US02Y: BOND MELTDOWN / 4.00% CROSS / MACD CONVERGENCE / RSIDESCRIPTION: In the chart above I have provided a simple MACRO ANALYSIS on current bond market meltdown where the US02Y dropped nearly 25% within FIVE TRADING SESSIONS.
POINTS:
1. US02Y deviation is simple & marked at every 1% difference as bonds rise and fall within the same range percentage therefore it has a rubber band like price action relationship with it's lowest 1% points.
2. Overlapping Orange Line represents ES1! a US Market Future.
3. Dotted Green Lines represent continuous downward momentum in past Bear Markets (2002 & 2008).
4. Bubbles overlapping dotted green lines represent initial break of supporting bond percentage %.
IMO: In my opinion the most concerning factor to take into consideration when it comes to current bond positioning is the STEEP RISE IN PERCENTAGE especially when the overall US market momentum is tied to BOND PERCENTAGE during both RISES & FALLS & the STEEPER THE INCLINE THE STEEPER THE DECLINE can become.
MACD: Notice a complete meltdown of Bonds when MACD confirms convergence to MEDIAN & eventually breaks past median and falls into into negative territory.
RSI: Notice that unlike in other recessions RSI levels have seen more consistent exposure to MEDIAN of 50. But as of lately from a MACRO perspective that is not the case as we have seen current RSI levels linger around 70 or above in EXTREMELY OVERBOUGHT TERRITORY.
SCENARIO #1: In a very BEARISH scenario we come to see BONDS PERCENTAGE go through a complete free fall.
SCENARIO #2: In a less BEARISH scenario we come to see BONDS PERCENTAGE go through an extended consolidation phase with PERCENTAGE LINGERING ABOVE 4%.
FULL CHART LINK: www.tradingview.com
TVC:US02Y
US02Y trade ideas
US02Y is on a breaking point. Great news for stocks!The U.S. Government Bonds 2 YR Yield (US02Y) is testing its 1W MA50 (blue trend-line) for the first time since May 31 2021. The 1W RSI is on the very same Lower Highs trend-line rejection that it was during the December 17 2018 1W MA50 test!
Needless to say this shows that the price is on a critical point as when it broke in Dec 2018, a downtrend followed that was at the bottom of the U.S. - China trade war and sent stocks (black trend-line = S&P500) on a 1 year mega-rally (until the COVID crash).
Will we have a repeat?
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Bond Yield Drops 5% Causing - Gloomy Bank RunOkay by now you heard of the SVB Bank Run
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The US Government Had To Step in
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"To Save The day"
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To make it more ugly the bonds
have dropped by -5%
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Only producing +4% per year.
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Meanwhile the head of the US central bank
is planning to increase borrowing fees to 6%
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that is 2% more than bond "cashflow"
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Banks that Borrow from the US Central Bank
Using Bond "cashflow" are going RED!
--
This why you learning trend analysis
will help you
--
1-If you want to protect yourself
2-If you want to have a better advantage
3-If you want to learn how to trade well
--
Before the bond "cashflow was a cool
+4.5%
now it dropped to +4% as show in the chart above.
You need to learn the how to read the direction of the trend
--
study the above chart to see what happened on Monday
and how the indicators moved.
The 3 indicators used in the chart above
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1)Momentum
2)DMI
3)Parabolic
find these indicators on the trading view platform
--
stay tuned for more information.
$TNX US02Y are CRATERING, Yields falling hardLast week we mentioned that #yields cratering like they did was not normal.
Currently they are all at support with $TNX holding better than short term yields. The 10Yr has BOUNCED a bit off support.
In a positive note it does lessens the inverted Yield curve :D
We'll see how this scenario holds.
What's happening today is more SPECULATION than anything else. The belief is that the #fed will stop raising rates due to the the bank closures that are happening.
IMO I don't think it'll stop them but MAY slow them down a bit.
The Fed Reserve HAS to pick between #economy & #stocks.
While the Fed has been friendly to equities and markets in the past its main concern in the US Economy. They also care about the US #dollar.
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.
DXY is now Risk On scenario now as banking sector gets crushed!Sharks are smelling blood in the banking sector and they are loading up to strike. Last week, we saw Silvergate Bank collapse and shortly after that, Silicon Valley bank (SVB).
Within 48 hours, 2 moderate size regional banks went under. Last Friday, several banks tanked at least 20% and few were halted due to massive shorting.
The house of cards are falling and this situation looks like a Lehman Brother's. Contagion will spread to vulnerable sectors such as housing and auto.
Jerome Powell wants to further increase interest rates, which will cause more destruction. Investors will be spooked and wanting to pull their money out of Dollar debt system and investments.
2 year US Treasury Bond yields dropped off the sky. With US national debt being so incredibly high at $32 Trillion and counting, US Treasuries are also no longer safe havens. Gold and Crypto perhaps?
DXY just broke new lows on Daily timeframe. The bear market rally is over I believe and with the catalyst of collapsing banking sector with its contagion expectations into other sectors, DXY is Risk On now, which is Bearish.
By Sifu Steve @ XeroAcademy
Japanese have been selling bonds, have Yields peaked for now?One of the reasons US Treasuries, and other bonds, have been selling off is the dumping by Japanese investors.
