, with a stop-loss at 130. There are several fundamentals reasons for shorting ARKK: 1) The concentrated positions of ARKK into few names ark-funds.com as ARKK is an actively managed fund where on the way down it would become increasingly problematic for Cathie to cut losing positions, with a potential of a self-enforcing liquidity spiral. 2) The largest holdings such as Tesla are priced in heavily above the SPX price/earnings(Forward P/E =115, SPX P/E= current 35, historical 16, price/book value ratios(28 vs 4.7), which is simply unsustainable in terms of future expected returns, unless Tesla takes over the world, which simply won't happen by any stretch of the imagination. Granted there seems to be a trend continuation on Tesla, although it may as well be a trap if the FED changes the current course (a discussion will follow below). 3) In the last few weeks since the IPO of $HOOD, ARKKs correlation to bitcoin futures has been 60%, although historical correlation since 2017 is only 20%. It begs the question as ARKK accumulates more and more names whose value is directly derived from cryptocurrencies (Tesla, Robinhood, Coinbase, SQ and others), is holding ARKK roughly the same as holding bitcoin/cryptos as they are both primarily driven by the same factor? Well it all boils down to understanding the key factor, which as mentioned appears to be the cheapness/availability of money. The question is when will money stop being cheap as it is today? The long drawn out debate will the FED taper, or even worse when will the FED start hiking. To understand how the FED sets their policy, it is based on whether or not they are fulfilling their congress given mandates which are price stability (inflation within target range) and maximum employment (unemployment at or below the long term rate ~5%). Currently based on the spot rates, the market is pricing in that there will be 1 hike in 2020 (Forward 1 year rate in 1 year, ~0.36) and roughly 2 more hikes in 2023. With balance sheet tapering (where the FED unloads bonds to the market in return for cash, or does not buys/tapers as much assets), the current projections are within the start of next year. However, plans may change as they quickly did back in 2019. From this chart it can be clearly observed that during the last policy normalization in 2016 (snipboard.io), the FED only started hiking once unemployment went below 5% (roughly the long term unemployment rate). In a normal environment where the FED isn't trapped by their QE policies, where both inflation and real growth rate are far exceeding their targets as stated by Taylor rule(nominal rates = neutral rate + inflation + 0.5 * (inflation - inflation target ) + 0.5 * (real gdp growth - potential gdp growth), the FED is bound to hike. But they've used the maximum employment "excuse" to not do so. This is why the recent reading where unemployment went down to 5.4% from 5.9% is scary. This meant that the fed is closer to fulfilling their maximum employment mandate, however they are far beyond their inflation target rate of about 2% =>>>> implying higher probability of more earlier hawkish policy to also fulfill the price stability mandate, because they don't have the maximum employment excuse any longer. Based on the recent readings (services PMI 64 vs 60, unemployment and todays inflation) bonds quickly reacted The current 5 year average (breakeven) inflation expectations are back within the inflation target of around 2% (2.5%-forecasting premium ~0.5%, snipboard.io), although this rate can hardly be trusted any longer as the FED holds roughly 1/5 th of the TIPS market. This is my attempt of shortening this long story, which relates to ARKK, as ARKK experienced two drawdowns in March and May of ~-30 to -20% during the last episodes of inflation fears when the 10 year yields went to 1.75%. This suggests that ARKK is extremely sensitive to yields above 1.5% given its growth factor exposure. A yield steepening caused by less quantitative easing and more likely rate hikes, certainly implies a choppy market ahead (at best) where value is gaining above growth (). SPX at these levels has returned nearly 20% for the year 2021 so far (4450/3750 -1 = 18.5% +~2% div yield), which is more than a standard deviation above the average of ~8%. It is simply unsustainable to continue the current fiscal and monetary policy stances that has driven asset prices higher mainly due to the multiples expansion, without mitigating the inflation risks that are bound to appear. Thank you for following along! If you have any questions or points to debate, make sure to leave them in the comments. -Step_ahead_ofthemarket ________________________________________________________________________________________ >>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 and follow is greatly appreciated! Disclosure: This is just an opinion, you decide what to do with your own money. For any further references or use of my content- contact me through any of my social media channels. The QQQs in a wedge : Large caps, SPX futures getting heated up:
AMEX:ARKKShort
by step_ahead_ofthemarket
2
