Bonds Yield in full flight, breaking 2018 highsUS 30-Year Government Bonds Yield in full flight, breaking 2018 highs. Major support at 3.80
A complete five-wave pattern could land bond prices at 4.85-5.11
US30Y trade ideas
30 year yield breakoutLooking at this chart it looks like the bond yields on 30 year treasuries capitulated between January and March 2020 and now we could be in a trend reversal from the large downward parallel channel. Indeed the long bond sell off seems to be accelerating as the price has now broken out of the upward sloping channel.
US30Y - The technical pattern is in a powerful breakout30Y have benefited from rotational flows out of the S/T part of the curve into longer dated, Technically speaking the 30Y has broken out of downward trend and is indicating a strong upside move, with a first target around 3.71/3.75% by next month.
US30Y just needs some airIt needs air and to me this is it - correction time, eoy should be bullish.
Four decades of downtrend has broken - Yield / Interest RateAll the fixed tenure yields have broken above their four decades of downtrend. - 2yr, 5yr, 10 yr & 30yr
To note, the shorter end, the fixed 2 year tenure yield is climbing faster than the longer end, the U.S. fixed 30 year tenure government bond yield.
The year closing, it will be crucial to determine the trend transition; from this long-term downtend to uptrend.
Are we heading towards a global crash?I notice that whenever a crash occurs, bond market would be offloaded prior to the event.
Order block was printed on the 1st of October 2018 prior to covid. Bearish fair value gaps printed and rebalanced in 2019 prior to the crash.
Note that Buyside liquidity (BSL) has been taken out, I would speculate that the market is currently printing a bearish order block. (up move before the down move)
US Treasure Bonds Yields - Long TermAlright so I've come up with a formula between different US Bond Yields resulting in an oscillator indicator - which successfully signals tops on the stock markets and the bear market after.
Based on the area where that oscillator crosses the 0 value (down), we start topping until it comes back up. This period last in average around 1 year and is aligningt +/- with the actual top of SPX.
This is a period in which stocks may consolidate or still go up - overall an area of indecission, ending bullish power etc.
The actual drop always comes after that period and last up to 800 days- depending on the strength of the previous bull trend - The longer and stronger, the bigger the fall.
All such corrections were hitting lower than 0.618 fib level - meaning we will hit 2200 or even 1600 (SPX).
Key takeaways:
- We're not in an actual Bear Market yet.
- We are in consolidation meaning a pump for ath retests is possible until March 2023 +/-
- After March 2023 we should start real falls until around March 2025
- SPX Bear Market Target 1600-2200
Sorry and you're welcome!
Capitulation IndicatorThe 30:10 Treasury Bond Yield Spread is a simple Ratio difference between the 30-Year Treasury Bond Rate
and the 10-YearTreasury Bond Rate.
A Large exodus from high Beta/Rho correlated Assets to perceived Safe Havens.
Presently the best-performing and most stable Asset of 2022 has been Cash - The US Dollar Index was 94.63
in mid-January to a high of 110.78 - a return of 17.066%.
Both the 30:10 Ratio and DXY performance are indicating an extreme lack of confidence in the strength of
the Economy.
Quite recently Cross Flows among Capital Stocks - largest Inflows this week are 2-year Treasury Bills @ 288%.
The flow was Net Cash to the Curve by Institutional Investors.
Concerns are rising with respect to both the return of Capital as well as the return on Captial.
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$3.196 Trillion across - Stock Index Futures, Stock Index Options, Stock Options, & Single Stock Futures.
P/C remains elevated @ .72 with .76 being the Pivot.
The LIS for 4X Expiry is SPX 3900, we will need to see Open Interest activity as the Day progresses.
It will either be supported for the Close or it will not as the next support is the Lows in June.
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It is important to observe the steep decline in Open Interest.
The largest SPY Roll was into the OCT Expiry @ 372 Puts.
SPX shows a parallel Roll.
Please watch the Globex Lows - the NQ and ES can trade lower, it will be important for the NYSE Open.
I focused initially on CASH for TECH - QQQ's 285 had the largest Roll period. In addition, all Strikes with a few
exceptions up to 310 had retail rolling from 287.
At the moment the O/I is churned for tomorrow, with both ROLL and SWAP to Retail, BUT Retail was a net
BUYER of Calls.
383 is the Primary Support now that we crushed the trend lines, the Fibs line up there for the SPY.
The ONLY issue I see is the Algos took the ES Futures up and over its Pivot trendline at the Close by a
very small amount.
Whether or not we open Up and then backtest or fall away will depend on several indications from the
VIX VVIX $ 2YY... Volumes will be enormous.
I'm looking over correlations and ratios and then swinging back around to Futures Options.
This is what sticks out at present, the concern, of course, is Retail Longs who thought yesterday was a
great day to enter Calls.
What stands out is the size of Roll skipping the weekly expirations for both the SPY, SPX & QQQs.
