US02Y trade ideas
Bullish rates reversal signals US dollar downside riskIf you want clues on directional risks for the US dollar, there are worse places to look than US 2-year Treasury note futures, shown in the left-hand pane of the chart. As one of the most liquid futures contracts globally, the price signals it provides can be very informative for broader markets, especially in the FX universe.
Having tumbled most of October, implying higher US yields given the inverse relationship between the two, the price action this week looks potentially important. We saw the price take out long-running uptrend support on Wednesday before staging a dramatic bullish reversal on Thursday despite another hot US inflation report.
The bounce off the 200-day moving average on the back of big volumes delivered not only a hammer candle but also took the price back above former uptrend support, delivering a bullish signal that suggests directional risks for yields may be skewing lower. You can see that in the right-hand pane with US 2-year bond yields hitting multi month highs on Thursday before reversing lower.
But it’s the correlation analysis beneath the chart that I want you to focus on, looking at the strength of the relationship US 2-year yields have had with a variety of FX pairs over the past fortnight.
USD/JPY has a score of 0.9 with USD/CNH not far behind at 0.89, signalling that where US 2-year yields have moved over the past two weeks, these pairs have almost always followed.
EUR/USD, GBP/USD and AUD/USD have experienced similarly strong relationships over the same period with scores ranging from -0.88 to -0.96, the only difference being where yields have moved, they’ve usually done the opposite.
The broader readthrough is that shorter-dated US yields have been driving US dollar direction recently, with rising rates fuelling dollar strength. But given the bullish signal from US 2-year Treasury note futures on Thursday, if we just saw the lows, it implies we may have seen the highs for US yields and the US dollar.
Good luck!
DS
Very close to Yield Curve Inversion, AGAINAfter #InterestRates were cut people were expecting a furious wave of buying, this has not come into fruition.
Recent events:
2Yr Yield rallied substantially.
10Yr #Yield bottomed when we called it, has not run as much as it's shorter term counterpart.
We're close to inversion again!
Colored areas = POTENTIAL Inverse Head & Shoulder = BOTTOM.
Worth noting, TVC:TNX has a higher right shoulder.
Further analysis:
We are seeing a Negative Divergence on $DJI.
Volume has been lessening as the days go by.
TVC:RUT Small Caps are LOWER and trading in a tightening range.
2yr Yields Bounce in Downtrend 2year Yield hovering right around the declining 50d after bouncing from the 3.50% level amidst a major momentum divergence. Giving the broader technical picture, would still lean towards this being a countertrend bounce within the structural downtrend. Could this be a set up to buy back into Bonds?
US02Y/US10Y Uninversion & RecessionsThe dynamics of the US Treasury yield curve, particularly the spread between the 2-year and 10-year yields (US02Y/US10Y), have long been studied as potential indicators of economic health. One phenomenon that garners significant attention is the inversion and subsequent uninversion of this yield curve. Lets delve into what these terms mean, their historical significance concerning recessions, and how investors might interpret these signals.
What is the Yield Curve?
The yield curve is a graphical representation showing the relationship between interest rates and the maturity of US Treasury securities. Typically, longer-term bonds have higher yields than shorter-term ones due to the risks associated with time, such as inflation and uncertainty. This normal upward-sloping curve reflects investor expectations of a growing economy.
Yield Curve Inversion
An inverted yield curve occurs when short-term interest rates exceed long-term rates. Specifically, when the yield on the 2-year Treasury note surpasses that of the 10-year Treasury bond, it suggests that investors expect lower interest rates in the future, often due to anticipated economic slowdown or recession.
Historically, an inversion of the 2-year and 10-year yield curve has been a reliable predictor of upcoming recessions. Before the last several recessions, the yield curve inverted approximately 12 to 18 months prior.
An inversion indicates that investors are seeking the safety of long-term bonds, driving their prices up and yields down, due to concerns about future economic conditions.
Uninversion refers to the process where the inverted yield curve returns to a normal, upward-sloping shape. While an inversion is a warning sign, the uninversion phase can be even more critical.
In many cases, recessions have followed shortly after the uninversion of the yield curve. This occurs as the Federal Reserve may begin cutting short-term interest rates in response to economic weakness, causing short-term yields to drop below long-term yields again.
The uninversion can signal that monetary policy is shifting in response to economic stress, potentially validating the recessionary signals that the initial inversion suggested.
