- 6 years is broken. Yield spread started to tighten: dow to 212 bps from 280 bps a year ago.
- Technically it is firm now, which means that as FED Will likely act and ECB has not much more room to move, the yield spread Will collapse further. (Also US 2s /10s curve steepening is likely
And here comes the fckn big question mark! -> look at the right chart of EURUSD: what the hell is the USD doing here??? How long can it be so strong and why the interest rate spread correlation is not working? (You can alternatively chack the DXY chart too.)
Our very detailed macro scenario breakdown indicates a massive USD devaluation ahead in next 4-10 months horizont, as a result of US economic downturn followed by FED action.
It is time to watch the Dollar charts very carefully, and when the technicals Will stay in line with the macro view, go short USD in size.