US BONDS The big market plyers has changed trends fundamentally and technically , i fell this is a pull back to the upside before a massive sell
Government bonds
US 10Y Yields - Sharpshooting Premium Prices In The Near Future We have seen a draw up to buyside liquidity but with price still trading inside of a discount, it's only a matter of time premium prices present itself... right??
Eyes on 4.169%
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
$TNX The little Yield that could. You think the Great Yield slaughter of the 40 years was something; just feast your eyes on the great Yield breakout, eons in the making.
In our next predicted cycle of disastrous economic, but not all that surprising or unexpected economic events; we will now see the Great Bond Slaughter coupled with treasury yields sky high. An event the likes of which the world has never seen.
As you can see the TVC:TNX is flagging on all high time frame charts and has several upper targets to reach before then top is in.
Our next target being a measured move at 8%.
Since we called this breakout 2 years ago, it has not failed to disappoint.
You might also want to check out the TVC:VIX and TVC:DXY monthly/quarterly/yearly charts.
When the shit goes down, you better get ready.
~Cypress Hill
Inverted hammer at the top of the 10Y channelIf the inverted hammer on 10/10 is a reliable indicator, then today may mark a local peak in long yields as we bounce off the top of the channel.
US 10Y Yields - Low Resistance Liquidity Run4 consecutive days of bullish price action with the potential to draw further up inside of the Feb 24 new week opening gap.
Short-term retracement is expected during conditions similar to now and would like to gee the NWOG for this week (still in a premium) filled with the last point of no return being a daily candle body closure below 3.946%
10yr possible false breakoutPossible false breakout US 10yr yields and this is a risk for risk sensitive currencies like USDJPY and USDCHF
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.
10Y bonds seeking support from April-July channelFrom April to July the 10 year Treasury yield was in a downward channel. It broke below that, retested the resistance-now-support for bonds, and kept moving until it recently re-entered.
The fundamentals for long bonds still seem strong, with the cutting cycle starting with an abrupt 50bp cut, but bonds seem to be seeking support. If yields break above this channel, then we may be seeing something unexpected sniffed out by the bond market. If we retest and continue the downtrend in yields, then expect a nice downtrend back to the post-2008 norm.
10Y is back in the April-July channel, testing supportFrom April to July the 10 year Treasury yield was in a downward channel. It broke below that, retested the resistance-now-support for bonds, and kept moving until it recently re-entered.
The fundamentals for long bonds still seem strong, with the cutting cycle starting with an abrupt 50bp cut, but bonds seem to be seeking support. If yields break above this channel, then we may be seeing something unexpected sniffed out by the bond market. If we retest and continue the downtrend in yields, then expect a nice downtrend back to the post-2008 norm.
Bond Yield Short (a.k.a Long Bonds): End of Corrective A-B-CThis is a call for Bonds yields to stop rising and to start falling. What this means is that treasuries will go up. I expect this fall in yield to be strong and accompanied by a fall in stock market.
Stop is shown on the chart. This is a rather aggressive stop.
Another great opportunity to work with U.S. T-BondsAnother great opportunity to work with U.S. government debt in the short term.
We have all noticed that after the 50 basis point rate cut by the Federal Reserve, the reaction of the fixed income markets was mixed. Geopolitical and domestic issues did not allow institutional investors to act freely, leading to a reverse effect.
Currently, another 50 basis point cut is expected, and the treasury curve is in a flattening phase. Yields have risen again.
This is exactly what we call a great opportunity to re-enter the markets with 6-12 month expectations.
#UBT #TLT #UST #US20Y #US30Y
US 10Y TREASURY: surprised by jobs dataThe major macro news during the previous week were posted nonfarm and unemployment figures in the US for September. The nonfarm payrolls significantly beated market expectation, by reaching the figure of 254K, while unemployment rate dropped to the level of 4,1% from 4,2% during August. The markets are now convinced that the Fed will slow down rate cuts till the end of this year to 25 bps, considering the high resilience of the US economy. Previously, markets were pricing another 50bps cuts. The US yields adjusted accordingly to new expectations. The 10Y US benchmark was moving around 3,80 during the week, but Friday's jobs data pushed the yields to the higher grounds, ending the week at level of 3,96. Yields were testing the level of 4% previously.
It could be expected that the markets will spend a week ahead by digesting the jobs data, in which sense, the 4,0% level could be tested during the week. At this moment, there is no indication that yields could move to the higher grounds. On the opposite side, there could be some relaxation, at least to the level of 3,9%.
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?
US10Y - US03Y long term outlookIf the bull flag is valid, the future of the US economy could be under currency debasement & stagflation.
Let's see.
Predictive Correlation the SG10Y Bond Yields on S&P500I have posted about this correlation previously. Perhaps this time it might be clearer to see...
