2 year yield breakoutUpside breakout from a triangle pattern on the 2 year yield. This is something that if it continues could put a dampener on the stock market rally. That and also the bounce in the DXY.
US02Y trade ideas
Are yields about to spike again?Yields saw a massive turn to the upside after the latest job report number coming in red hot.
Showing the US labor force is a juggernaut.
If we see this Bullish consolidation break to the upside this implies interest rates are going much higher.
If this pattern comes to fruition and fulfills it upside targets, this would also imply the likely catalyst that could spike yields even more could be a hot CPI number or additional Labor data.
Bear market over..... Check historyLook at the history, the market has shown indications in the past when it bottoms. look at this chart. we are at the pivot point.
every influencer is bearish....what happens when everyone is bearish?? The market goes bullish.
Get ready.
S&P500 may be on the verge of a mega rally based on the US02YThe chart represents the US02Y on the 1W time-frame against the S&P500 index (green trend-line). The phase that the US02Y has entered is similar to that in entered in December 1994. As you see shortly after a Golden Cross, it made a Lower High on the RSI, flashing a Bearish Divergence, while the MACD Double Topped. This is exactly the same sequence of events in the exact same order since the June 2022 Golden Cross.
The US02Y fall of December 1994 practically started S&P's mega rally of mid-late 90s that led to the 2000 Dotcom Bubble. If history is repeated, instead of a continuation of the Bear Market that most expect, S&P500 my be on the verge of a new multi-year Bull Cycle.
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US02Y : Market speaks out!It seems that the front end of the curve is starting to 'speak out'. Unlike in the past, it is NOT moving up despite the recent 50% rate hike. This is significant because whenever the FRONT starts acting up, we can expect something BIG and SIGNIFICANT coming up.
As we can see, a BIG portion of market participants disagree with the recent Fed decision. In fact they are now betting against the Fed. This is a lot of money involved here. We are not talking day traders like you and me; or even big speculators. The Bond Market involves much bigger players and their opinion matters.
There may be two reasons. One is that they see the recent 'slow down' in rate hike might soon turn into a freeze and pivot, with a 'soft landing'. The second is more important. They might sense that the economy is nearing a RECESSION when everything grinds to a halt. Some are forecasting a deep and long lasting recession. For this, we look at the US10Y and see how much it will drop. But whatever it is, 2023 will not be a good year.
Three days ago, I heard someone talking that GOLD will reach $3,000 in 2023! And so says Saxo Bank. Perhaps you should be aware what will happen just by looking at Bond yield which is saying 'future growth looks 'bleak'. Gold, Oil and stocks will be at RISK with the coming recession. Whether it is a BIG one is still debatable. But if the Fed insist on hiking again, chances are it is going to be a BIG one. Money supply, at least in the US, is FALLING. If you look at M2 and do a simple extrapolation, to get gold at $3,000, there needs to be a really HUGE increase in MONEY SUPPLY (note that inflation do not determine Gold price. It has always been money supply. Whether money supply leads to inflation is another thing. But if market participants think that inflation is going to high in the future, would they continue to drive yield lower?) .
USDJPY would be a nice to trade. It is just a matter of looking for the right time/place.
EURUSD is a bit risky with the ongoing war in Ukraine.
Have a nice weekend.
P/S : As always, do not just believe what I say. Use your common sense.
Martin Luther King Jr. Day - Market AnalysisKey events:
US – Martin Luther King, Jr. Day
UK – BoE Gov Bailey Speaks
The recently released CPI is prompting investors to question the Fed's plans to raise the overnight rate above 5%. The market doesn't seem to care, and after this data coincides with the forecast, yields are falling across the curve. Thus, 2-year Treasury yields have fallen to their lowest level since October, with room to fall substantially.
If the Fed really does intend to raise rates that much and maintain tight financial conditions, then it appears that the market is not listening to the central bank and not paying attention to what it wants.
This only suggests that the Fed's forward guidance is no longer working. The Fed will have to dig into its toolbox to convince the market that it is serious. The central bank may have to talk about accelerating the pace of balance sheet reduction or outright sales of treasuries and mortgage-backed securities.
The market indicates that the Fed's interest rate hike cycle is coming to an end, with the belief that the central bank will be forced to cut rates as soon as 2023. However, the Fed continues to insist that it plans to raise rates above 5% and leave them high and financial conditions tight for a long time.
The 2-year Treasury yields fell to their lowest level since early October. This is the first weakening in months. Apparently, the rate cut is now embedded in the quotes of not only the federal funds rate futures market.
As a consequence, the Fed will be forced to use balance sheet talk as a last resort to ensure that rates remain elevated and the dollar remains strong enough to prevent a stronger-than-acceptable Fed easing of financial conditions.