Intra-Week Roll is almost non-existent.
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**** This week matches a record from 1930 -the lowest raw number of Stocks Up as a percentage.
I warned of the 4X Expiry being a large Risk, for revview -
US30Y - 41 yr bull market in bonds comes to an abrupt end. US30Y - 41 yr bull market in bonds comes to an abrupt end. US30Y yields headed much much higher.
Bonds Yield Breakout on different time FrameWe are in a strange epoch, at the moment all the US Bonds Yield break an historical trend-line that start in the 80'.
Now it's approach a resistance, that in my opinion it'll break because the interest rate il still low, at the present 2.5% in comparison with an high inflation.
Another consideration is about the volatility we can se in stock market and especially in high risk stock, because high bonds yield imply a possible instability in the feature. But now we see all bonds in up trend, it's mean a global uncertainty on different time-frame.
Pay attention on the break-out of the resistance.
How to improve your trading by looking at interest rates: Part 3Hey everyone! 👋
This month, we wanted to explore the topic of interest rates; what they are, why they are important, and how you can use interest rate information in your trading. This is a topic that new traders typically gloss over when starting out, so we hope this is a helpful and actionable series for new people looking to learn more about macroeconomics and fundamental analysis!
In our first post, we took a look at how to find interest rate information on TradingView, and how rates fluctuate in the open market. In our second post , we took a look at some of the decision making that investors have to make when it comes to investing in bonds (rates) vs. other assets.
Today, we'll be taking a look at how global investors understand interest rates, using three concrete examples.
Let's dive in!
As we mentioned last time, when it comes to understanding interest rates in any region, there are three main things to take a look at:
1.) Central Bank Funds Rate risk
2.) Inflation Risk
3.) Credit Risk
First, let's take a look at Credit Risk. 💥💥
Credit risk is something that happens when there is a risk that you may not get back the money you loan to a certain entity. For this series, since we're only looking at government bonds, this means the risk that the government won't pay you back.
Lesson: All things being equal, the more an entity (Company, Country) has to pay to borrow money, the less 'stable' they are in the eyes of investors.
Next, let's take a look at Inflation Risk. 💸💸
Inflation Risk is something that happens when there is a risk that your principal may lose buying power over time, faster than the interest rate, due to the rate of inflation.
For example, check out this chart:
In the Blue/White, you can see Turkish 1 year bond yields. In the green, you can see U.S. 1 year bond yields. Notice the difference in interest rates - the Turkish bonds pay 14%, and the U.S. bonds pay 3%. While the U.S. is a larger and more developed economy (and therefore runs a lower "credit" risk), some of the difference in yield comes down to the drastically different rates of inflation within the economy.
In the red, you can see the rate of inflation in the United States, and in the yellow you can see the rate of inflation in Turkey. Assuming a steady exchange rate, as Turkish Lira buy relatively less and less goods and services over time vs. The U.S. Dollar, investors will demand more yield to prevent against the loss in buying power.
Lesson: the direction of Interest rates tells you how investors think inflation might develop over a certain time horizon.
Finally, let's take a look at Central Bank Funds Risk. 🏦🏦
Central bank funds risk is something that happens when the Central Bank may move base funding rates adversely to your position.
Check out this chart:
It's the same chart as last time, but instead of the inflation rates superimposed on the interest rates, we've added the current Central Bank rates to the chart.
Remember, the Central Bank rate is the rate you get from the bank without "locking up" your money into a loan to the government.
Central Bank rate risk plays the biggest part in bond pricing, as you can see that interest rates and yields move together rather closely, especially as these are only 1 year bonds (we will look at the yield curve next week).
That said, given that Central Banks across the world are typically mandated to try and create stable prices for consumers, their actions are often dancing with inflation. Sometimes banks will raise rates too much and create deflation. Sometimes banks will raise rates too little and will be "behind" inflation (as many believe is currently the case).
Lesson: Interest rates are indicative of Central Bank policy, which is informed by several factors and varies from region to region. In other words - interest rates can describe the health of an economy. Too "High", and the Central Bank may have lost control. Too "Low", and the economy may be stagnant. These are generalizations, but they are a nice place to begin comparing regions on a relative basis.
And there you have it! Some concrete examples and lessons to be learned from looking at live moves in the market. Understanding these dynamics can be really helpful to building out a more comprehensive trading strategy. In other words, if you're trading FX, it's incredibly important to know interest rate differentials between countries, along with the underlying drivers of rates. Similarly, if you're looking at investing in a company, looking at that company's bond yields can tell you how much risk investors think the company has of defaulting on obligations.
Next week, we'll take a look at the Yield Curve, and include some more lessons about how you can use that information to begin forecasting prices and the overall economy.
