Australian bond market is collapsingAU10Y rally continue. The chart is at the bottom of the up-trend channel and heading upward. The target is ~12% and probably will be reached in 2025.
Government bonds
US 10Y TREASURY: surprise, surpriseThe US jobs data posted during the previous week was the highest surprise for markets in the recent period. The US economy added 256K new jobs in December, which was much higher from market expectations. At the same time, the unemployment rate dropped to the level of 4.1%. Certainly, such developments are positive for the US, however, investors were not happy. A strong jobs market and a too strong US economy will make the Fed halt further cuts of interest rates. Some analysts already came up with their predictions that the first rate cut in 2025 might occur in September. For other analysts it is questionable whether the Fed will cut even once in 2025. Whatever these initial expectations, still the FOMC meeting is scheduled for January 28th, where more information will be available and further priced.
The US 10Y benchmark yields reacted strongly to jobs data on Friday. Yields reached higher grounds, at 4,76%. At one moment, yields reached the level of 4,8%. Yields returned to the levels from April last year. Until the January FOMC meeting, it could be expected that the market will continue to test levels around the 4,8%. However, the picture will be much clearer after the inputs from Feds officials. Hopefully, there will be no more surprises.
[EUCHF] Reallocating your FIAT-Cash to your friendly neighbour OANDA:EURCHF
Hello all,
TL;DW:
Without seeing a precise trade entry/exit this 'trade' is more about positioning you FIAT into another country.
🧀 The reward is (more) cheese
Knowing that inflation will (hopefully not!) come back in full in 2025, it can be a wise move to prepare for it in advance and position yourself accordingly.
🧀 Super Swiss Cheese Target of below 0.9 and below
I assume a continuation in this drawn channel of standard-deviations, which will lead to a target over a time horizon of 9+ months somewhere at 0.90 or further below 0.85.
Please also watch the video.
Thanks! 🚀
Market Update: UK 10Y Yields Back on Nov 4th, we highlighted a potential triangle pattern on UK 10Y yields. 📈 At the time, we noted that a weekly close above 4.75% would complete the pattern, offering a potential longer-term upside target of 6.6%.
Last week, we got a weekly close above 4.75%! While a monthly close would strengthen the case, for now, as long as yields stay above 4.50%, I'm leaning into this scenario.
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Bond prices under pressureThe price on the US 10-year Treasury note fell to almost 96.0 on Friday, after payrolls report came stronger than expected, reinforcing the view that Fed would need to slow down rate cuts.
The price on the UK 10-year gilt fell to 89.6, the lowest since August 2008, and broke down the support at 91.0.The pressure in the UK bond market has been further amplified by mounting investor concerns over the nation’s debt levels and the government's ability to restore public finances while implementing its budget plans.
This rise reflects a broader increase in bond yields fuelled by concerns over Trump’s policies and a hawkish outlook from the Fed.
10y+ bonds are becoming even more attractive for investorsThe US economy in December added the most jobs since March and the unemployment rate unexpectedly fell, capping a surprisingly strong year and supporting the case for a pause in Federal Reserve interest-rate cuts.
Nonfarm payrolls increased 256,000, exceeding all but one forecast of economists. The unemployment rate fell to 4.1%, while average hourly earnings rose 0.3% from November.
YIELDS are rising, and traders are fully pricing in the first rate cut in October. The 10-year yield may aim for the 5% level, similar to the March 2023 movement. However, let's not forget that at that time the interest rate was 5.5%, and there were no expectations for combating 9% inflation.
Currently, inflation is even below 3%, and concerns that the US will impose new sanctions or that tax cuts will create a new wave of inflation are purely speculative fears, not facts, which have created an emotional backdrop in the markets.
On the contrary, 10, 20, and 30-year bonds are becoming even more attractive for investors.
And don't forget, pre-election promises often do not turn into reality.
US10Y 10 YEAR BOND YIELDthe united state government 10 year bond yield will continue to rise in the face of current change of political landscape, the new regime will focus of strengthen us dollar will will see more us dollar return back to us .
1Q2024 outlook pre-December NFP'sBack in December before the November non-farm payroll print, the US 10-year yield was sitting just below the 4.20% which coincided with the 50- and 200-day MAs. Since the stronger than expected payroll print of 227 thousand, yields have spiked aggressively to highs just above 4.7% earlier this week. (See the attached idea from December)
It is difficult to gauge how the payrolls will affect the US bond market today but I still believe the US 10-year yield will reach the 2023 highs of 5% given the strong upward trend. The turmoil in the UK gilt market also does not bode well for investor risk sentiment as we may be witnessing a historic resurgence of the so called bond vigilantes.
