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Zb1

Rising rates: Why is the 30 year yield so low? The 30 year treasury yield has traded under 3.25% for almost 4 years now. The Fed continues to hike rates on a quarterly basis and Trump is unhappy about rising rates. Every day we hear how the economy is 'in great shape', and jobs data is 'as good as it gets'. More significantly what is pushing up rates are increased treasury issuance and the Fed's accelerating Quantitative Tightening. So all in all why isn't the 30 year yield closer to 4% like it was only four years ago? For several years the market has priced in low expectations for the long term. The yield curve continues to flatten towards the lowest spreads since leading up to the great recession. (28 basis points on the 30-5 spread and 30 points on the 10-2 spread). At this rate the curve could flatten or invert in 6 to 12 months. An inverted yield curve historically is followed by economic recession. What's your thoughts?
TVC:US30Y
by dime
2
ZB1! - Bond trend is up, flow is downThe orange stair stepping of the bigger structures (Pivots) on this chart show us, that the trend in this timeframe is up. But currently there is a opposite flow going on, to the downside. The flow is NOT the trend, but the minor stair stepping down on the level of the market breath. The white Fork is a "Pullback-Fork", as I call it. It measures the potential pullback (from the upside to the downside in this case), and where price will reach the Centerline (dashed white line) over 80% of time. The yellow Mini-Fork give us context in the flow of the market. As soon as price is trading above the U-MLH (upper-medianline-parallel), price has a high tendency to swing back to the upside and retrieve it's current direction, the trend (orange stair steps). Just observe without trading and see how this plays out. You will learn a lot... P! If you like to learn more about the Pitchforks and how to find high probability trades, then here's how you can get your free beginners course: 1. Klick the link at the bottom of this post to surf to our website. 2. Register for the FREE MEMBERSHIP 3. Login and start the course
CBOT:ZB1!
by Tr8dingN3rd
XAUUSD: What's it worth? The correlation to real yieldsThis chart compares the real yield of long term Treasuries (top) to gold in USD (bottom). The real yield is the investor in long term Tresuries expects to receive after allowing for inflation (nominal interest rate minus the inflation rate). At a glance there's visibly a strong negative correlation betweeen real rates and the price of gold over time. Research by _Erb and Harvey showed a negative 82% correlation between real interest rates and gold prices from 1997 to 2012 (The Golden Dilemma). The real yield on long term treasuries has fallen from over 3% in 2000 to negative yield in 2012-2013. During this period of time the price of gold gained over 600%. From 2012 the real yield increased approximately 1% to 2015, while the price of gold fell almost 40% during this time. Since 2014 the real yield has remained relatively steady under 1% while the price of gold has stayed between 1200-1400. Gold is relatively expensive when the real yield on treasuries is high, and relatively cheap when the real yield on treasuries is low. If an investor can gain a high real yield after inflation by holding a 'risk free' treasury, then the opportunity cost of holding gold is comparatively high. This makes gold relatively less attractive since gold pays neither dividend nor interest. Treasury investors lose money during negative interest rates (when inflation is greater than the nominal interest rate). This makes gold more attractive despite having no yield. The Long-Term Real Rate Average index shown in the chart is described by the Treasury as, "the unweighted average of bid real yields on all outstanding TIPS with remaing maturities of more than 10 years and is intended as a proxy for long-term real rates." The price of gold can be compared to real yeild of treasuries from short term to long term. Another interesting comparison is the 3 month rate minus _CPI inflation. What's your thoughts? Do you expect the real yield on treasuries to increase or decrease in the years ahead? Where do you expect the price of gold will be in the coming years? More info: en.wikipedia.org papers.ssrn.com www.pimco.ca
FX:XAUUSD
by dime
2
Short Bonds & Long Copper | Copper/Gold vs. 10yr YieldsIt looks like the Bond market hasn't priced in growth or we're going to see a nasty reversion trade in the materials sector and a bond pop. The Copper / Gold pair is a great proxy for inflation due to the divergent properties of the 2 metals. Copper is purely an industrial metal and a proxy for inflationary growth so the 10yr reacts correspondingly. Gold, on the other hand is a precious metal and trades similar to a monetary instrument and is loosely correlated to the long-end from the inverse yield relationship.
COMEX:HG1!Short
by mattcook