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US30Y trade ideas

Macro - Global Inflation Expectations Rolling OverSpeculation for Macro: These are the underlying conditions: - Inflation expectations are what leads risk appetite. After all, who would hold or buy an asset expected to depreciate in value? - Global inflation expectations turning down and have been in a downtrend for decades. Of course it is deflationary. If DEBT fueled GDP growth (for appearances over results) misses expectations vs. the underlying conditions, what can you really do? - AMZN missing expectations is a hint. Bonds and currencies lie less than stocks. Stocks are the last to get the message. AMZN - This is a pattern prevalent globally right now. Look how it resolved in HSI, and now AMZN: - Druckenmiller says that funds position for 18 months in advance. The sell-off in tech and lack of interest is a huge tell. In decelerating markets, sector losers will be sold off heavily. - If you cant stimulate earnings & job growth by dumping money into stock buybacks, then you have failed. You will have price inflation ONLY, but it is not creating GDP growth nor lasting means to do so. Only raising DEBT, and then when you take away QE/negative rates you are left with nothing but high prices, and a big asset bubble. Now, we are to assume that investors will keep bidding up assets that are expected to depreciate in value? No they will just sell, and money managers see what is coming just from AMZN + GDP missing expectations. - When you only have price inflation, but the population not accumulating capital, it will lead to consumers being priced out of discretionaries and demand will decrease. You will revert society back to demanding bare necessities, rather than creating innovation. - You can keep pouring in money through QE, but rates cant go more negative... CBs will just eventually hold all of their own negative yielding debt and keep printing money when nobody is actually giving you money for the debt? How does it create GDP growth when the money they print is depreciating in value vs. existing debt which needs to eventually be financed? - Debt is the deflationary force that money printing is fighting against. They need the economy such that it can eat away the debt without them pouring money into it, but if companies fail to produce increasing revenue while debt is increasing, they have failed. - Then for the next crisis, your are left with no options except to lie down and take it. - Institutional money will begin to sell off as they realize what is happening and data factors begin to confirm this trend. Global Liquidity Providers with a red flag: Softbank: Evergrande: Bitcoin/Blackrock - US equities have yet to factor in the selloff in Bitcoin (Bitcoin is the US liquidity provider/Shadow Bank IMO): - What is the Trigger to actually sell the US equities though? How to action this global shift? Its very tricky obviously, but I am looking at the leaders (FAANG) which have upheld the bull run up till now as hard supports vs. the weakening market breadth. That's why AMZN is an important cue for me. - Asia is the key. As we know, China is attempting to pop their asset bubble, and it is creating a deflationary wave which has reached HK and now Japan. It will spillover to EU and US without question. - You can see the COVID and other fears being set up to be blamed as a 'catalyst' to blame, rather than CB's blatant failure to navigate the crisis. - Of course, stocks aren't the economy... but when smart money realizes that revenue will decline, and no value will be created for them, of course they will sell. i.e. Its going to translate to revenue, innovation, dividends and stock buybacks. I expect a correction at the very least in the near future in US equities, and a big one in the mid-long term. All I can do is short the setups and prepare for the big one. But where will investors put their money then? - Dollars, housing and bonds from the looks of it. Anything to escape the tail risk in equities. Even the junkiest of yields are below inflation as investors seek yield. - It is a bit sinister, because the Fed is buying bonds and MBS's, and eventually it will be returned in theory. So they retain the ability to strike down the havens. When new instruments which are riskier and riskier are created so that investors can obtain yield and institutions can sell their risk to them, it piles on more risk into the system, such that the threshold for a tail event is lowered. That is probably where the liquidity eventually flows to. Just because there is an immense amount of money in the system doesn't mean investors won't sell that risk. When everyone is risk-on, wouldn't it create more yield to just flush risk assets first and then buy the dip? The great Black Swan here is that inflation is indeed transitory. It would mean that even QE Infinity and negative rates cannot stimulate the economy. How it Unfolds: - While M Money Stock has increased, it has done little to reduce debt vs. money, nor increased GDP (growth YoY). - The Credit Cycle is the beginning of liquidity flows. The global credit impulse is negative, meaning new inflationary credit is not created, and eventually, debt will be called instead. Inflation will be destroyed. Debt is at an all time high. - For debt to be serviced, those institutions which have sold debt must now pull liquidity from assets in order to service the debt. While the assets have appreciated in monetary value, they have depreciated vs. debt, meaning that they will need to return more M Money than they borrowed. This means that at the end of it, there will be a money SHORTAGE! GLHF - DPT
Editors' picks
TVC:US30YShort
by UnknownUnicorn1043646
35
