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Yields

2yr Yield - FEDFUNDS "Inversion"Over the past ~25yr, we've seen 3 instances of 2yr Yield dropping below the FEDFUNDS rate set by the Federal Reserve. All 3 instances coincide with Recessions. On this chart, you see the Yield Differential (Yellow), the SPX (Candles), along with the time of said "Rate Cycle Inversions" (Blue Bar Counts Below Price). As you can see, all 3 previous instances lead to significant corrections and/or volatility with notable downside. Not since the 2008 "GFC" have we seen an "inversion" of this magnitude. While correlation is NOT causation...It can be a "warning light" signaling 'Danger Ahead'. It is certainly forewarning us that the probabilities of a recession/down-turn are gaining momentum. Yes, people have been calling for Doom n Gloom, "Top is In", Recession imminent... for a couple years now. And I am not recommending you sell everything and hide under a rock. What I am recommending however, is that you reduce leverage if you have any, perhaps lock in some profits while you're "on top", and head into the coming days/weeks/months with eyes wide open, alert to potential quick corrections when this wild ride inevitably 'ends'. Each instance resulted in the "recent lows" being violated. If history rhymes this time, that could mean low 3k's incoming for SPX. COULD. Can your portfolio/strategy/mindset handle that kind of volatility/drawdown? Just some food for thought. As always, good luck, have fun, and practice solid risk management. Thank you for your time and consideration.
SP:SPX
by mrjones2020
One Chart to Rule them All ~ 10Y/2Y and 10Y/3M Yield Spreads10Y/2Y and 10Y/3M Yield Spread One chart to rule them all. I have combined the 10Y/2Y Yield Spread (purple line) and the 10Y/3M Yield Spread (blue line) onto one chart. You can get updated readings on it at anytime on my TradingView page (link in bio above) I have measured the historic timeframe from un-inversion to recession for both datasets. Un-inversion occurs when the yield spread rises back above the 0 level. Given the 10Y/2Y Yield Spread has just un-inverted (moved above 0), I thought this a worthy exercise. The findings are interesting and useful. Main Findings / Trigger Levels The findings are based on the last 4 recessions (this as far back as the 10Y/3M Yield Spread chart will go); ▫️ Before all four recessions both yield spreads un-inverted (only one has to date); - At present only the 10Y/2Y yield spread has un-inverted (2nd Sept 2024), thus we can watch for the next warning signal which is an un-inversion of the 10Y/3M yield spread. Without both yield spreads un-inverting the probability of recession is reduced. ▫️ The 10Y/2Y typically un-inverts first and the 10Y/3M un-inverts second. -Historically the delay between the 10Y/2Y and the 10Y/3M un-inversion is between 3 to 10 weeks (23rd Sept – 11th Nov). This is the date window that we can watch for a 10Y/3M un-inversion (based on historic norms). -If we move outside this window beyond the 18th Nov with no 10Y/3M un-inversion, then we are outside the historic norms and something different is happening. Nonetheless watching for the un-inversion of the 10Y/3M after this date could be consequential. ▫️ On the chart I have used the last four 10Y/2Y yield spread un-inversion timeframes to recession and created a purple area to forecast these from the recent the inversion on the 2nd Sept 2024 forward (Labelled 1 - 4). This creates a nice visual on the chart. Based on these historic timeframes and subject to the follow up 10Y/3M un-inversion confirming in coming weeks, the potential recession dates are as follows (also marked on chart); 1.28th Oct 2024 (based on 2000 10Y/2Y un-inversion to recession timeframe) 2.03rd Feb 2025 (based on 2020 10Y/2Y un-inversion to recession timeframe) 3.12th May 2025 (based on 2007 10Y/2Y un-inversion to recession timeframe) 4.25th August 2025 (based on 1990 10Y/2Y un-inversion to recession timeframe) ✅ Remember, you can check in on this chart and press play to get updated data at any time by clicking the link in the comments below or by following me on TradingView👍 ▫️ I will include a table in the comments which outlines all of the above metrics with dates. I will also share a chart with a zoomed in version of present day so that all the above trigger dates can be more closely monitored. Finally, it’s important to recognize that these findings and trigger levels are based on the last four recessions. There is no guarantee that a recession will occur or occur within the set trigger levels. What we have is a probabilistic guide based on historic patterns. This time could play out very differently or not play out at all. Regardless, all of the above findings help us gauge the probability of a recession with historic timeframes to watch. It leaves us better armed to make the necessary