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US Government Bonds 5 YR Yield

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US05Y trade ideas

Let the US yield curve guide - viewing the 2s v 5s UST curveAs we approach a world where the Fed look set to hike in March, with 3.4 hikes priced by Dec 2022- we are also now hearing an open discussion around allowing maturing securities on its $8.8t balance sheet to run off (QT) -so, it's worth going back to the Dec FOMC minutes for real insight. With the market having had time to pour over the wording, it feels clear that the key paragraph is the one highlighted on the chart - with the Fed saying that history has not been so kind when hiking into a flatter curve. This suggests that if the curve does head towards inversion - and I've chosen the 2s v 5s - then the Fed will do its utmost to counter that - this suggests: 1) the Fed desire a steeper yield curve 2) will favour QT/ balance sheet run-off if we see a flattening curve In the situation of continued high inflation, wage pressures and full employment, the Fed now have maximum optionality, but to counter the impact of higher fed funds on demand, utilising its balance sheet could be the key focus over hikes. So our central guide on the Fed's thinking will be the yield curve...and judging by the FOMC minutes if this is flattening and headed towards inversion, the lessons of 1986, 1988, 1999, and clearly 2006 are our case study by which we can wok with. So if the curve steepens and heads to 1%, the Fed will be compelled to hike concurrently with BS run off... but should if flatten then rate hikes will be priced out - This should offer excellent trading opportunities to go long US 2year Treasuries, and US rates (fed fund and ED futures) and may weigh on USDJPY initially before the market puts more weight on future relative balance sheet differentials. Gold should rally on a flatter curve. CW
TVC:US05Y
by Pepperstone
1
Black Swan - Risk Parity EventIdea for Bonds: - US05Y and US02Y printed immense spikes in the pre-market. Glitch? Probably not. Bond market in general is having extreme events globally, US markets not immune. - Not shown on TV, but HYG also printed -7% in the AH on Friday... and traded there for several minutes. - Dollar is unstoppable with global shortage. Pension funds have elected to use leverage to meet a 5.5 trillion dollar liability gap. I'm betting they will not succeed. In the context of everything, more likely it is a dark pool trade and people are running for the exits. GLHF - DPT
TVC:US05Y
by UnknownUnicorn1043646
5
My Forecasts: PostscriptLet me say this from the outset; within the 2's5's curve is a manual, given that I do not have a great deal of time, it is not possible for me to go into great dimensions or detail I have chosen. Instead we will have to content ourselves with the revolutionary charts/diagrams both before and of the period where I have gone into more details. The same is true of the other important charts (VIX and Unemployment Claims) I refer to below. So now that we are all prepared and understand the knowledge, we must start to turn the dusty pages. Firstly lets review a chart on which I stack tremendous value: I would not wish to enter into conspiracies. There have been a handful of inversions in the manuscripts over the past three decades which all speak historical truth in advance of the crisis. The advance in the 5 year suggests salvation from the Fed can only come in the medium term as the 2 year lags behind. And now to the point around Alpha Protocol Seeking Immediate Extraction . The 2's5's is already under the nature in an impulsive form. The prior three inversions (Housing and Credit, Dot com, GFC) also suffered from a lagging Fed, that of being at least 10-12 months behind! This means that it is not uninteresting to highlight the totally overlooked inversion in 2019, it was a loud SOS signal that the economy was clearly running out of steam. I was the one who was able to properly understand that manoeuvre in both Unemployment Claims and Vix ahead of time, calling the move from 12 to 85; with complex inversions, always look to play against the crowd. See our opening in US Claims and VIX before the fact: Given we are facing both inflation via contractions in globalisation and deflation via advancements in technology etc all at the same time, it is causing a major paradox/dissonance across the board. It would serve no purpose to mention or not hint at what will happen next; my personal sense is that because the Fed ALWAYS lags behind, we will see another example of the long end of the curve driving the flows ( for those interested in bull steepening and bear flattening I have also omitted the exclamations in bold ). This would suggest that it is likely that we could be heading into an environment where you see nominal yields receiving a booster shot while real yields flatten causing further pressure on USD.
