TNX trade ideas
US 10 Yield -Trend line break out(Gold target $1269,EUR 1.1600)A slight jump in yield till 2.43 % likely which is negative for Gold -1.14% and Euro -0.60%
Interest rate spike and its effect on the market. www.tradingview.com
This chart provides color as to what happens after an interest spike in the late cycle. SPX on the back and green lines depict the interest rate spike.
SPX corrects the following days after the spike.
Long 10 year on this breakoutThe 10 year treasury has been being hit with massive amounts of buying from overseas funds that has been pushing our yields further lower even though the Fed raised rates .25 basis points to 1-1.25 in June and keeping the tone for another later this year (possibly December), along side the restructuring of the balance sheet that will release bonds and mbs from the financial crisis onto the market sending the yield higher. This will widen the spread on the 2 - 10 and the bank stocks can continue making higher margins off their loans and deposits (BAC).
The technicals look sharp as a bullish breakout of the recent downtrend from the march highs of 2.62 and the break above the 200 dma on strength and MACD confirmation of a bullish crossover in play.
I'd like to see the yield above 2.30-2.31 in the next couple days for confirmation as that support level broke in May will now act as resistance and is the last hurdle before a possible retest of 2.62 resistance.
Treasuries to target levels pre-Trump electionRespectfully.... if that is possible, I disagree with the Federal Reserve. I do not see how inflation can move higher in an economy that is slowing, income growth softening, retail consumption waning.... all amidst rising delinquency rates. I just have a tough time with what seems like basic economic principles.
On the one hand, mopping up excess liquidity is crucial, lest the economy be put into a mode where there is too much liquidity, and a bubble on assets appears. Well, that assumes we are not there already. I think that is the intention of the Fed's moves. But, this intention is going to be balanced by two things. First, by shrinking the balance sheet, the Fed will push up the long end. But, that pushing up of the long end, which will draw in capital, will also keep interest rates lower simply because there is so much demand for yield. The long end will head higher, just not too steeply.
I believe the Fed will pull this off. I do not believe our economy will be very robust while the Fed does its work. I do not like the linearality, one-track mind of the way the Fed is going about this. The economy will soften, yields will soften.
We may see the entire Trump rally disappear.
Inflation drops hard and so do bond yields; the new normThe economy is slowing. I have been saying this for a minute . Because of that price pressures are awaiting. This is the new normal. Bond yields are falling as investors adjust to the reality of a presidential administration that has no ability whatsoever to deliver any one promise and the economy's faltering.
I have been shorting the US Dollar Index lately. This trend will continue. I have also been bearish on bond yields, and that is now happening. I expect the bond yields to drop below the 2.00% soon. The Dollar will adjust. Commodity prices will follow.
And, yet, why do I think the stock market will rally?
What is going on?U.S. treasury bond yields are signalling deflation, whilst stock melt up indicating an inflationary economy. Does the bond market know something that stocks don't?
TNX: A Monthly TNX Rally/Bounce Potential May Boost the DollarI don't trade the TNX, just observe. It looks like a rally is forthcoming. It could just be a bounce.....
Sometimes the 10 year yield has a positive correlation with the US dollar. Sometimes the positive correlation disappears due to quantitative easing or heavy demand in the dollar. It is on;y visible afterwards when it is almost too late.
With that said, the current level in the TNX looks like a level of support that may give a bounce to the US dollar.
TNX is primed for upWe all know likely rate hike in June. expect yields and financials to catch a bid starting this week.
More Downside For TNXThe TNX is currently correcting the 93.43% up move in the mid of 2016.
To make long story short, we want to buy tnx at around 1.99% IF it can manage to break the current low at around 2.17%.
Consequently, with a break of the low of 2.17% and TNX reaching 1.99% we believe that the correction in the indices or not over yet. So in case of a leg lower in TNX we expect indices to follow the downside path of TNX. Why we expect this is because of intermarket analysis reasons. We cant go into detail because we want to protect our clients privilege.
Hope that helps.
Cheers,
Your Secrets2Trade Team
TNX v SPX500Bonds bubble may bring down markets with it. Bubbles, bubbles, we know they are there, but they don't have names yet. Perhaps when they burst, and we cannot see them, we will name them.
USD SPX500 and 10 YearJust keeping this simple. 10 year in a channel for life just about. Its RSI says three strikes and you are out. In the 3 cycles over this period, we are in cycle 3, and we are past the 3rd peak. Closing and staying below 2.25 is the tell here. Strength all over is dropping. Hope is fading. Shorts have covered for the last time, being in too early to catch the knife falling.
And there we have it folks... We have now had the first weekly close below the 10-YR 2.31% Yield. =)
10 YR Treasury (TNX)QE has created a structural shortage risk free and distorted the price of the most important market in the world: the yield on 10-year bonds. Thus, almost 2/3 of the Treasury of more than 1 year duration are held by entities that have no sensitivity to market forces. And this discrepancy begins to have its own effects on the Treasury. In March there was the largest covering the history of short positions on the 10-year Treasury. Interesting insights on this ZH article: www.zerohedge.com
10yr note % yield goes down after rate hikes? I'm confused. Please someone explain why the 10yr note yield TNX goes down after FOMC raises interest rates? I would expect the relationship between the two to be pretty much linear.
