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2% yield is coming--soonHello everyone, I drew this pattern a few days ago when analyzing the SP500 behavior in recent weeks. I believe the market boogeyman is not gone and that today was just a taste of what he has in store. 2% yield will not be in July. It will be here in April or June... and as early as March 29th. The yields are behaving extremely bullish lately. The blue lines represent an ascending channel that is consolidating at higher lows. In the past few days you can see that the pattern is returning to the center of this channel less and less. It's breaking out of the channel to former a sharper one. So we've got increasing curvature. I believe the yields have a strong possibility of going parabolic unless the fed takes control. Given JPOWs speech, he is going to be reactionary and not prevent it. So it's definitely in the realm of possible and trending towards it. I believe this could have severe implications for the equities market. I've drawn a purple 2% yield line which is being eyed by the market as a whole as a possible 'catalyst' for a 20% correction. At 2%, the yield allows the bonds to break even by surpassing what JPOW says is inflation. The bond market is not believing JPOW and the Fed. They seem to believe inflation is over 3% and as high as 4%. They also seem to believe that it is not transitory. The yield is also becoming suspicious. I believe there are a number of short sellers hitting the US10Y in an effort to push the fed to raise rates. I have no proof. Only a gut feeling based on observed price action. Be careful. A parabolic yield could induce a panic leading to a possible limit down on the NASDAQ/SP500. You're welcome to view my forecast I made on March 12th. We are seeing some deviation but the overall pattern remains. If I am trading right now I would be in cash or in puts. Please trade carefully. The market may experience extreme volatility as the TINA effect weakens. (There Is No Alternative -- meaning stocks have the best return possible and there is no competition) Disclaimer: I am holding puts and have been for a few days. I am not a financial expert or advisor. Trade at your own risk.
TVC:US10YShort
by tay_tay86
End of volatility? Yields continue to rise. Spy could crack.Hello. Despite this weeks amazing rally, I believe it's too much too soon. The yields are continuing to rise and could be as high as 1.7% by late Monday/Tuesday. How could it affect the market? Some economists are predicting that a 2% yield on the 10 Year will result in a 20% correction in stocks. This is in line with the bearish megaphone that has formed. There's a possibility that we are approaching a peak. The rejection could take us quite close to the economists warning of -20%. 350 could happen which is around a 18% correction. What do you think? Leave your comment below. I believe we have 1 more dip before truly breaking out of this. For now, I remain short and will load more puts should we try to push past 395 to reach 400. At 400, I will go all in on puts. Currently holding puts for 390 strike by friday. A circulating idea has been that we will have >2% yield by June. Trade at your own risk.
AMEX:SPYShort
by tay_tay86
6
7 MOST IMPORTANT CHARTS TO WATCH RIGHT NOW1. VIX is filling the gap from when the Feb-Mar crash begun. Volatility is getting supressed when things actually look very fragile with Central Banks having nothing under control. A VIX spike (big move down for stocks) wouldn't be a surprise here for reasons I'll explain soon. 2. DXY looking strong here. The 50 DMA has turned up and dollar strength could be a problem here. Watching other charts tells me things are OK, so the weakness comes from specific currencies. Some currencies are doing very well while others very poorly and there is no concrete way to go about it. 3. CNH/CNY however are very clear as to what is going on. They seem to be in agreement with the DXY. The relentless USD downtrend has been broken and the USD is showing signs of life. Despite the QE, despite the massive stimulus... the USD hasn't gone down. That's not a great sign. Sure most currencies are getting devalued, but if the USD is so strong and could begin an uptrend we have a problem... 