TVC:US05YLong
by ridethepig
9
Macro - Reading The CurveForecast for Macro: - Falling Wedge Breakout must be re-tested. - Bear Flattener coming as short-term rates rise with Fed tightening expectations: - 2x ATR spike in US02Y: - The Fed members will probably all have their turn to make comments, leaning hawkish. This should cause a rally in the US02Y. - Bonds Volatility Technically Bullish: - However, this will be followed by a steepener, respecting the Falling Wedge Breakout, as the Fed implements monetary policies to control Deflation, creating a Stagflation environment. - US30Y, this is bearish and deflationary: - USOIL, deflationary. The US economy depends on Oil: - US Manufacturing Employment Index, looks to be at the top of the range, and on a decline: - Capital goods are the heart of every economy. Without manufacturing employment, no capital goods. No capital goods, no innovation. - CN30Y, also bearish and deflationary: - China's Credit Impulse, and consequently - global credit impulse turns negative. - No more credit flows means no more liquidity to flow into risk assets. - M2V declining, if the economy was booming and growing, money velocity should be increasing: - Business destruction cannot be inflationary. Thriving tech businesses lead the recovery, but Tech is inherently deflationary. - Reading the curve will be critical to see the macro turns coming! GLHF - DPT
TVC:US05Y
by UnknownUnicorn1043646
1
WILL YIELDS DROP? CRAZY MOVES!Hey tradomaniacs, The market is seriously playing games here! 🙈 The blast of yields can not be sustainable as this is going to be a be a thorn in Powells flesh. Why is that? Basically because rising yields will "raise the price of" debts! First of all, this is a BET against the FED and looks like TEST. As often explained, YIELDS are currently rising due to the inflation-worries. BUT here is the thing: In his last testimonial Jerome Powell said the FED is not even close to its inflation-goal of 2%❗️ So you may ask yourself, when will the YIELDS stop rising? Well there are two options: 1️⃣ Yield-Curve-Controle with Bond-Buying-Purchases 2️⃣ To back down and change the current policy Yield-Curve-Controle of long-term-yields would be an option but probably not a solution as the FED would PRINT money in order to buy bonds 👉 More inflation 👉 More worries! Will 10-Year-Yields reject off the resistance and correct? We have to keep in mind that gamblers can bet on rising yields, which will likely take some of their profits. This could cause a retracement, but fundamentally I can`t really say whether the yields will continue to rise or not. One thing is for sure: Rising yields are showing cashflow out of equities into bonds and put stocks under pressure, especially NASDAQ100 and tec-stocks. If equities fall due to rising yields then US-DOLLAR will have a lot of support to change its trend❗️ Today we have got very nice pullbacks for almost all pairs! If we see profit-saves in YIELDS, in other words a correction, then we might see again soem risk-on and great opportunities to follow the trends! Very interesting, but also a very tricky situation for Forex-traders.🙏
TVC:US05
by Trading2ez
4
Game, Set and Match!📌 ridethepig | Game, Set and Match! In order to inform ourselves about the dangers of this move, we shall in what follows point to a few live charts which we called live together from 2019 that the 2s5s was going to invert frantically , and was a bad sign. It enables occupation of the dominos, which for those following long enough will know the one thing we always through individually is our playbook . 1️⃣ Every other time this happened it ended badly for the global economy via recession. ✅ 2️⃣ A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". ✅ 3️⃣ The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet , one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. ✅ ✅ Powell's noble attempt to pick a fight with the end game in an economic cycle can be regarded as having come to nothing. The threat comes from confidence and credit . Aiming for a complete annihilation across risk assets later in 2021, the presence of the inversion was sufficient. Now this move is being made with momentum. Game Set ... & Match The simplest example is to explain the move with diagrams which was the wish here. To occupy a piece of tradingview real estate with a live walk through in the end of an economic cycle. This could be considered as a momentum move in the sense of the word. The rule is: I’m long vol for a very long time. Insane risks are palatable but you need to understand the game otherwise you have a very high likelihood of total destruction. Stay long vol short dollars. We are entering into a series of exchanges between public and private assets, the door is closing, like in the Star Wars movie when Chewy and Harrison Ford are running to the doors, we can see the door closing in China, and in Russia and yet we still have a chance to get out. An exchange towards a decentralised world is possibly into 2032.