The uninversion of the US 2-year/10-year yield curve is a critical event that has historically preceded economic recessions. By understanding this phenomenon and considering it alongside other economic indicators, investors can make more informed decisions. It's important to approach such signals with a comprehensive analysis and a prudent investment strategy that aligns with individual financial goals and risk tolerance.
correlation between the yield curve and the unemployment rate correlation between the yield curve and the unemployment rate
correlation between the yield curve and the unemployment rate correlation between the yield curve and the unemployment rate
US bond market is yelling Crash coming!US02y/US10y suggesting a change on the trend pretty soon. Last two times MACD was this close to visit the 0 line It took about 120 days to start the crash in 2007 and less than 30 days in 2020. It is just a matter of time folks. Pain is close
What if bonds are kinda important?Lets draw few parallel lines. Looks like cross of green supports shows start of the party and crossing red resistances means music isn't playing anymore. Could be coincidence. Looks like green support is coming. If we pierce it could be bullish. Unfortunately this time is different because of inversion. We will see.
Bond markets pricing in a possible recessionary scenarioSpread between US 2 year yield and Fed Funds Rate is one of the key indidcators to watch out for the state of the economy. Fed Funds Rate is an overnight rate. Historically, before any recessionary scenarios the spread was seen moving to negative territory, during Middle East Crisis in 1989/1990, dotcom crisis in 2000/2001 and Credit crisis in 2008.
Currently, the spread is at -1.67%, second lowest in history only to 2008 Credit crisis which was at -1.76%. This leads to a strong conclusion that the interest rate markets are possibly pricing in a recessionary scenario.
Interesting times ahead...
US02Y / US10Y Yield CurveThe Yield Curve has been inverted for a long time, and as rates are about to go lower, it can finally un-invert. When the 2-year yield is higher than the 10-year yield, the chart is above 1.0 ; But once the 2-year yield dips below 10-year yield, the chart should drop below the 1.0 mark.
us02Y(Mallicast)The U.S. two-year Treasury bonds, after reaching a yield of 5.093% and gathering liquidity, have begun to correct their previous upward trend. This correction is expected to continue until it reaches 3.555%, with the possibility of further correction down to 2.832%.
us02Y (Mallicast analysis)The U.S. two-year Treasury bonds, after reaching a yield of 5.093% and gathering liquidity, have begun to correct their previous upward trend. This correction is expected to continue until it reaches 3.555%, with the possibility of further correction down to 2.832%.
Yield ChartThis chart tracks U.S. Treasury yields for 2-year (blue), 10-year (white), and 30-year (orange) bonds, along with the yield spread (green) between the 10-year and 2-year bonds. A positive spread suggests a normal yield curve and economic growth, while a negative spread (inversion) often signals a potential recession.
getting close to yield un-inversion 2Y is warming up for un-inversion , looks like more pain to come ahead for SPX
2 Year yields are weakeningWhich often signals a incoming recession.
The market leads the #FED who always raise and lower rates too late.
We have #Unemployment starting to tick up
Tight financial conditions, delinquencies on the rise.
So make hay over the next few months in memestocks, coins, bitcoin, alts, NVDA and so on.
But don't be left holding the hot potato when the music stops playings.
#Macro
#Meltup
#NVDA
#Nasdaq
#Stocks
#Bitcoin
#Altcoins
#Ethereum
#Pulsechain
2 Year US Treasury Yield going down2 Year US Treasury Yield going down.
2 Year US Treasury Yield is always the first one to go down, few months before the Federal Reserve starts cutting rates.
Hold 2 Year US Treasuries to capitalize on it. (Yield down, Bond price up)
T-notes Interest rate vs its future pricingIt's Inverse relation. An increasing interest rate will drive down the future's price.
$US02Y $US10Y $GLD $IVOL $TLT - The Chart tells the futureHere we have a historical chart showing what will likely be obvious in 2 quarters. The chart bats 100% on the issue but not on the resolution. As you can see with LTCM and the Bhat crisis in the late 90s. This chart is great for signaling when to risk-off, it does not signal risk on, for that I use the CBOE:BXY . The way I play the waiting game after going risk off is exposure to AMEX:IVOL NASDAQ:IEF AMEX:GLD NASDAQ:TLT AMEX:UUP
Cheers,
We are close folks. 2 year bond market close to shift to a downtrend that could be trigger a major correction on spy . Recession time ahead folks
Can higher projected US02Y impact GOLD price ?TVC:US02Y has been trading to attractive levels fibonacci levels of 50% resulting in formation of bullish flag. Price is projected to go to 5.5% according to flag pattern. Recent NFP had higher than expected unemployment claims. Will this scenario attract investors to buy more bongs ?
What do you think will be impact of bullish bonds yield to the price of GOLD ?