risk adjustments, particularly if the 10Y/3M yield curve un-inverts. Price is king, and at present, prices are pressing higher on most relevant market assets. From the above findings and the current positive market price action, it appears we have a little more time before being hauled into a longer-term correction or recession. I lean towards the later dates (2, 3, and 4 above) for this reason. Interestingly, many of my historic charts from months ago and last year suggested Jan/Feb 2025 (also option 2 above) as a very high-risk period. You can view these charts under the above specific chart on TradingView. This chart is your one-stop shop for checking recession trigger levels based on historic timeframes for both yield spreads. You can update this chart data anytime on my TradingView page with just one click. Be sure to follow me there to access a range of charts that will help you assess the direction of the economy and the market. Thanks again for coming along! Remember, you can check in on this chart and press play to get updated data at any time by clicking the link in the comments below or by following me on TradingView. Thanks PUKA
FRED:T10Y3M
by PukaCharts
12
Are financials topping here? Financials have been one of the leading and strongest sectors on the back of rate cut narratives. The resilience and strength can easily be observed... XLF has been making new highs despite the QQQ & SPY not. Now it begs the question; is all the rate cut priced in? We think financials are set for some downward rotation. If this rotation occurs it opens up many other opportunities as financials do carry some decent weight in the indices. Today names like JPM & XLF gave us a potential daily topping tail.
AMEX:XLF
by Trading-Capital
Gold forecast: What now for gold after scoring 7 monthly gain?I expect gold to rise further and continue to attract buying activity on any dips. One reason is that the overall trend remains bullish, which should deter bearish speculators from acting too forcefully unless there are clear signs of a reversal. Gold finished higher for the 7th consecutive month in August, meaning that the precious metal is now up a solid 21% year-to-date. Will it be able to rise further in September or take a breather? The gold forecast will now depend at least partly on incoming US data and interest rate expectations. I continue to maintain a bullish view on the metal thanks to a favourable macro backdrop and its steady-as-she-goes price action. Gold forecast: Can XAU/USD continue rising? I expect gold to rise further and continue to attract buying activity on any dips. One reason is that the overall trend remains bullish, which should deter bearish speculators from acting too forcefully unless there are clear signs of a reversal. Additionally, there are few fundamental reasons to short sell gold at the moment. In fact, some argue that gold is still undervalued, considering the significant devaluation and loss of purchasing power of fiat currencies worldwide due to high inflation, which remains persistent in some regions. While disinflation is evident in the US and other areas, it's not the same as deflation. Prices are still increasing, just not as rapidly as before. Demand for gold as an inflation hedge should continue to offer support. Moreover, the sharp decline in bond yields in the last couple of months, driven by expectations of rate cuts by the Federal Reserve, is likely to benefit low or zero-yield assets like gold. As long as we don’t see a reversal in the that trend, lower yields should argue against a sustained period of weakness for gold and silver. Dollar in focus ahead of busy week The US dollar is facing a key test this week with the release of several market moving data releases, including the August jobs report. Following today's US Labor Day holiday, the US data schedule becomes busier, featuring ISM manufacturing data on Tuesday, JOLTS job openings on Wednesday, ADP employment data, jobless claims, and ISM services on Thursday, and culminating with the key event of the week, the August jobs report on Friday. Out of all of these data releases this week, the nonfarm jobs report should be a key determinant of whether the dollar’s two-month dollar bear trend extends or whether range bound price action will return. Gold bulls will need to a weaker number to send the metal sharply higher. But if the consensus is correct regarding Friday's jobs report, which predicts 165,000 job gains and a decrease in the unemployment rate to 4.2% from 4.3%, then the market will likely solidify expectations for a 25-basis point rate cut to start the Fed's easing cycle on September 18. In this scenario, I would expect to see a modest weaker reaction in gold at least. However, if payrolls only increase slightly, say by around 100,000 or so, with the unemployment rate potentially rising too, then in this scenario, the