Over to the technical indicators, a short-term pullback towards the 50-day MA at 4.41% and the zone between 4.45% and 4.50% seems like the next move following today’s payroll print. The US 10-year seems a bit overstretched and the RSI indicator is hinting at a bearish divergence. This will however just be a short-term pullback and as long as we remain above the 50-day MA, a 5.00% yield on the 10-year seems inevitable.
Bond market bottom ? Equites down bonds to change and move up?Simply put, USA needs the interest rate to be lower, it bounces off the long term KLOS then we could see a change in direction for bonds something that next to no one is expecting. Trump is coming into help save the world. So his new team will make structural changes Elon could tweet to all to buy bonds and hey everyone who follows him takes action to save their own butts. Elon fixes the deficit hugely in relative proportions without putting the jobs at risk.
That would on the one hand help savers and people with mortgages as if the price of the bonds goes up then interest rates go down. however the loss to Americans from their stock portfolios does not help the total money held by Americans.
The box represents only 7% away price may reverse at round number 100, which is not so far away now. This area offers strong KLOS for a bounce from 2004 levels
You could get short term fed notes which pay well and would benefit from any reduction in interest rates. I think these would hold their prices or go up a bit because they may get bid but the money moving out of equites.
Interest rates to move lower ? (with a bit of dollar weakness ?) this will reduce the payments all governments need to make globally so as to stretch their budgets rather then raise taxes.
critical critical moment from TA standpointThis can be the lower high that dictates the uptrend I have been speculating for so long
Yields are going to drive the markets this year.
British bond yields breakoutBritish long bond yields, in this case 30 year yields are breaking out from a long term ascending triangle pattern. Higher long bond yields tend to translate to higher interest rates so if this trend continues could impact the housing market and the overall economy of Britain.
2024 review and where to from here for US10yRisk-off sentiment doesn’t seem to last long in this current market despite all the geopolitical tensions, election volatility and inflation fears we witnessed this year. In spite of all the volatility and the odd carry trade squeeze the SPX is set to end the year up more than 25%, its second year on the trot of more than 20% gains. Never the less the US10 is on its way to close the year down roughly 4.5%. Meanwhile gold, a risk-off asset similar to US long-term treasuries, touched fresh all-time highs in October at $2,792 per ounce, up almost 30% year-to-date, and bitcoin (regardless whether you see it as a store of value, casino capitalism coin or a reserve asset) is up 125% year-to-date.
The US 10-year yield was off to the races in the first four months of the year off the back of elevated inflation and modest US labour market growth which saw yields climb to highs of 4.7%. 10-year yields however turned at the end of April after US CPI topped out at 3.5% in April while the US unemployment rate continued to tick higher.
I initially expected treasuries to continue their sell-off in the 2Q2024 and the US 10-year yield to break above the April high of 4.7% to complete another wave higher towards 5.0% however the forward guidance from the Fed coupled with their self-proclaimed victory against inflation ultimately pushed bids for bonds. Additionally, in June the ECB, BOE and other major central banks started front running the Fed with their rate cuts which strengthened the demand for treasuries and the dollar. The failed break above 4.5% in July coupled with the US unemployment rate topping out at a rate of 4.3% let the bond bulls loose.
Yields continued to slide rapidly in the 3Q2024 until Japanic Monday on the 5th of August when the carry trade squeeze scorched short positions on the Japanese Yen after the BoJ’s surprise rate hike. Bond bulls managed to pull the yield down to a low of 3.6% before the Fed’s 50bps rate cut unexpectedly halted their run.
Counter intuitively, longer-term yields have been rising since the Fed started cutting the federal funds rate. The Fed controls the short the short-end of the yield curve and with the Fed cutting rates coupled with the treasury sell-off, the market finally saw the normalization of the yield curve which has been inverted since July 2022!
So, where to from here? The conclusion of the US election results saw treasury yields come off of their highs of around 4.5% but the current sell-off may still have legs if the bond vigilantes see another bout of inflation on the horizon. Additionally, the Fed has indicated that they are in no hurry to cut rates, opting for a more hawkish stance. The last non-farm payroll print will be released on Friday which may give some technical direction for yields heading into 2025.
A break below the 200-day and 50-day MA around 4.2% will allow yields to drop back below 4% as we head into the New Year. My prediction is however for a re-test of the 2024 high at 4.7% early in 2025. A break above the 61.8% Fibo level of 4.3% will be an early indication of this move. In terms of technical indicators the RSI still has room to move higher and is close to oversold ranges while a cross of the 50-day MA above the 200-day MA will signal a golden cross. Additionally the impulse wave following the Fed rate cut was very strong which signals to me that we are current seeing a bullish pullback in yields (bearish for bonds).