4. Essentially most of that is attributed to US long term rates going up faster than anywhere else. This could be happening for many reasons, right or wrong. Inflation might be here, inflation might be coming... but it depends on which country you are looking at and in what form you are seeing it. Is it because of supply shocks (i.e low Oil and Copper production), currency debasement, loss of faith in the currency or trade wars etc? It could be many combined, but when we see bonds go down it could the fact that we have a lot of supply coming in and not enough demand. Maybe we had such a big bull market that people are taking profit. However the impact this has on the market is on many different levels and it comes down to how the market is structured, stock valuation models, different investment strategies and so on. So the more yields go up (bonds down), the bigger the problem becomes if it is relentless. 5. Gold has been going down because real yields have been going up and people have been taking more risk. Why hold gold and not other more useful commodities or riskier assets in general? Gold going up isn't a good thing. It means something is not going well. Over the last few days Gold didn't go down along with bonds, which is worrying. It is stuck between and uptrend and a downtrend, however it is clear it is currently in a downtrend as it is below all key MAs (50-200-300 DMAs). 6. Oil has had a massive rally and I can't tell whether it is over for now but it could be. Very high oil prices in the current environment wouldn't be ideal, but hopefully because more oil is being produced, not because demand is down. Low oil demand means low growth and bad things in general going on. High oil demand means growth and go things going on. Oil got above the 2019 highs, swept them, retested them and went down quite a bit. It also crossed above the big diagonal downtrend from the 2008 high all the way down here and then came back down. If it closes like this and goes lower, I can't rule out 52$ or even 42$, but if it starts going above 68 it could quickly accelerate higher. 7. RUA is the index that has the top 3000 US stocks, spot. It is just an index and doesn't track futures but spot, so it isn't open 24/5. Stocks are still in an uptrend, which Japanese and European stocks showing quite a bit of strength. We've seen quite a few US stocks do well, but if the top US stocks struggle because of higher rates... there could be a big problem. If bonds start selling off hard, the borrowing costs for many companies will skyrocket. That is clearly a massive issue right now. So is a 20% like the one we had in 2018 possible? Yes it is. Do I think stocks could still go parabolic? Of course, but it might take some extra time to get there. We need bigger actions from central banks and eventually bonds slowing down and go up slowly. For now we could get another 5-10% correction, test the trendline and go higher. Until I see the market close below I think up is more likely, although I am more cautious.
by BitcoinMacro
WATCH OUT with this PUMP!WATCH OUT GUYS 👉 ALL THIS COULD REVERSE during the Press-Conference, which is why I decided to take a little bit of profit here and rather wait❗️ "The Federal Reserve kept interest rates and its monthly pace of bond buying unchanged Wednesday, even as it acknowledged an improved economic backdrop as vaccine roll outs gather pace." It seems like the market has priced in a potential rate-hike (pretty unlikely to be honest, but the reaction shows it), which is why equities and majors vs USD are pumping. As you can see, the FED still decided to keep its Bond Purchasing Programm unchanged 👉 They probably don`t do anything to cap yields, which WILL likely cause more inflation-worries and so a potential reversal of the current moves due to rising yields. Let`s wait for Jerome Powell and see what he has to tell us!🙏 If he meontions yield-capping- we might see a continuation!