dollar could resume lower, sending gold sharply higher as expectations shift back toward a 50-basis point Fed rate cut in September. China concerns linger Meanwhile we have had some mixed PMI readings from China’s manufacturing sector in the last couple of days, leaving investors guessing about the health of the world’s second largest economy. While the official manufacturing PMI fell further into contraction at 49.1 in August from 49.4 in July, the Caixin PMI improved to 50.4 from 49.8 the month before. Meanwhile, the official non-manufacturing PMI ticked up to 50.3, suggesting that perhaps the Chinese economy may have bottomed out. We will need to see further evidence of a Chinese recovery. If so, this will help raise hopes that elevated demand from the world’s top gold consumer nation can sustain precious metals prices at these levels or even push them higher. Gold forecast: technical analysis and trade ideas The steady grind higher is precisely what the bulls would like to see, keeping the technical gold forecast bullish. Shallow dips, higher highs, higher lows are characteristics of strong bullish trends. So, the trend is clearly bullish and will remain that way until we see a lower low form. Dips are likely to find support around broken levels such as around the old record high from July at $2483, where we also have the 21-day exponential moving average converging. The bullish trend line that has been in place since February, comes in around $2450, representing another short-term support level to watch. On the upside, there is only one prior reference point to watch given that the metal is trading near its all-time high. And that level is the all-time high itself, hit last month at $2531. -- Written by Fawad Razaqzada, Market Analyst
WHSELFINVEST:GOLDLong
by WHSelfInvest
CRB Index: Impact on Commodities, Inflation, and the DollarIt’s been some time since we last looked at the Thomson Reuters CRB Index, a key indicator for tracking commodity performance and gauging inflation. With inflation softening recently, it’s not surprising that the CRB Index is also reversing. The chart shows a three-wave rally from the 2023 lows, which suggests a corrective movement in an ABC formation, as identified in Elliott Wave theory. When a correction like this concludes, the next move typically retraces the previous rally. Looking at the CRB Index, we expect prices to move even lower, possibly down to 241. This decline could be further driven by falling crude oil prices, especially if OPEC increases supply as recently announced. Some may wonder how this will impact the USD. Currently, the correlation is that lower commodities lead to lower CPI, which in turn suggests a lower USD due to expectations of Fed rate cuts. Until the Fed cuts rates a few times, the correlation between a lower CRB and a lower USD could remain in play due to falling US yields. However, once rate cuts are nearing their end, that’s when the dollar may find a bottom.
TVC:TRJEFFCRBShort
by ew-forecast
US10Y going lower with the Fed having no choice but to cut.Almost 10 months ago (November 7 2023, see chart below), we made a bold (for the time being) call on the U.S. Government Bonds 10YR Yield (US10Y), as against the prevailing market sentiment we gave a sell signal, right after what turned out to be a top: Today's revisit to this pattern shows that the 1M RSI Lower Highs have already started to form a Bearish Reversal on the US10Y price, similar to 2006 - 2007. We are expecting to hit the 0.382 Fibonacci retracement level at 2.100% as its first Target, on the Fed's first wave of rate cutting and gradually hit the lower Fib targets as the rates stabilize. For better illustration we have plotted also the U.S. Interest Rate (red trend-line), where you can clearly see that the fractal we compare to today, is right before cuts started in August 2007. Also it is a natural consequence of US10Y falling when rate cut cycles start, evident also in June 2019, December 2000, May 1995, May 1989 September 1984, May 1981 etc. ------------------------------------------------------------------------------- ** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support us, keep the content here free and allow the idea to reach as many people as possible. ** ------------------------------------------------------------------------------- 💸💸💸💸💸💸 👇 👇 👇 👇 👇 👇
TVC:US10YShort
by TradingShot
1
Why are Interest rates falling? Time to buy? We have seen an amazing fall in interest rates. Bonds have looked to put in a local bottom. Why are bonds showing signs of accumulation? Is the bond market pricing in a recession? I believe the recent decline in yields is due to commodity weakness. Yields have soften because energy & base metals have become cheaper. This drives the disinflationary narrative. I think its to early to tell whether this decline is from demand or global weakness.