- Team TradingView ❤️❤️
Too much inversion. 3,5% is needed for growthWe are currently facing a too much curve inversion which plan for a recession
We can go deeper to green line but this mean the growth will dive strongly
long US30 treasuries hereUS30 treasuries are hitting a resistance line, 50 MMA and a high RSI and MACD. It seems like a good risk / reward to buy some treasuries here.
If the recession is starting it should put a downward pressure on inflation and treasury rates.
I will buy some TLT ETF and SPPX ETF.
IF the 30 year bond stays above the trend line, stocks lose.The three decade + trend for bond rates has been downward. In June, we witnessed the first rise above that trend line in recent history, followed by a return to the trendline last week. This is a pivotal point for both bonds and stocks. If stocks drop back down below the trendline, we can see the market go higher in the near term. If the 30 year bond rates rise this, we can expect a downturn in the stock market.
Prediction: Bonds will trade sideways before going up. Stocks, already with substantial momentum, will continue higher, until bonds resume an upward momentum, confirming that the stock bullmarket is over. This may last up until the Fed raises rates in September.
USA 30 Year Goverment Bond USA Sun Storm Investment Trading Desk & NexGen Wealth Management Service Present's: SSITD & NexGen Portfolio of the Week Series
Focus: Worldwide
By Sun Storm Investment Research & NexGen Wealth Management Service
A Profit & Solutions Strategy & Research
Trading | Investment | Stocks | ETF | Mutual Funds | Crypto | Bonds | Options | Dividend | Futures |
USA | Canada | UK | Germany | France | Italy | Rest of Europe | Mexico | India
Disclaimer: Sun Storm Investment and NexGen are not registered financial advisors, so please do your own research before trading & investing anything. This is information is for only research purposes not for actual trading & investing decision.
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RANGE TRADINGThe US30Y is ranging between 2.98-3.08, simple. Keep in mind fundamentals headlines like recesion/inflation and macro data.
Monster Bear Flattener AheadHistorically - inflation has never been defeated except when a long term bond (in this case the 30 year) yield is above the rate of inflation. The collapse of supply has meant too much money chasing too few goods. This means more and more capital is sucked into a blackhole of wage-price spirals. Currently the US has trapped itself against a wall and a hard place in that the 30 year treasury yield is well below the inflation rate. A situation which hasn't happened to the US in 100+ years (I can't speak for the Civil War Era, I haven't found data back that far). You can see the 30 year yield history by searching Google for "Fred 30 year yield" (Can't post links yet).
The only logical path to achieve this is a bear steepening when people realize that inflation cannot come down otherwise and then begin a sell-off.
Yield curves will stay inverted since the FED has put a floor on interest rates which the treasuries are already starting to get close to.
"Restrictive rates" = = a bear flattening environment. We are currently in a "bull steepener" attempt which will fail.
A Look at 30y US Bonds, Fed Fund Rate and InflationTreasuries are an intersting play right now. Depending on your home currencies it still might be a good moment to consider stocking up on them in your portfolio.
Couple of notes looking at the chart.
FOMC participants’ assessments of appropriate monetary policy: Midpoint of target range or target level for the federal funds rate was shown to be around 4% (per June 15 '22 Summary of Economic Projections).
The bond market had been signaling the need for FED fund rate hikes for some month already.
Looking at it from a EUR buying perspective you can currently get 30Y treasuries at around 3.3% (2.75 - 3% nominal plus slightly stronger EUR at the time of writing yield with an ~5% lower price still.
Forecasting a continued weak EUR and a top of the fund rate at around 4% these treasuries ought to be bound to rise latest in 2024.
Newly issued bonds ought to be reaching 4% soon. If so those will be attractive too.
It should be noted that there is no guarantee that the FED (nor the ECB) will be able to contain inflation or the starting recession.
The EU is likely to be hit harder for both.
That said the FEB may continue and we may end of up with much higher FED fund rate of above 4% (5%, 6%, .....).
This scenario seems unlikely as such high interest rates would break the financial markets and econimies.
It is to be noted that the FED's fund rate it approaching to be break a downward trend since 1984. On the chart the trend from 1988 has already been broken.
This chart does give some indications of the dependencies of these three key figures. But one can easily spot that it is not a clear when X goes up then Y does too.
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30 year yield has topped30 year yield has topped, increased my position in 30 year treasuries.
Disinflation is coming later this year, already seeing it in durable goods.
Rates down from here (but short-term 2022-2023)Last time I made a forecast about rates going to rise. Now it will retrace for a while.
NFA = Not financial advice
HIGH LOW Spread US30Y YieldDaily HIGH LOW Spread US bond 30Y Yield vs SPX index, for trying to signal bottoms ...
US30YR Targeting A Pivotal Equality TestIn this update we review the recent price action in the US30YR and identify the next high probability trading pattern and price objectives to target
Same as the US2YT, I've decreased the upside potentialFor the same reason, I think the US30YT and the US2YT can be inverted at this level by -0.25% and no more can be done because of the high recession level incoming.
In next weeks this will happen, this summer in my point on view