by Trading2ez
17
US30Y Time for bond yields to reverseThis is the U.S. Government Bond 30Y Yield from 1988 until today. I chose this hyper long-term chart on the 1M (monthly) time-frame as with bonds being the talk of the month as for reasons that may move stocks, Gold etc lower, I wanted to get a good understanding of what the real long-term picture is. This illustrates a clear and standard Channel Down. I have applied the Fibonacci levels on it. As you see the price is now testing the 0.618 retracement level, which is exactly on the 1M MA50 (blue trend-line). The chart clearly shows that the MA50 and the MA100 (green trend-line have been acting as a Sell Zone since at least 1995 (where we can measure). We can see that only once over these decades did the price (marginally) break the 0.786 Fib (October/ November 2018). On all rejections within the MA50/100 Sell Zone, the price always pulled back to at least the 0.236 Fibonacci level. That means that the upside is limited on the US30Y and we will most likely start seeing a bearish reversal soon. ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** -------------------------------------------------------------------------------------------------------- !! Donations via TradingView coins also help me a great deal at posting more free trading content and signals here !! 🎉 👍 Shout-out to TradingShot's 💰 top TradingView Coin donor 💰 this week ==> xBTala --------------------------------------------------------------------------------------------------------
TVC:US30YShort
by TradingShot
13
CRUCIAL MOMENT FOR US-DOLLAR!Hey tradomaniacs, US-10-Year-Yields are currently re-testing a strong resistance, which is bad for equities but supportive for the US-Dollar. Technically we see that YIELDS and DXY (US-DOLLAR-INDEX) are both at strong supply-levels while equities are at strong demand-zones👉 These are curcial moments as either rejection or violations of these levels could cause trend-continuations or reversals today. I`m observing these two charts carefully and wait for confirmations. If YIELDS drop US-DOLLAR is more likely to fall aswell in order to complete the previous S/H/S-Pattern. The Target-Zone for it is at 91,200. LEAVE A LIKE AND A COMMENT - I appreciate every support! =) Peace and good trades Irasor Wanna see more? Don`t forget to follow me
TVC:DXY
by Trading2ez
7
BOND YIELDS scary now? Rising way bk frm Aug 2020 (& GOLD down)What this chart shows... The treasury bond yield and the price of gold have a strong relationship in the long and medium terms (in inverse directions, hence the use of GLL UltraShort Gold ETF as a comparative measure - PURPLE line). Yields had been falling strongly, and gold price rising swiftly throughout 2019 and into 2020. After the initial Wuhan Virus shock, yields fell even lower and the price of gold rocketed to historical highs - their movements turned around together in early August 2020 (US10Y yield starting to pick up from Mon Aug 3, and gold starting falls from Fri Aug 7), and have been relentlessly moving like that from that date. The US Dollar, which had been generally strengthening for over two years pre-Wuhan, flipped post-Wuhan; and has been weakening over most of the post-Wuhan period to date (despite weaker gold prices and strengthening US yields from early Aug as we have mentioned). Right on cue, within the first week of 2021 (particularly Jan 7), the USD belatedly began to move in the direction of continued higher yields (with an ever weaker gold price) - this was especially notable in the USDJPY yen and the USDEUR euro . Despite a steep surge in bond yields and the USD for four trading sessions from Jan 7 (and accompanying erosion of the gold price), equity markets were not overly disturbed. But it is a further sustained spurt in bond yields from Feb 16, that has market commentators pointing the finger for the shock to the NASDAQ (IXIC - BLACK line). (Out of step, the USD actually weakened when considered against the USDEUR and the USDAUD from Feb 5 to Feb 25; but they seem to be following the storyline after that.)
TVC:US10Y
by dartde
Ethereum Improvement Proposal (EIP) 1559 is officially approved!Ethereum ETH is trading at support. Lose the 1500 and we have buying opportunities lower. Break 1600s and we're back off to the races to retests $2K. Short term the popularity of ETH has created the high transaction, aka gas, fees, on Ethereum. High fees have driven down sentiment with reason. Will hot new kids DOT, ADA and LINK overtake ETH??? Probably not but DeFi is growing in a side experiment closed ecosystem called Binance BNB. It's a great short term trade if you want the crypto trading pairs. Longer term, open, decentralized , ETH2 is happening this year. Why would one bet on Binance long term when you can bet on Ethereum not controlled by a single organisation? Is Binance controlled by Malta? Is Malta part of the EU? Who controls Binance? EIP 1559, the interim solution is happening in the London release (fork). Meanwhile, miner replacement for lower fees, validators need to lock up 32 ETH to become validators on ETH The future is friendly. Anything under $2K USD for ETH will seem cheap very soon. Bitcoin might become the store of wealth, ETH might become the workhouse with a now programmed way to ensure the supply dwindles with transactions creating a constant upwards pressure for ETH starting in July 2021, four months from now. As Bitcoin continues to stay inefficient without L2 lightning, ETH has a real world dominant use case with a solid, well supported, road map. Watch the ETHBTC pair for confirmation on this thesis.. PS There is room for both and some others....