TVC:US10Y
by Trading-Capital
Is the market crashing? The SPY and IWM have completely diverged. On the back of rate cut expectations, many investors are piling back into the junk and high beta names. A clear relative strength move has occurred in small caps: IWM Whilst the megacap stocks have been sold off. The SPY sliced through the 50 MA yesterday and cofirmed the break below. Although this is typically bearish, we are getting into an area of oversold support. If the SPY gaps down tomorrow, I think traders will be buying the dip with both hands. The IWM has blasted above the 50MA, basically moving the exact opposite of the S&P500. The question remains....are small caps going to hold their gains inside of the weekly topping tail?
AMEX:IWM
by Trading-Capital
Front-Running Yield Curve Normalisation on Rate Cut AnticipationThe (in)famous Yield Curve remains inverted. In recent past, spreads normalized only to revert to inversion as rate cut expectations got pushed out. This time though, is different. Recent CPI print has significantly altered market sentiment. The likelihood of an initial rate cut at the September FOMC meeting now exceeds 90%. Consequently, the yield curve is normalizing once more. Current market signals indicate that this normalization could be enduring. WHY IS THE YIELD CURVE INVERTED? The present yield curve inversion indicates that investors do not expect that rates will remain this elevated for long. While 2Y treasuries continue to be re-issued at higher rates, expectations for longer terms such as 10Y and 30Y are lower as they factor in that rates will normalize from their present levels. YIELD CURVE WILL NORMALIZE SOON, WHAT WILL DRIVE IT? While this is the longest period of yield curve inversion in history, the curve has started to normalize. The factors driving normalization in the yield curve were previously discussed. Ordinarily investors demand higher rates for longer-duration treasuries to account for the higher inflation expectations and greater risk. Either inflation must fall, or inflation adjusted treasury yields for longer maturities must rise. Rate cuts will also drive the normalization in the yield curve. The yield spread between 2Y & 10Y treasuries tends to rise in the two months preceding the first rate cut in a cutting cycle as observed in the past. The impact of rate cuts on the 2Y-10Y spread is even more pronounced in the two months following the first-rate cuts. UNCERTAINTY IN MACRO ECONOMIC DATA IS DISSIPATING Make no mistake, the broader picture remains uncertain. However, recent data points to recovery. Chicago PMI showed a sharp recovery in July. But the job market signals uncertainty. Continuing jobless claims remain elevated. Job openings have fallen. But job creation in the last two non-farm payroll prints were above expectations. US Retail sales and industrial production have improved. The impact can be observed through the consistent increase in the GDPNow forecast for Q2 GDP since 12/July. Source: GDPNow The June CPI release showed uncertainty easing. Headline CPI cooled sharply as it fell on a MoM basis. Notably, the stickier core CPI also continued to cool as it fell to 3.3%. However, inflation remaining sticky at the 3% level remains a grave concern. Even if a recession does arrive in the coming months, the 10Y-2Y yield spread is likely to have normalized by then. Yield curve inversion is observed only before recessions not during. RAPID RATE CUTS EXPECTED IN THE COMING YEAR Source: CME FedWatch The rate cuts outlook has improved substantially. FedWatch signals that rates will fall by 100 basis points by March 2025 (as of 19/July) suggesting successive cuts. Other analysts are even more optimistic. Analysts at Citi bank hold the view that rates will be slashed by 200 bps (2% in total), starting in September across eight successive FOMC meetings (25 bps at each) by the summer of 2025. CERTAINTY IN RATE OUTLOOK SUGGESTS YIELD CURVE NORMALIZATION Major moves in the yield curve have only come through after commencement of rate cuts in the past. This time, markets may front-run these expectations. The attempts to front-run rate cuts were already observed in December when the yield spread recovered sharply after the Fed signaled six potential rate cuts in 2024. Presently, the 10Y-2Y