The market, on the other hand, is trying to figure out how much pressure it can put on the Fed to maintain tight financial conditions. If the central bank is serious, sooner or later it will try to fight back. Otherwise, the Fed will lose control of the public discourse and won't be able to tell the markets what direction it thinks they should go.
Talk of a higher overnight rate is no longer having the desired effect, so the next option for the Fed is balance.
If it doesn't use that option, the markets will take it as a signal that the Fed is okay with easing financial conditions and thus gives the markets permission to continue the rally.
US2YR SFP M1With the 2YR printing a M1 SFP we can expect a sharp reversal on yields shortly - this may be confluence for the bias of a FED pivot and return to risk.
US2YR Bond Yield Topping OutUS 2 Year Yield seems to have confirmed a reversal on the weekly which in turn seems to have given stocks and crypto some cause to rally. Too early to say yet if it will be sustained. Lets see if we get a continuation.
2 Year Trutheries Claims Fed Pivot Soon!Fed claiming to continue rate increases. 2-year treasuries calling, "Bluff"! One of them is lying.
35. A lesson on INFLATIONFolks,
This is the hottest topic nowadays. Everyone is talking about it. How high will it go? When will it end? The obvious reason being solely to predict when the Fed will pivot.
Lets look at the MARKET reaction to date. When 2Q GDP was announced, US02Y drop below the 50MA. This is the market saying the pivot is near. The Fed will stop hiking rates because the economy is contracting and in recession. Since then, the market has sobered up and is now anticipating a 50bps hike next month (current = 2.50% + 0.50 = 3.00%) and is hovering around 3.00%. We can see from this that the MARKET is indeed VERY OPTIMISTIC and is somewhat ignoring the recent DOT PLOT.
But for us, it is best to really understand the situation correctly. This is often not found/mentioned by the MSM. Inflation is a topic best covered in mystery and not easily predictable. Or is it?
Lets use some logic and common sense.
INFLATION WILL END 13 MONTHS FROM THE DATE WHEN THE HIGHEST PRICE WAS RECORDED. And when we talk about price, the easiest would be to use the single most important commodity - OIL. USOIL traded at the high of $129.416 on 8 March 2022 . So regardless of what the Fed do or not do, inflation will start to normalize sometime in March 2023.
Get it? For example, you may be paying $2/gallon. But because of inflation, price suddenly jump up to $5/gallon. Even if price continue to stay at $5/gallon, 13 months later, there would be no inflation as price remain the same y-o-y.
It is just some statistical shitfuckery used by the policy maker to justify that things are back to normal.
That is why the stock market is so 'RESILIENT' - they are just waiting for the coming happy time just a few months away.
That is why the market is so bold to even ignore the DOT PLOT.
Lets continue to monitor the US02Y. And when it really drops below the 50MA and below the FFR, then we might see the Fed finally capitulate to Market Demand.
Good luck.
P/S : As always, do not just believe what I say. Use your common sense.
1) Do not forget beside the FFR, there is also a Balance Sheet Reduction going on. This will impact liquidity and based on latest Fed talk, they are indeed serious about this this time around.
2) There is still a war going on in Ukraine and this has direct impact to EURUSD we are trading. Regardless of pivot or not, the situation in Euro Zone is quite dire. Germany is collapsing and without GAS, they are looking at a DEEP and LONG recession in the coming months.
US02Y: Falling Wedge, Sign of Stronger Dollar Ahead?Hello Fellow Trader/Investor!
Price Action Analysis
US Government Bonds 2 Years Yield is moving above EMA90, indicating a bullish trend. The Falling Wedge Pattern is a bullish continuation pattern confirmed by the recent breakout. The MACD Indicator made a golden cross, signifying a possible upside movement to the target area.
Fundamental Drives
1. The Fed does not reach the 2% Inflation Target Yet
2. Hawkish Fed Position usually makes the bond yields potentially increase, which will cause a bullish dollar outlook.
All other explanations are presented on the chart.
The roadmap will be invalid after reaching the target/ support area.
"Disclaimer: The outlook is only for educational purposes, not a recommendation to put a long or short position on the US02Y"
2-year Treasury yield: hang in there, buddy!As long as we do not see RSI (daily, 14d) prints below 35, I wouldn't call for a trend reversal in years - maybe we'll see 4.00%, but I doubt we'll see 2-year yields come in more. Strategy long = long yields, i.e. short the 2-year Treasury bond.
January 2023 projectionOn July 6th 2022, the 2s / 10s yield curve inverted, and it has widened its gap since then. An inversion of the 2-year, 10-year part of the curve is viewed by many as a reliable signal that a recession is likely to follow in one to two years. On May 27th 2022, US02Y piRSI levels were oversold the same as they are now on December 15th 2022. From May 27th - June 14th 2022, US02Y piRSI spiked and so too did the rate from 2.48% - 3.37%. Yesterday, FOMC Jerome Powell publicly stated that the peak rate will be higher for longer in order to minimize risk of a protracted bout with elevated inflation.
