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.
It's just like you to dig below the surface,
to see what others are not seeing, at critical and very important major market turns.
I remember well your spot on call for a major bottom in long term rates in June 2016
during the Brexit crisis, when the 10 Year Bond reached a crisis low of 1.33%
I hope you followup on this analysis again,within the next 30-90 days,
Your idea here has considerable merit.
It's just like you to dig below the surface,
to see what others are not seeing, at critical and very important major market turns.
I remember well your spot on call for a major bottom in long term rates in June 2016
during the Brexit crisis, when the 10 Year Bond reached a crisis low of 1.33%
I hope you followup on this analysis again,within the next 30-90 days,
Thank you.