yield spread is trading below those levels and has the potential to break out as we approach September rate cuts. The risk of a reversal remains but it is lower. Higher rates pose a systemic risk for the US given its profligate borrowing. Higher rates on treasuries are untenable for much longer. Cost of servicing public debt in June hit USD 140 billion and totaled USD 868 billion in the first nine months of the current fiscal year (33% higher YoY). For reference, the total budget deficit for this period was $1.27 trillion. The interest burden is weighing heavily on the overall budget deficit. HYPOTHETICAL TRADE SETUP Treasury auctions are a sound guide to maturities selection when positioning for yield curve normalization. The recent demand for treasuries at the latest auctions has been low. Bid-to-cover ratio for all (2Y, 5Y, 10Y, and 30Y) was lower than the average bid-to-cover over the prior ten auctions. Demand was weak for the 10Y treasuries. Demand for 30Y treasuries has also been lower than previous auctions but has remained more consistent than 10Y. The yield spread between 30Y-2Y treasuries has outperformed the 10Y-2Y spread over the past 2 months. Investors can seize opportunities from normalization in the 30Y-2Y spread using CME Yield futures. The CME Yield futures are quoted directly in yield with a one basis point change in the yield representing a P&L of USD 10. As yield futures across various maturities represent the same notional, to calculate the spread P&L is equally intuitive with a one basis point change in the spread between two different maturities also equal to USD 10. The hypothetical trade setup consisting of long 30Y and short 2Y is described below. • Entry: -2.6 basis points (bps) • Target: +25 bps • Stop Loss: -25 bps • Profit at Target: USD 276 (27.6 bps x USD 10) • Loss at Stop: USD 224 (22.4 bps x USD 10) • Reward to Risk: 1.24x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CBOT_MINI:30Y1!Long
by mintdotfinance
Why Are Bonds Still Crashing?Why are US, UK, and EU bonds still crashing since March 2020? In this video, we are going to study the relationship between bonds, yields, and interest rates, which many of us find confusing. How can we understand them, and why are bond prices leading the yield, followed by interest rates this season? 10 Year Yield Futures Ticker: 10Y Minimum fluctuation: 0.001 Index points (1/10th basis point per annum) = $1.00 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
TVC:US30YEducation
by konhow
9
KRE: Regional Bank Collapse?Financials have been demonstrating some interesting price action. We believe financials in the near term could be in for some choppy negative price action. With yields now sitting at support during the recent selloff, banks haven't done all that well. Were now at a point in the inflation fight where we could experience an upside move in inflation. We just witnessed today the Canadian CPI came in much hotter. To make matters worse, were at a time when central banks like the ECB, BOC, PBOC, BOJ are all loosening policy. However this very laxy=daisy policy is what caused Oil to bottom on June 4th. Oil has since moved up 13% in 2.5 weeks. This will likely cause yields to have upward pressure since its inflationary to the economy. If the US CPI comes in hotter expect no 2024 rate cut...banks would hate that. Im eyeing the head and shoulders breakdown.
AMEX:KRE
by Trading-Capital
US10Y held the 1D MA200 and is starting a new rallyThe U.S. Government Bonds 10 YR Yield (US10Y) is expanding the new Bullish Leg, and continues to follow the buy signal we gave on January 24 (see chart below): Last week it tested the 1D MA200 (orange trend-line) as a Support, for the first time since April 01 and held. As a result, we expect it to resume the Bullish Leg, the same way it did on July 19 2023 and test initially the previous Higher High of the 2-year Channel Up. Our Target is slightly below at 5.000%. ------------------------------------------------------------------------------- ** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support us, keep the content here free and allow the idea to reach as many people as possible. ** ------------------------------------------------------------------------------- 💸💸💸💸💸💸 👇 👇 👇 👇 👇 👇
TVC:US10YLong
by TradingShot
2