Down-trend on TLT is about to resume with a target around 122, so I am excepting long side of a yield curve to go event further up and eventually exceed 3%. I like Lacy Hunt's arguments for deflation/not inflation in the long term. But as he also mentioned, it is a norm at the moment to expect a short term inflation pressure.
I believe a 5 wave structure is unwinding since 5th of April, 2020 on TLT chart, with 4th wave potentially just completed. Wave 2 had triangle structure, so wave 4 is expected to form a zig-zag , exactly is it actually happened. So it is ready for the next move down towards 122.
Watch TLT/JNK chart which I found very interesting, it gives an idea about a turning point when market is going to turn from risk to save assets. Most likely it will be in sync with completion of DXY correction (started in 2017), so both $ and bond will go up after then. [img][/img]
In previous recessions 10-Year Treasury Minus 3-Month Treasury also went above 3%. So indeed, I agree with your chart.
Short term -> inflation (XLF, XLE, GLD, GDX)
Long term -> deflation (DXY, TLT)
Johnny_Rockets88
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@T-r-X then why has gold been selling off and TLT been forming a bottom? we have reached peak inflation and now are transitioning to Deflation again. imagine home prices after forbearance ends and with say 5% interest rates.... 💥💥💥 Housing debt will be the last bubble to pop.
Johnny_Rockets88
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@T-r-X I believe we will see zero interest rates and 40 year loans to attempt to save the housing market/banking system from a nationwide systemic collapse. this will usser in a period of large scale inflation for a 2-3 year period. then another deflationary collapse. we can't get out of this cycle.
CertifiedSTinger
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@jscheurichiv, Long puts?
Donnyboy123
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@CertifiedSTinger, Exactly. The question is , what strike price and what month. There is O/I in the Jan 21st 120 & 125 strikes, but that doesn't seem far enough out for me. Look at the January 2023 90's 95's & 100's. Still relatively inexpensive for the time value. I will be doing my homework on this trade.
Short term -> inflation (XLF, XLE, GLD, GDX)
Long term -> deflation (DXY, TLT)