US Government Bonds 30YR Yeld (US30Y)Situation, for the moment, remains standing. The unemployment rate has risen to 5.9%, this is a figure to be taken into consideration because in fact in the US we are in the midst of reopening, therefore an unemployment rate that rises after everything is reopening is a non-alarm signal, at least of attention. The fiscal stimulus is about to end, as are family allowances. The savings rate has risen and consumption has not had that hoped-for surge. Perhaps the pandemic event has changed (perhaps temporarily) the propensity to spend and increased that of saving. In itself it is not a bad thing, on the contrary, saving generates healthier purchases because it is not in debt. for companies to continue to make profits, the level of raw materials needs to drop a little, but not too much. There is plenty of capital, as well as manpower. So perfect data in the situation we are in. However, I believe that the increases in raw materials will not be able to reach the final consumer. Today's employment report is emblematic. There are major problems in the supply chain of many industries. And this factor will also affect prices, but how? Finally, the M2 that does not circulate. If money does not circulate it does not create inflation. QE and all other financial stimuli, for the moment, remain in the financial system and the only inflation I currently see is asset inflation. So how to take advantage of a possible and healthy decline in the markets? The alarms on the demographic collapse of the western population and also that of China and Eastern Europe intersect with the increase in the average age of the population. The output of production will be decidedly higher thanks to the significant innovations on the productivity front, however, the demand for consumption, determined by a large portion of the population that does not produce (the elderly), will be lower. The effect will have a deflationary structural dynamic. These correlations show that the demographic dynamics of developed economies have not only helped central banks to keep inflation low, but may also undermine their efforts to keep it above zero in the long run. The demographic dynamics underway in Europe, Japan and China have deflationary effects. Demographics, inflation and economic stagnation are concepts that interact with each other on a tighter level than is commonly thought. The more the population advances over the years, the more the economy slows down. The powerful structural forces represented by excessive indebtedness, demographic aging and technological disruptions will continue to provide disinflationary pressure. These are profound structural forces that have been developing for decades and that will certainly not disappear overnight. The rapid growth of the Fed's M2 monetary aggregate measure is a key factor behind the reflationary hopes. The theory might suggest that this portends a spike in inflation, but one cannot look at the monetary aggregate in isolation - it is crucial to consider the velocity of money circulation as well. This is a rate that measures how often a currency unit is used to purchase goods or services. The coronavirus crisis has prompted a drastic drop in that speed. This suggests that more people are saving or investing their money rather than spending it, which is inherently deflationary. What could change the inflation scenario would be if central banks took more serious policies, such as Modern Monetary Theory (MMT), "helicopter money" (making payments directly to consumers) or a more permanent shift towards debt monetization.
TVC:US30YShort
by mgiuliani
1
Macro - Risk is Very HighIdea for Macro: - Credit Cycle turned down from top of Risk Range. - Global Credit Impulse negative, US Systemic Liquidity Flows turning down, Fed Balance Sheet 5yr avg. at top of risk range. - Demand-push Inflation at top of risk range, in 40 year downtrend. - Implied Volatility vs. Realized Volatility reaching a critical level. - PC ratio reaching low levels (signals investor complacency). - SKEW at an ATH. Perceived Tail Risk is at an ATH. Speculate a correction in equities this Summer, then a large correction EOY-Q1 2022. GLHF - DPT
TVC:US30YShort
by UnknownUnicorn1043646
5
US Treasury Yield Curve and Inversions.This chart shows three times during the past three decades in which the yield curve inverts. An inversion is when the rate of a shorter term debt security is higher than the rate of a longer term debt security. This is identified on this chart in 2000, 2006, 2019. Treasury Debt Securities: Bill; less than one year to maturity at issue. Note; greater than one year but less than 10 years to maturity at issue. Bond; greater than 10 years to maturity at issue. In 2000 the yield of the 3 month US Treasury Bill was about 6.3% while the yields of both the 5 year Note and 30 year Bond were around 5.8%. In 2006 the yield of the 3 month US Treasury Bill was about 5.1% while the yields of both the 5 year Note and 30 year Bond were around 4.9%. In 2019 the yield of the 3 month US Treasury Bill was about 2.3% while the yield of the 2 year Note was around 1.8%.
TVC:US30YEducation
by ThrivingProject
1
The Big Hedging is Coming; Bonds and VIX looking BullishThe market lately has been very unstable to say the least and has been willing to jump onto any boat it can in order to avoid inflation, However the price action we are seeing on the 30 YR seems to indicate that Inflation fears are overblown and that the Value if the Dollar index will likely remain stable. While looking through the charts i noticed that there was an unusually high correlation between the 30YR Bonds and the VIX: Starting March 3rd 2014 as marked by the green vertical line on both charts. You can see that most Green Months in the 30 YR results in a Green Month in The VIX. I assume this is because many investors buy bonds in times of market uncertainty as a hedge against potential downturns in the value of equities and securities. Todays Surge in Treasury Bonds could signal: A rise in Volatility to come, A downturn in the Stock market, and a Rise in both the Value and Confidence in the US Dollar.