BITSTAMP:ETHUSDLong
by UnknownUnicorn2413721
Stocks Still Rearing from YieldsThe sudden and continued rise in bond yields have created a problem for Stocks. The S&P has retraced from the upper bound of our pseudo-megaphone pattern. Although we do have support at 3791, we appear to be forming a bear flag, and may break lower. There is a vacuum zone down to 3758, which it appears that the S&P seems to be gearing up to cross. The level 3758 is not only a technical level but it also intersects with the lower bound of our pseudo-megaphone pattern so we should see some some support there. We have a cluster of levels below that at 3749 and 3737, which should provide further support. If there is bull momentum, we should see resistance at 3847, which is about mid way between the upper and lower bounds of our chart pattern.
FX:SPX500Short
by quantguy
US10Y Similarities of 2020/21 with 2008/9This study brings forward the similarities of today's price action on the U.S. Government Bonds 10YR Yield with 2008-2009 on the 1W time-frame. * In 2008, the bottom was made shortly after the Quantitative Easing 1 (QE1) was initiated in order to offset the sub-prime mortgage Crisis. In 2020 the bottom was made shortly after the 1st Stimulus packaged was initiated in order to offset the COVID-19 Crisis. * In 2009, the strong rebound that followed broke above the 1W MA50 (blue trend-line) but the MA200 (orange) held, emerging as a Resistance and eventually rejecting the price. So far today, the US10Y is way above the MA50 approaching the MA200. * That rebound formed the fastest/ strongest 1W MACD rise in more than one decade on both periods. * There is a Symmetrical Support Zone involved in both cases. * A Golden Cross and a Death Cross preceded both periods. Will history be repeated? ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** -------------------------------------------------------------------------------------------------------- !! Donations via TradingView coins also help me a great deal at posting more free trading content and signals here !! 🎉 👍 Shout-out to TradingShot's 💰 top TradingView Coin donor 💰 this week ==> alanmasters --------------------------------------------------------------------------------------------------------
TVC:US10Y
by TradingShot
10
Look out below Short the Market, Long SPXSAs the 10YR Treasury yield surpasses the average dividend yield of the S&P at 1.5%, risk assets will lose their shiny appeal and become a much scarier thing to hold. As rates rise, growth companies usually don't do as well since they can't borrow money as cheaply to fuel their rapid expansions. If you look at the all-time 10yr Treasury Bill it looks like we are on trend to retest an old resistance line, which is at about the 2.39% range. If it were to hit that, there would be a huge flight from equities into fixed income because then decent returns could be achieved while remaining safe. To play this, go long SPXS. It is levered 3x to the downside for the S&P 500; so every percent the SPX drops, SPXS rises 3%. Maybe 1 to 3% of your portfolio since it is levered 3 times. 10YR retesting resistance trend line 10YR could hit 2.39%; towering over the SPX's average yield of 1.5% This is not investment advice, do your own due diligence and gauge your own risk tolerance.