Editors' picks
TVC:US05YLong
by ridethepig
67
It's Different This Time... Right...📌 Endgame in the economic cycle and illustrating a painful recession Yields had the opportunity to move and successfully played the 'elastic band' rejection from the inversion in 2019, which despite the length of the global CB combination, can be expressed in no other terms than reckless. FED was obviously aiming for the ideal position (the frontal defence from Fiscal this time around) which is a well known counter when the issue comes from private debt, however they were forced to 'bend the knee'. Things proceed as follows: 1️⃣ Every other time this happened it ended badly for the global economy via recession. ✅ 2️⃣ A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". ✅ 3️⃣ The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet, one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. 👈 'we are currently here' The Whitehouse has decided to follow hyperinflation, Dem voters were naive in this sense and thought they could hold rates lower forever without any consequences. Now we must waste more time pursuing their distant dream that taxation is a solution. Wishful thinking if you ask me... the kind of overdrafts these governments have run up are several multiples beyond even Piketty's theoretical tax base. This ending of a cycle is a pragmatic demonstration of the lust to keep 'putting it on the card' and leaving private debt problems to future generations because of time being finite. Finally a notion which carries its own duties: In a debt crisis, as Japan have known for some 30 years a) you do not want an appreciating currency as the cost of servicing those debts will skyrocket in real terms and b) remain nimble...(get a peloton if necessary). Thanks as usual for keeping the feedback coming 👍 or 👎
Editors' picks
TVC:US05YLong
by ridethepig
127
Bond notes / messenger that Gold collapse is nearDespite the rise on DX, Gold is extending it’s uptrend move / Buying pressure is evident, but still Gold is showcasing the strong underlying Bearish trend. What keeps Gold ranged is the Bond notes Trading near Resistance, and above almost an Yearly high on the Stock markets. Also, on the E.U. opening, I spotted also side Swing movements as I am only expecting Gold to Buy the every dip under these conditions. More specifically with #1,919.80 as the Hourly 4 Resistance (and with the Hourly 1 #1,895.80 well Supporting) if it breaks I am expecting an aggressive gap fill at towards #1,927.80 within #2 - #4 sessions, of course if Stimulus hopes arise. The Daily chart is slowly turning Bearish today and can support the downtrend (in my reports I have mentioned that the Daily chart Bearish confirmation is what I have been waiting for). This #2 - #4 session horizon coincides with today’s release of the U.S. Fundamental events, so all the parameters support a speculative downtrend on Gold amplified by a rise on the Bond notes. Keep in mind that Gold is surely Bearish on the Medium-term, what keeps it ranged is current events on the correlating assets (Stock markets especially). I am expecting decline on Bond notes which can postpone ultimate Gold meltdown aiming the last Yearly Low of this cycle (as current configuration is Bullish for Gold), but once Bond notes break the psychological barrier / Resistance (June #7 Top), it is a sign that Gold should be sold on Medium-term towards #1,800.80, and #1,750.80 extension.
TVC:US05YShort
by goldenBear88
5
Betting on Treasury spreads: long 5Y, short 30Y It's obvious that the Fed has to continue Treasury purchases to keep rates suppressed; the Federal debt is so huge at this point (and the fact that financial fallout from covid isn't even close to resolved) indicates to me that yield curve pinning is likely part of our future. If the Fed pins yields, they're likely to start out towards the front end of the curve. That means we'd see shorter duration yields drop, e.g. they might decide to pin the 5Y to zero. Everyone's talking about inflation these days, so it isn't beyond belief that 30Y bond yields might pop up. This is the leg of the trade I'm most uncertain about. It seems not unbelievable to me that 35 year bond bull market continues, and asset inflation keeps pumping 30Ys. In any case, the trade here would be a duration-weighted, delta-neutral curve trade. You might buy 5Y treasury futures and sell 30Y futures at a 4:1 ration to account for differences in duration. As you can see on the chart here, there seems to be a cyclical pattern whenever the Fed starts to dramatically intervene in the rates market. It would fit historical patterns that the 5Y-30Y rate continues to head lower. At least partial credit to this idea goes to Kevin Muir.