TVC:US30Long
by RizeSenpai
8
BONDS Yields: Potential trouble ahead. Get ready! This is not a prediction. It's meant to be educational but it's an analysis. Loads of traders are unaware of what the Bond markets mean. This post can't be a full exploration as it's a massive topic. Some self-driven independent study is required. I'll give a few snippets of what I understand in the form of a story. The Bond Market (aka Treasuries) is the truly big one. It dwarfs the stock markets. The Bond Markets have reliably heralded what's likely to happen in the economy. This where the really big money is, and people put their money for very short periods, long periods or 30 or more years. A Bond is a loan. You lend your money. Somebody owes you money and interest. But you can sell a Bond, which the debt owed to you. Someone can buy off the debt owed to you if they think it's a good deal that you're offering. That depends on a whole load of things. Now the Bond market is important because the big one is US Govt Treasuries. You lend money to the Govt over various periods and you expect a 'Yield' which is similar to interest. At the end of the term - unless you sell the Bond on - you expect to get your money back in full from thuh Govt (plus the 'interest' over the years of the term). The trouble at the moment in the Bond Market is that the 30Y and 10Y bond yields are definitely rising. Last year, people were worried about Yield curve inversion, where long term bond yields fell low and followed short term yields bonds. Between about Aug 2019 and Feb 2020 long term yields were below the 2Y yield. That was crazy cuz it meant that putting your money with the Govt for longer was not much better than with a short term loan to the Govt. That happened when 'everything' went south and people thought the economy was gonna go bust. Now something different is happening. Look at it. 30Y and 10Y yields have rocked north leaving behind the 2Y. What does that mean? The Yields on the 30Y and 10Y are important because it means that the US Govt have to offer a higher interest rate to attract the big money. When good times are expected, bond prices fall as demand falls because people want to put their money in shorter term investments, where they think they can make more money, more quickly. Fewer people want to lend to the govt i.e. no pressing need for the best secure investments. They wanna take risks to make more! This is how it works - right? Well, this is probably not you - but the big money can take on risks better than you can. As a result the government has to pay a higher yield (interest rate) to attract investors, cuz they wanna go elsewhere. Higher yields therefore signify that sentiment in economic outlook is better. You should be punching the air - but not so fast. Here's the problem. Bond yields set the stage for higher interest rates on loans elsewhere (- needs reading up). This is very simplified so may not be 100%, but it's broadly true. There are all sorts of issues like short-term interest rates and long term rates (they don't go hand in hand). But overall the Bond Market is the one to signal what's coming, in broad brush. Who likes higher interest rates? Well, those with cash, in the minority- who want to lend to the have-nots, and squeeze the juice out of them. 😮😂 Who doesn't like higher interest rates? The people who have borrowed or will borrow money and have to pay back; in a majority. 😨😢 I've left out rates of rises of various Yield curves and an essay on Yield-curve inversions of different types. The important thing is to get more educated about all stuff related to Bonds. Is hyper-inflation coming? I don't know. If you believe the FED, the answer might be 'no'. It's a big separate topic. Okay- this is complicated stuff. I've left out about 20 things related to Bonds and Interest rates. What does it mean for you as a trader? Well you won't really get the full big picture if you just read this post. But the big picture is your business if you're trading on a 4H to 1D time frame in any market. If you're a short term trader in stocks or forex the tension is mounting in the backdrop with rising volatility which can take you out in the 5 min to 1h time frames when you least expect it. If you think my broad understanding is incorrect. Do let me know and share with others so we can all learn. I always dare to be wrong. Let's have that discussion. Stay safe. Mind your stop-losses. Don't burn good cash. Okayyy? 😉👍
Editors' picks
TVC:US30Y
by Captain_Walker
18
US30Y Time for bond yields to reverseThis is the U.S. Government Bond 30Y Yield from 1988 until today. I chose this hyper long-term chart on the 1M (monthly) time-frame as with bonds being the talk of the month as for reasons that may move stocks, Gold etc lower, I wanted to get a good understanding of what the real long-term picture is. This illustrates a clear and standard Channel Down. I have applied the Fibonacci levels on it. As you see the price is now testing the 0.618 retracement level, which is exactly on the 1M MA50 (blue trend-line). The chart clearly shows that the MA50 and the MA100 (green trend-line have been acting as a Sell Zone since at least 1995 (where we can measure). We can see that only once over these decades did the price (marginally) break the 0.786 Fib (October/ November 2018). On all rejections within the MA50/100 Sell Zone, the price always pulled back to at least the 0.236 Fibonacci level. That means that the upside is limited on the US30Y and we will most likely start seeing a bearish reversal soon. ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** -------------------------------------------------------------------------------------------------------- !! Donations via TradingView coins also help me a great deal at posting more free trading content and signals here !! 🎉 👍 Shout-out to TradingShot's 💰 top TradingView Coin donor 💰 this week ==> xBTala --------------------------------------------------------------------------------------------------------
TVC:US30YShort
by TradingShot
13