US10Y afternoon analysisTechnical analysis for US10Y.
Bearish on long-term bonds, this analysis has yields continuing to go up.
Displayed count has A wave beginning off 9 March 2020 low, completed 23 October 2023. B wave as completed zigzag to September 17 2024 low.
C wave count in wave 3 of 3, with targets of 5.337% and 5.592%. This count shows C wave completing at top of pitchfork (drawn off 9 March 2020 low), but with measured move I would expect the C wave to complete north of 6.496%.
Key supports: 4.507% and 4.126%
Key resistances: 4.739% and 5.021%
US 10Y TREASURY: expected economic outlookInvestors continue to weigh the US economic outlook for the year 2025, and adjust their positions accordingly. Although there has not been significant US macro data released during the previous week, still, the ISM Manufacturing PMI report for December showed that the US manufacturing remained under pressure. Also, weekly jobs data missed the investors’ expectations. The market reacted with further decrease of the price of the US Treasuries, increasing the 10Y benchmark yield to the highest weekly level of 4,62%. Still, they have ended the week at 4,60%.
In a week ahead, the US non-farm payroll data are set for a release. This might bring further volatility to the market, and a reaction in modestly higher 10Y yields. The higher volatility might continue through the month, prior to the January FOMC meeting, scheduled for January 28-29th.
Potential Bond Duration Spread - 'Riding The Yield Curve'I expect short-dated treasury yields to drop, increasing their price
ie. buy short-dated treausries
could also go short ultras but my view is that yields will slowly come down across the board so I will not be buying the spread
COT positioning shows commercials favour shorter duration bonds
Reversal Imminent as Bond Yields Hit Key Support🚨 Why Record-Low Bond Yields Matter for Chinese Stocks 🚨
When bond yields hit record lows, it sends ripples across financial markets, and for Chinese stocks like NYSE:NIO , NYSE:BABA , and NASDAQ:JD , the implications are particularly impactful. Here's why:
1️⃣ Lower Borrowing Costs
Low yields equate to reduced interest rates, making it cheaper for companies to finance debt or raise capital. For capital-intensive firms like NYSE:NIO , NYSE:BABA , and NASDAQ:JD , this means:
Improved financial stability: Lower interest expenses help preserve cash flow.
Accelerated growth potential: Easier access to capital supports scaling operations, R&D, and expansion.
2️⃣ Increased Market Liquidity
Monetary easing drives investors away from low-yield bonds and into equities, searching for higher returns. Growth stocks like NYSE:NIO , NYSE:BABA , and NASDAQ:JD are especially attractive in this environment because:
Their valuation thrives on future earnings potential.
Increased equity demand supports rising stock prices.
3️⃣ Stimulus-Driven Demand
Low bond yields often align with monetary and fiscal stimulus efforts aimed at boosting economic activity. For NIO, BABA, and JD:
Electric Vehicles (EVs): Subsidies and green initiatives can stimulate EV demand, benefiting NIO.
Consumer Spending: Platforms like BABA and JD benefit from increased consumer confidence and spending.
Technical Analysis Supports the Case
The CN10Y (China 10-Year Treasury Yield) has reached the bottom of its falling wedge pattern, a historically bullish signal for Chinese equities:
Repeated pattern: Every time the CN10Y bottoms, Chinese stocks surge significantly.
RSI Oversold: The Relative Strength Index (RSI) confirms an oversold condition, indicating a potential market reversal is imminent.
What to Watch For
📈 As bond yields drop, the market is setting the stage for a potential rally in Chinese growth stocks. Be prepared for a surge, particularly as stimulus measures kick in and liquidity flows into equities.
Chinese stocks like NYSE:NIO , NYSE:BABA , and NASDAQ:JD might be on the brink of a significant uptrend. 🚀
Disclaimer: This is not financial advice. Always conduct your own research and consult a financial advisor before making investment decisions.
Recession RisksWhen the 2 year yields reconnect with its declining moving average, markets get really vulnerable.
Not always, but often.
But I guess nobody cares anymore about recessions...
US10Y Yeild US10Y in a bearish channel. Will it breakout to the up side or respect fail and break towards the downside?
US10Y yieldsYields are the factor that dictates what happens to the market next.
In case of a break above the white trend around 4.8% expect another push higher towards 5.2% which will mean the stock market might a final push higher, then a recession should hit at this rate.
in case of a break below the yellow channel around 4.35% expect further downside to 3.2% which should coincide with a healthy market correction and a run to safety with a rise in bonds, below this level should means recession is already in
Did the 10 year yield break in 2008?Good day Traders and investors,
The 10 year yield on the 6 month chart. This is the entire history on one chart.