The new batch of quarterly projections from Fed policymakers shows the key overnight lending rate rising to 5.1% in 2023 and easing to 4.1% in 2024. The Fed now expects the unemployment rate to rise to 4.6% next year as GDP growth slows to zero. Wednesday 12/14/22, tickerTracker MFI crossed under the 50 level for ETF's SPY, DIA, QQQ & IWM. With all things considered, including Christmastime market seasonality and the above mentioned fundamental and technical analysis. The probability for January 2023 is for US20Y to spike up and US equity markets to go down as the new fear will be a downgraded MegaCap earnings season with recession looming on the horizon.
Do your own due diligence, your risk is 100% your responsibility. This is for educational and entertainment purposes only. You win some or you learn some. Consider being charitable with some of your profit to help humankind. Good luck and happy trading friends...
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US 2 Year Starting To Creep HigherThis melt-up in the 2yr has seen the breaks put on in the stock rally. Have to see how things look after January. The Fed might remain more hawkish for longer than expected.
BONDS YIELD PREDICTION!!!!! US02YDESCRIPTION: In the chart above I have provided a macro analysis for 2 year bond yield on the Daily Timeframe.
POINTS:
1. Since the beginning of this upward trend on January 2022 we have seen that bonds and the overall market are said to share an inverse relationship but during pivotal moments that has not been the case as you can see that the stock market has risen along with bonds and vise versa .
2. Deviation in SUPLY & DEMAND POCKETS is clearly shown to be every 1% RISE IN YIELDS . (Refer to BLUE & ORANGE Horizontal Lines)
3. Before entry is made into a new DEMAND POCKET price action has a distinctive pump that has occurred several times. (Refer to white lines between SUPPLY & DEMAND POCKETS).
4. Predicted rise was formulated by using the average of previous last two pumps of +40.92% and +54.21% = +48% when rounded.
5. Average does in fact coincide with previous point of resistance when bond yields rose to 6% in the early 2000's. (A POINT THAT I WOULD CONSIDER TO BE A PIVOT POINT)
6. When you observe MACD we can also conclude that downward pressure is looking for relief like in past occasions.
SCENARIO #1: Bond Yields continue to rise and follow uptrend into early 2023 which can then signify that a market bottom is yet to be confirmed.
SCENARIO #2: Bond Yields break crucial SUPPORT OF 4.000% and will invalidate current setup. Possibly being followed by capitulation in the stock market since falls in yields seem to be more closely tied to falls in the overall market than the inverse relationship.
TVC:US02Y
2 y 5 y 10 y bonds butterfly idea and historical returns hello
does anyone find me please an historical returns of a butterfly spread as follow -
long 1 2 years bond
short 2 5 years bond
long 1 10 years bond.
Does that make sense ?
It is a combination of 3 legs , using 3 instruments.
I am looking for some history and historical returns .
Thnak you
2Yr Yield creeping up slowly$TNX is closed atm but if the 2yr is an indication it may open higher
We re-entered long yield after FED day in DEC.
Sold puts on $TYO & bought common
Didn't go heavy because Monthly chart is a tad tough.
Weekly 2yr trading decently above avg's again
So far so good.
We were bullish on STOCKS but that was late Oct/Early Nov, then went bearish for a bit, & are now NEUTRAL.
EDIT:
Keep in mind that in BULL MARKETS items can remain OVERBOUGHT for long periods of time.
2yr Treasury note yield, a Monthly look MACD has done a nice job of highlighting the 2yr treasury note yield cycle tops over the past decades. Will be interesting to see how this one works out.
2 Year Treasury Hit Supply from 2007 - Bullish for StocksThis is bullish for stocks if rejects, beautiful monthly shooting star at supply from 2007.
2yr Yield & $TNX2Yr #Yield is close to support @ 4
Look at that weekly performance!
However, monthly shows RSI readings above mid 70 has signified TOPS
ALSO
Depending on how Dec closes $TNX also looking weak
Look @ RSI
What is this telling you?
"Someone" buying loads of #bonds, who & why?
US2Y - FedFunds comes down to zeroUS2Y - FedFunds comes down to zero coincides with fed funds pausing, which is bullish for S&P
US02Y Showing the way to stock market recoveryThe US02Y has just completed a Head and Shoulders (H&S) pattern, which is a technical formation found on tops. The very same formation was last seen in October - December 2018 and caused a massive long-term drop on the US02Y. Check also the identical 1D RSI sequences leading to the top with Channel Down patterns.
The US02Y peak was translated into a fall on inflation (orange trend-line) and the stock market (S&P500 blue trend-line) immediately reacted. We've already seen a strong stock rally these past two months, but so far seems counter-trend.
Do you think the Fed and the CPI report next week can help sustain it?
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When does the recession become official?Fed funds rate crossing above the 2 and 10 year yield(s) can give us a pretty good idea...