Bonds - US10Y Cannot and Will Not Rise SignificantlyIdea for 10Y Treasury Bond Yields: I speculate that yields cannot and will not rise significantly until the equity bubble pops. I think that it will start a wave reaching 0.7 this month. Why is that? - There is almost $300 trillion in private sector debt globally. - Companies used margin debt for share buybacks to boost EPS, creating the illusion of economic growth. - There is a borrowing cost for private debtors, debt must be serviced. - 10Y is used as a risk-free rate benchmark for credit derivatives, especially for risk spreads. - Furthermore, rising yields means that a rate hike would inevitably follow. - The premium on credit risk is at a record low (BBB). - Even junk bonds and Greece is negatively yielding. - Zombie companies are at an ATH (one that isn’t generating enough income to cover the annual interest payments on its debts. With interest rates so low, these zombies have stayed “alive” by refinancing their debts at increasingly lower rates, or simply tacking on more debt to keep breathing. But with rates rising, zombies may be forced to refinance at higher rates.) - Since debt is increasing, the magnitude that rates can rise before negatively impacting the private sector is decreasing. Any significant rise in rates will quickly cause mass insolvencies in these zombie companies, which also would cause a cascade of liquidations in yield chasers who had sold credit default swaps - accumulating asymmetric risk. It is a massive, massive bubble, and any significant rise in rates would collapse the equity market and the economy. The only way to keep equities stable would be for negative rates, but the dollar is without a doubt - rising. As debt rises, liquidity is sucked out of the collateral pool in a proportional amount. You will just eventually get to a point where debt servicing becomes too expensive anyway from a collateral supply perspective. That's the fundamental condition which will eventually bring about the reflexive regression to the mean. So is it a slow and painful death, or a quick flush? I'd bet on the latter... more money to be made for insiders who short it. In fact, I would wager that the Bill Ackmans of the world are betting big on credit default swaps on zombie companies, similar to CDSs/CDOs on subprime mortgages in 2008. People are buying with both hands bonds which are expected to yield less than what they paid for at the maturity. Any change in conditions would cause this to be capitulation into a bid-less market, don't you think? It's pure insanity and there is only one thing to do here. GLHF - DPT
TVC:US10YShort
by UnknownUnicorn1043646
4
Yield Curve: The ultimate predictor of crypto movesThe yield curve, defined as the difference between US 10-year treasuries yield and US 2-year treasuries yield, is an excellent predictor of the next intraday moves in the crypto market. If it is going higher, it means that long rates are increasing faster than short rates and that translates to strong economic activity and higher inflation. Crypto markets love inflation because they serve a hedge against it. Observe the chart, it appears to be a leading indicator on the future direction of crypto prices. Today it really as the case, the yield curve steepened alot (see green vertical line), which was THE signal to buy. You had about 1 hour to load up before the crypto market reacted. Sometimes the indicator has a long lead, sometimes it has a shorter lead and sometimes it may appear even coincident. Now the indicator is not giving any signal, but I just want to show you how great the signal was this morning and the previous weeks!
TVC:US10Y
by quantmaven
Non- Farm Payroll Front RunAAII Bullish sentiment Indicator @ All Time Highs. ROC irrational optimism abounds - while sentiment remains extremely negative @ 38%. Housing Prices remain in an extraordinary Bubble with the 10yr approaching 1% from YCC. The ES SPY SPX Trend SLOPE is increasing. USDX appears to be supportive ~ 92. A weak US DX will shove assets higher within the Negative DX Trend. A clear structure of the resumption of Down Trend as the Long DX Trade which Specs chased is failing. FX Pairs have clear bias to Higher DX, outsized, but not extreme. Technical Structures across FX remain DX Bearish. Yields are telling us Equities would move higher and yet the expectations for the move higher was not met. _________________________________________________________________ *** Divergences continue to expand to Negative Extremes. NFP will be front run, Claims have been declining. August 6th may provide the Catalyst for Bulls, then again Delta is beginning to show large gains in New Cases among the Vaccinated. The Market remains extreme, Caution warranted. We remain Neutral into NFP.
FRED:NPPTTL
by HK_L61
1
10 Year Treasury Note into Jackson Hole10yr Yields peaked at ~1.70 as the Federal Reserve began YCC (Yield Curve Control) well in advance of recognition by the Retail Bond Market. With a shortage of T-Bills and Janet Yellen attempting to Fund the Fiscal Malfeasance out the Curve in order to reduce Short Term funding. With CASH mounting in Money Market Funds, there remains a large pool of Cash with the potential to absorb further issuance while driving Notes to Bonds Yields even lower. The issue becomes the non-transitory nature of shortages, rates of labor, price levels for those of us keeping track and a number of perversions to the integrity of Data presented. There is a long history of Intervention Failures, the approaching one will be historic. Europe has by any measure, already defaulted. This Point of recognition is quickly approaching in August. It will spread and generate a panic.
CBOT:ZN1!
by HK_L61
2