AMEX:SPXSShort
by EBITDAtiger
5
US10Y Testing a symmetrical level. Potential Resistance.One of the hot topics in the market recently has been the rising bond yields. The US Government Bond 10 year yield traded this week inside a Zone that has formerly been (from 2011 to 2019) a long-term Support level as clearly illustrated on the chart. With the RSI on the 1W time-frame also entering its Resistance Zone (holding since 1996) and the MACD approaching its own, can this mean that the US10Y has topped? It is not impossible that what used to be a Support Zone, will now turn into a Resistance. What do you think? ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** -------------------------------------------------------------------------------------------------------- !! Donations via TradingView coins also help me a great deal at posting more free trading content and signals here !! 🎉 👍 Shout-out to TradingShot's 💰 top TradingView Coin donor 💰 this week ==> alanmasters --------------------------------------------------------------------------------------------------------
TVC:US10YShort
by TradingShot
4
BONDS or EQUITIES? JPOWs major dilemma|YIELDS|INFLATION|MACRO|This will be a relatively detailed idea, but bear with me. There will be plenty of charts that speak for themselves, so I'll try to keep it as short as possible. Since everything is connected, the analysis will contain three parts, including yields, inflation, macro indicators. I will post an additional analysis of equity factor performance during rising yield spreads, sometime in the near future. Firstly, SPY/IEF is an interesting ratio if we disregard the negative dividend carry. Given the recent volatility in the bond markets, I chose to use IEF instead of TLT, however the difference is not that major when it comes to moves of the 10 and 30 T bonds. EIF principally holds 10 year US treasuries, with an effective duration around 8. I ) YIELDS In essence what the charts shows is that whenever the ratio has been near the top of the channel, an equities correction has followed. There are many reasons why bond yields affect equities. The main reason of course being, the fact that yields are used as a discounting factor, higher yields imply lower present value. This is particularly detrimental for growth stocks, whose cash flows Secondarily, higher yields also imply higher interest expenses, which in an extremely debt ridden economy, companies in the junk spectrum are particularly sensitive to. More on this later. An even more interesting ratio is the IWM/IEF ratio. The reason here being that companies with small market caps tend to have larger betas, and the higher the beta the larger the systematic risk exposure. Based on the argument above, higher yields certainly implies higher systematic risk. Therefore, at the point at which yields become troublesome, this should be first be observed in IWM/IEF ratio. The current consensus is that bond yields will start to hurt equities around the 1.4%-1.5% range. However, these levels can still be considered at the lower range, considering that in the previous three cycles the 10Y-2Y spread returned to 2.5-3%, marking a full inflation expectations recovery (fred.stlouisfed.org). Below are charts 10Y treasury charts for the past 10 years and the past year. What seems to be the problem is the sudden acceleration in rising yields, marked by the breakout from the Biden factor initiated momentum channel. In theory, a higher bond market volatility, is quite an issue for volatility targeting strategies, as they are forced to decrease overall exposure, further exaggerating the ongoing crisis. II) JPows dilemma, bonds or equities? For the past 10 years, the average inflation for most economies globally has been well below their CBs targets. I guess this inspired the FED this time to even encourage inflation expectation beyond the 2-3 % range. The actual problem here of course is that bond holders would require compensation for the inflation premium. Why hold assets that essentially decrease your purchasing power?https://fred.stlouisfed.org/graph/fredgraph.png?g=BphU The past week, with a conjecture of many factors 10Y yields have been completely out of control. There are two main ways to deal with rising yields in a debt ridden economy, implement yield curve control (YCC), Japanese or Macro Prudential way. It's extremely difficult to know exactly how equities will react in the short and long run, and whether the Japanese example is of any relevance. But what's certain is that, a Japanese YCC would cap rates at a given rate (let's say 1%), by setting a price at which the FED buys treasuries excess supply of treasuries. This case is the most bullish for equities, as the monetary base further expands. The question is whether this is constitutional. The Macro Prudential way, would be to force savings institutions (pension funds) to hold more treasuries, driving yields lower. In essence, this would imply a transfer of wealth between the borrower (young) and the saver (old) on a massive scale. This is the bearish case for equities, as the funds would have to decrease their equity holdings in order to buy