Money gravitates to where it is treated best. Currently the mid area of the US interest rate curve is inverted.
90 day US T -Bill rate = 2.29% (IRX)
Five Year US T-Note rate = 1.92% (FVX)
Ten Year US T-Note rate = 2.14 (TNX)
Thirty Year US T-Bond rate = 2.58% (TYX)
While mid and long rates have plunged, short term rates have had only a shallow decline. Notice that the weekly Stochastic for Five Year rates (FVX) has reached oversold,
the Stochastic condition is the same on the IRX - which can't be shown on this comparison chart.
If short term rates have so far not had a significant decline it is doubtful they will anytime in the near future. Yield curve inversions are a rare aberration.
Currently anyone holding mid to long range US debt instruments has great reason to sell the longer term Notes/Bonds and buy short term T-Bills, especially if its perceived that short term rates won't decline much.
This will 1) get a better rate
2) reduce portfolio volatility
3) lock in profits from recent Bond/Note rally.
The Five Year Notes - FVX are nearing a 50% retrace of its bull market that began in 2012. This is also the zone of a significant consolidation area- the VALUE ZONE.
If there's selling of Bonds/Notes -inversely rates will rise,possibly starting this week.
Mark
90 day US T -Bill rate = 2.29% (IRX)
Five Year US T-Note rate = 1.92% (FVX)
Ten Year US T-Note rate = 2.14 (TNX)
Thirty Year US T-Bond rate = 2.58% (TYX)
While mid and long rates have plunged, short term rates have had only a shallow decline. Notice that the weekly Stochastic for Five Year rates (FVX) has reached oversold,
the Stochastic condition is the same on the IRX - which can't be shown on this comparison chart.
If short term rates have so far not had a significant decline it is doubtful they will anytime in the near future. Yield curve inversions are a rare aberration.
Currently anyone holding mid to long range US debt instruments has great reason to sell the longer term Notes/Bonds and buy short term T-Bills, especially if its perceived that short term rates won't decline much.
This will 1) get a better rate
2) reduce portfolio volatility
3) lock in profits from recent Bond/Note rally.
The Five Year Notes - FVX are nearing a 50% retrace of its bull market that began in 2012. This is also the zone of a significant consolidation area- the VALUE ZONE.
If there's selling of Bonds/Notes -inversely rates will rise,possibly starting this week.
Mark