TVC:US05Y
by james_ob
Bond notes on Monthly Lows / Recovery will be Bearish for GoldIt is well known that Gold is tightly correlated with Bond notes, which are showing apparent recovery candles. I am on a strong Sell side regarding Gold's Medium-term and a slightest recovery on Bond notes could engage the historic decline on Gold. DX did approach the #92.80 Support but Gold remained more or less stationary Hourly 4 chart making a mere Lower High #1,955.80, highlighting the strong Bearish pressure it is under. The Hourly 4 Channel Down had no further room to go, so I don't expect this consolidation to continue. My focus shifts to the Fed leaving the rate unchanged due to the ties on Stock markets. Trading Gold is tricky for inexperienced and Traders, situations such as this one, even if we see all Bullish setups, this is not a good sign for those who want to Buy this market on Long-term (most of Traders will) as the more prominent area for Buyers to keep an eye on, having seen how well it held Price-action Lower in late November. This is a cautious market at the moment. As soon as Bond notes engage the recovery, Gold will initiate historic decline towards #1,700.80 zone.
TVC:US05YLong
by goldenBear88
6
ridethepig | Recession Strategy📍 This chart update comes from the ' Alpha Protocol - Seeking Immediate Extraction ' The cramped inversion should aways be considered the end game of an economic cycle. But of course we will get the v shapers and naysayers who obliges that stonks only go up. The space available to operate against the Robinhood army is becoming more flexible. Sharp speculators are seeing more of an advance in the 2's 5's curve and abandoning ship when it suits them. The threat of recession completely materialised and shows the importance of outguessing its weakness. You can learn from this inversion that: 1️⃣ Every other time this happened it ended badly for the global economy via recession. ✅ 2️⃣ A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". ✅ 3️⃣ The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet , one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. Powell's noble attempt to pick a fight with the end game in an economic cycle can be regarded as having come to nothing. The threat comes from confidence and credit. Aiming for a complete annihilation across risk assets into 2021, the presence of the inversion was sufficient. Now this move will be made with momentum.
Editors' picks
TVC:US05YLong
by ridethepig
41
Bull time for #5Y - Bear time for Gold / correlationTaking all aspects into consideration, personally - Gold is ready for more than #200$ historic decline on Medium-term. New monetary stimulus is prepared by U.S. officials, “economy recovery” process is expected as U.S. Treasury yields and Bond notes (#5Y), dipped without finding the Support regarding market sentiment and Technically - Bearish Price-action should be rejected, subsequently weighing on traditional reaction of the market/Investors using Gold as a safe-haven. Down (almost #0.205), in the shape of a near-full-bodied daily Bearish candle, Monthly chart Price-action (Bond notes #5Y) is determined to challenge October #17 #1,998. Year opening level on a strong decline which added strong Buying pressure on Gold and is a sole Fundamental reason of Gold’s current strong upswing. Another point worth taking on board here is the RSI indicator seen on the Yearly low’s, indicating strong turn of the events which is a messenger that Gold is facing the ultimate Top and the time has come for an strong correction. It is more than obvious that all current recessions are gradually well planned, such as one on #2008, #2012 and current one #2020 - and the result is uncontrollable rise on Gold representing Safe-haven. Once the Bond notes (#5Y) find the Support, I will carefully monitor and start Selling Gold on local Highs. That is why DX is also hammered (suited for currency printing - Fed left the rate unchanged means free money for Wall street and Investment Banks - which they will share further the printed currency (DX $). Also, Stock markets are currently moving on Swings (which is not usual for that kind of market) as an main example of market turbulence. Bottom line: My estimation shows that Gold can Trade within #1,680.80 - #1,780.80 within #2 Months.
TVC:US05YLong
by goldenBear88