more bonds. (Idea attributed to R. Napier) Of course, the FED could also decide to do nothing, in which based on similar occasions in the past, we should have a minor correction and/or choppy markets in the near term. I am not even going to guess which direction will the FED choose, we'd just have to wait and see. Any YCC measures would be particularly detrimental for banks. The financial sector has been picking up momentum against tech for the first time in more than three years. III) Is inflation really, really coming? Macro indicator analysis The economy seems to have rebounded extremely well. Here's why. Capital expenditure bounced of extremely well, compared to 2009 and 2001 (fred.stlouisfed.org). The same could be said for Durable goods (fred.stlouisfed.org) and new housing permits (fred.stlouisfed.org). Unemployment declining rapidly, but is still high (fred.stlouisfed.org), which in essence is quite bullish as it implies a accommodative policy until "full" employment is achieved. And of course, corporate earnings are set to rebound fred.stlouisfed.org Likewise, HY credit spreads are at the lowest levels they've been in the past 20 years (fred.stlouisfed.org and fred.stlouisfed.org). Savings rates are high, especially the latest reading for January, an increase of nearly 10% (fred.stlouisfed.org) implies for a further potential that the saved money will be put into the economy once it reopens. Money supply growth is at the highest levels recorded for the past fifty years (fred.stlouisfed.org). Additionally, wages pressures that are mainly legislative should also drive demand pull effect on inflation. Each of these measures to a large extent imply a risk of overheating once the economies fully reopen (perhaps this summer). On a global scale, Chinese GDP is "apparently" rebounding, and the Eurozone is noticing first signs of inflation picking up. However each of these measures is troublesome. There are many reasons but I will go through them briefly. Firstly, the housing market is since a long time has been dysfunctional. The rent moratorium implies, that there is additional debt accumulation, that'll drag down spending. Additionally, foreclosures seems to be postponed, driving the real estate supply squeeze. Savings rate are mostly accumulated by high earners with arguably much lower propensities to consume. Higher minimum wage pressure could easily be negated by business hiring less workers or lower hours worked. The most important factor of all is the fact that the dis-inflational tech/innovation factor still persist, and is perhaps even stronger than ever. At this point I'd argue that since the breakeven inflation rate is still below 2.5-2.7% which has been the top range for the past 20 years(fred.stlouisfed.org), inflation risks are perhaps too far exaggerated. Yes, governments are directly sponsoring extremely risky loans to business (CARES act), dramatically increasing money supply. However, at the end of it all governments can raise taxes directly or indirectly(locally), to cover for these fiscal expenses, which is especially viable right now as the Dems hold a trifecta in DC. This should also take care of Money supply growth. Come second half of 2021, we will see the kind of tax amendments the Biden admin will propose. Retroactive tax code changes would be particularly detrimental. This is it for this detailed macro top-down analysis. There are many other factors to analyze, but the analysis is already extremely elaborate. In the following weeks, the key events to follow are, the quarterly triple witching, how the FED decides to deal with yields if they continue to climb towards 2 %, and todays vote on monetary stimulus and minimum wages. Dip buying may seem very attractive at this point. However, I would caution buying any dips as long as the bearish trend in 10Y treasuries persists, and at least wait until the markets are past the triple witching . In my next idea, I will evaluate performance of equity factors for the last 20 years. -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.
AMEX:SPY
by step_ahead_ofthemarket
5
Short NASDAQ and Gold!!As per the proven academic hypothesis by Ilmanen(2003), it has been established that in times of growth uncertainty, low inflation and stable discount rates, there is an inverse relationship between Bond Yields and Equity Markets. The simple logic behind it is that, investors are looking for risk free return and if the dividend yield of index which is on average 1.74% for Nasdaq with risk (In Feb 2021 it was 1.34%), is lower than risk free investments i.e. bond then why invest in Equities? This is the reason why the equities have started to fall now as bond yields are rising. Bond yields have been rising since August 2020 but their yields were not high enough as compared to Equities. Now when the yields are higher than the dividend yield on equities, people have started to invest in bonds. The same is the case with Gold. Holding gold does not give any return but bonds do and being risk free, offering a higher return than equities, ergo, people have again started to invest in bonds by shorting Gold.
TVC:NDQShort
by wajahatid