All duration #YIELDS have done well but more so the shorter term. The Inverted Yield Curve has widened over the last few months but has been significantly lately.
However, today we see the 1 & 10Yr ($TNX) selling off but the 2 Yr is CRATERING! Interesting.
Also interesting is that volume has been waning for investment grade and high yield bonds. Liquidity could be an issue later on if this continues.
US02Y - US01YThis shows you that the market still has a rate cut priced in for next year. I'll be a lot more bullish on the market if they price this out.
Inflation is here to stay, and so are high interest rates. The market can still go up though, but as I said earlier, bonds should not be going up.
🔥 US Bond Yields Suggest More Interest Rate Hikes: BEARISH 🚨The US 2-Year bond yields are important because they tell us how much returns an investor will get by lending his money to the government. In periods of higher economic risk, investors demand higher returns. Thus, the height of the bond yields can be used to determine whether we're in an economically risky period or not.
As seen on the chart, once the 2-year yield starts increasing, the FED will increase the interest rates. Higher interest rates are BEARISH for the markets.
With the 2-year yields making a new high recently, it suggests that the FED will need to increase the interest rates further. Is the current 25 basis points enough to tame inflation and market risk? Certainly not if the yields will keep like this.
If the yield will keep on rising there's a decent probability that stocks will continue to go down. If so, crypto will likely follow.
For now there's little reason to believe that we're going to make new bear-market lows, but once stocks will really start selling off this probability will increase. Will monitor.
US 02Y possible black swan for stocksUS 02Y is close to breakout from the bull flag. After reaching the top, the price of 2 y did consolidate but never dropped hard. After consolidation on this level, it seems it's ready to break out of the bull flag which would be very bullish for 2 Y but bearish for the market as a whole. Remember, even though a lot of retail traders follow FERD, they should follow 2 Y yield as that is what FED and Powel followed. FED is much smaller than the bond market, and the interest rate on the 2-year bond is something that is important for FED.
Also one of the main problems for retail traders is most of them don't follow yield inversion which is now at a huge level. Meaning the interest rate is now higher for a 1 or 2-year bond than on 10 or 30 which is insane and is a sign of huge money indicating something big will break out soon. Every yield inversion till now finished with massive stock collapsing, so will likely now too.
With the breakout of the bull flag, there would be a trigger possibility for 2 y to retest highs which would mean the FED fund rate must go much more than 5% which would be very bullish for US Dollar/DXY and very bearish for stock, crypto, and gold and silver/ commodities as a whole.
A good thing would be that all would have pressure on inflation which we all need at this moment.
Daily Bearish Cypher looking for 3.62% over the next 3-6 monthslooking at the daily chart, I see weakness on the 2yr treasury yield. There is a bearish cypher pattern on the daily chart. A great short opportunity would be near 5%..If it gaps above previous C-wave sell off that would be a buy up tot he short level near 5%...It can also short at this level. But overall based on my TA I see weakness. You also see similar in the 20yr treasury etf tlt
Bond Yield Update2Y bond yields still melting up
This leads me to believe that tomorrow is gonna be a pump and dump, nobody expecting a rate cut soon, and market still needs to price in a rate hike for July.
The algos still have to make their money, so I expect a gap up then a sell off as bond traders price in a rate hike. Remember the inflation target is 2%, the expected numbers are:
Expected CPI Tuesday 5:30am
USD CPI m/m 0.5%
USD CPI y/y 6.2%
USD Core CPI m/m 0.4%
I think the numbers come in as expected, the market pumps it because it's better Y/Y but then sell off because of M/M numbers like Europe did last week.
Are the FED hike rates really peaked?Whenever we sow down crossing between FED fund rates and US 2Y yield bull market started (BTC, SPX ...). Now that crossing seem to happen even now but in the past it never happened if inflation was above them.
Can we expect inflation to start rapidly falling in next weeks and months to go below fund rates and yield?
Bond Yields 1 vs 2 yrThere's still an inversion between 1 and 2 yr bonds, which means the market still has a rate cut priced in for next year. On top of that, it looks to me like we're headed over 5% this year, so even the 1 yr needs to go up.
What's interesting is that the rate inversion started at the same time as the market rally, last Oct.
I dunno if the market fixes some of that Tuesday or just gets all pumptarded because inflation only went up .5% m/m like Germany did, lol. .5% m/m extrapolates to 6% yearly, and it took then a few hours to figure it out, lol. Remember the target inflation is 2%, and it;s gonna require more than one more rate hike to drop it down.
Pretty good chance Tuesday winds up being a pump and dump like Europe, but I'm gonna carry a small position in TLT and BITO puts. Decide against doing a straddle.
2 year yield patternThe 2 year treasury yield is a very good predictor of the Fed Funds rate. Since April 2022 the yield has formed a broadening ascending wedge pattern which indicates a potential move down. For the last couple of months the yield has been in a narrow downwind channel. With CPI data coming soon this could trigger a breakout either to the upside or downside which is likely to trigger movement in stocks. A drop in this yield would be bullish for stocks and vice versa.
FFR Inversion with 2 Year USTMany believe the Fed kept the Federal Funds Rate (FFR, in orange) too low for too long. But the recent path of hiking has caused the FFR to now get above the 2 year UST yield (in blue) -- a situation that rarely happens, and rarely is a "good" sign for markets. Stay alert.