This uncanny correlation between the SG10Y Govt Bond Yields as a leading indicator for the S&P500 was noticed some time ago, and tested since.
As shown, the major turning points were seen in trend changes of the SG10Y GBonds first, before the S&P500 reacted. The vertical time markings show when you would short or long depending on the trend breakouts of the SG10Y GBonds (see lower panel, blue line),
Comcomitantly, comparing what happens from that point, you can see the S&P500 in the upper panel with yellow line.
The lowest panel is the MACD... and this shows the correlated pattern of a (lagging) technical indicator.
Since 2023, there are at least six instances with 100% hit rate.
Now... that brings us to TODAY.
It appears that we are given advance warning of the next couple of months.
For now, there should be a quick pop up to the very recent high followed by a failure of support in the S&P500; and then the expected trends should play out...
10Y - 02Y outlookMy recent assessments have been negated.
I am mostly skewed to the idea it will break negative again, correlating to sentiment fuel for the blow off top in the SPX (no recession sentiment short term?).
Once it flips negative again, to back test the purple bull penant, I strongly expect that to correlate to the markets topping and will potentially exit if I see further confirmation across other instruments.
Reason for exiting prior to it flipping positive again if it goes negative, is because my research has shown me when the 10-2 yield spread is truly trending upwards to break 0%, the market falls with it, as I imagine "smart money" will know what's coming and exit.
Not financial advice.
Just my prediction for now.
DRUCKENMILLER TIPS: Shorting Bonds and MoreInvestment Strategy
Stanley Druckenmiller, a renowned investor, shared his market insights at Grant's Annual Fall Conference. He revealed that he is shorting U.S. government bonds, representing 15% to 20% of his portfolio. While he is unsure when these bets will materialize, his strategy is based on the perception that inflation could return to levels similar to those of the 1970s.
Disinterest in China
Druckenmiller also expressed disinterest in investments in China under Xi Jinping's leadership. This view contrasts with the recent trend of many investors betting on the Chinese market following the People's Bank of China's economic stimulus. Rather than following this trend, Druckenmiller is skeptical about the sustainability of the rally in the Chinese market.
Opportunities in Japan and Argentina
Despite his caution towards China, Druckenmiller was optimistic about Japan and Argentina. He believes Japan could offer attractive opportunities for investors, given that the Japanese economy has shown signs of recovery. As for Argentina, he praised the new president, Javier Milei, describing him as a “brilliant leader,” which has sparked investor interest due to his liberalizing economic policies.
Focus on Natera
Currently, Druckenmiller has focused its attention on Natera, a genetic testing company that has experienced a remarkable increase in value, highlighting a 191% growth in the last year. This choice reflects its strategy of seeking companies with high growth potential in innovative sectors.
Fiscal and Political Perspective
Druckenmiller, famous for shorting sterling during “Black Wednesday” in 1992, maintains a cautious approach to fiscal policy in the U.S. He declines to vote for the major political candidates, Kamala Harris or Donald Trump, noting bipartisan fiscal recklessness as a key concern.
Conclusion
In summary, Druckenmiller's investment strategy is characterized by a skeptical approach to the U.S. bond market and Chinese equities. In turn, it shows interest in economies such as Japan and Argentina. As the global economic outlook becomes more uncertain, his ability to anticipate market movements and adjust his portfolio accordingly remains critical to his success as an investor.
Ion Jauregui – ActivTrades Analyst
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US 10Y TREASURY: pricing the PCE easingThe inflation measured through the Personal Consumption Expenditure Index showed signs of further decrease in August. The Index was standing at the level of 2,2% on a yearly basis, which was a bit lower from market expectations. The US Treasury yields eased after the release of data, bringing the 10Y US benchmark to the level of 3,75% as of the end of the week. During the first half of the week, the 10Y yields were exploring higher grounds, reaching the highest weekly level at 3,82%. At the same time, released final GDP Growth data for Q2 showed no changes on a quarterly level of 3% growth, which pointed to investors that the US economy was growing in a moderate pace in the environment of high interest rates, and that further drop in interest rates will be supportive for the boost of the economy in the coming period.
Current charts are pointing to a probability for further easing of the US yields in a week ahead. The non-farm payrolls are set for a release, which might bring back some modest volatility on the markets. Still, some significant moves in yields should not be expected. The levels around 3,7% might be tested in the week ahead.
US 10Y Yields - Neutral Territory Not expecting anything fancy this week but will be alert to market structure shifts.
US10Y Mortgage Rates Trackerlets see how accurate or NOT accurate this may be. create a free account and press PLAY to keep track of the prediction
US 10Y Yields - Balancing Price Ranges3.774 - 3.826 Sellside imbalance buyside inefficiency is my next draw on liquidity.
The million dollar question is.... what day will we book price action?
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.