What is going on with the 10 year yield? It is getting very, very volatile. It all started in 2008 with the financial crisis just looming around the corner. At the same time it broke the .236 on the Fibonacci sequence and has been diving ever since. That is until the next major crisis of the pandemic where is seems to have bottomed and took a strong bounce off a cliff dive. What does all this mean? did something break in 2008 like a lot of economist are saying? It's very possible. When we look at the chart, the 10 year yield compared to the last decade has been very stable. Even during the Volker years (late 70's early 80's) when interest rates spikes it barely made a move out from the norm and then rode the top of the trend as support for years until 2008. This volatility break out does look deferent and kind of scary. What will the volatility lead too, massive spike? or massive plunge? Could it also just bounce around sideways for years? What we have to keep in mind is, these are historically long-term trends. 20 to 40 years. Could this move up be a fake out? Yes, I think it's possible, however a fake out is on this chart 5 to 10 years, so it's of no major concern at the moment.
THE INDICATRORS
Right away, when look at the chart and the RSI, we see clear weakening and bearish divergence on the trend. We can see it playing out (bearish divergence) from 1968 to 1981, when the yield made a higher high but the RSI made a lower low. As we can see the divergence did play out, but it took almost 2 generations in 40 years. Also the ASO has been showing that the sentiment over the yield has been lessening over the years on the up swings and down swings, but it just had a major cross, so is that over now? Time will tell, a lot of it.
Touching on the Historical volatility again, we clearly see a sense of somewhat controlled or stable volatility for close to 100 years until 2008. Could this new volatility be the new trending range for the next hundred years? Possibly, if so, it shouldn't concern us. For now, we should just focus on the next 5 to 10 years and see what happens.
I have included a couple of scenarios in the chart. If the RSI gets rejected from this down trend, then yes, this is the chance that it could be a fake out move and then reverse and go lower. If volatility stays high and the trend is to go up for 20 to 40 years then I do believe the RSI would have to break this down trend. both of those in my opinions are scary, the 2nd one than the first. There is also sideways action for a decade and possible a cool down of the volatility before the next move, I would prefer this one, as it seems less scary to me.
THE FLUFF AND EXTRA
I think the yields being a fake out and go lower is the least likely scenario. However, (and here is the Fluff) my conspiracy mind has one scenario where this could happen. It all hinges and plays on CBDC's becoming a thing during this time frame. The theory is if CBDC's are introduced within the next 5 to 10 years then the yields could reverse, go back and make new lows at some point. The reason being is I don't think we can go negative yields without CBDC's. That doesn't mean it's a given if CBDC are implemented, it means the doorway would be opened for it. Remember, this is just FLUFF and opinion and means nothing.
Kind regards &
Have great day
Demetrios
JP10Y JAPANESE GOVERMENT 10 YEAR BOND YIELDJP10Y PLAYS A KEY ROLE IN YEN TRADING ACROSS ALL PAIRS
Interest Rate Differential: When JGB yields rise, it increases the interest rate differential between Japan and other countries. This makes JPY more attractive to investors, causing the currency to strengthen.
2. Capital Inflows: Higher JGB yields attract foreign investors seeking higher returns, leading to capital inflows into Japan. This increased demand for JPY causes the currency to appreciate.
3. Reduced Carry Trade: A higher JGB yield reduces the attractiveness of the carry trade, where investors borrow JPY at low interest rates to invest in higher-yielding assets. Reduced carry trade activity leads to a stronger JPY.
4. Increased Hawkishness: Rising JGB yields may signal a more hawkish stance from the Bank of Japan (BOJ), which can lead to a stronger JPY.
US02Y : The strongest 'indicator'The chart above explains.
Big decision for DXY and Stocks.
Good luck.
2024 is a wrap - time for 2025 outlook - let's go2024 will be a memorable year
-23% gains
-Mag 7 + Semiconductors + Bitcoin all contributing nicely
-PLTR was the top performing stock in the S&P 500 (impressive 340.48%)
As always, 2024 wasn't in a straight line up, though it felt like it at times
VIX had #1 and #2 largest single day moves ever (Aug 5 and Dec 18)
April was a sticky inflation pullback month
August was a Bank of Japan deleveraging weekend scare
FED dominated the catalysts with guidance, narrative, and wait and see between employment and inflation data
2025 will bring new president, new policy, new Republican power. Many were excited about this but there are still checks and balances and markets need more reassurance than hyperbole. I plan to look at income plays and trading plays were buy and hold. Whatever I do own equities and ETFs wise, I want protection just in case the market isn't as straightforward and bullish like it has been since Oct 2022.
Happy New Year - thanks for watching!!! See you in 2025!!!
