US02Y : The BOND dilemma

i_am_siew Updated   
TVC:US02Y   US Government Bonds 2 YR Yield
The recent dot plot is quite interesting. It has 2 important notes:
a) no recession
b) you got to wait longer if you are looking for cuts.

This caused yield to move UP - to price in a longer Fed pause.

And I think both short and long yield to continue to be HIGH.

In a situation with high DEBT load, a higher rate environment is trouble.

$ FX and US yield sometimes move in unison and sometime not. We just need to know when it does and when it choose not to.

We are now again at the point when things tilt. I THINK that when yield goes any higher, DXY would need to move LOWER to compensate for the higher rates. As we know, DXY is now facing some resistance on its way UP.

In a week or two, US might face another possible government shutdown. We must trade with caution.

Till the next dot plot in 12/2023, DXY might NOT move up as fast as earlier thought.

Good luck.
After gaining for 9 weeks in a row, perhaps this week will see the DXY ending in RED. If this is so, it seems higher yield is impeding its move UP.

Good luck.
In the world of MONEY, there are always 2 parties - the LENDER and the BORROWER which exist in the EuroDollar system. To understand FX, we need to understand Bond. To understand Bond, we need to understand the Fundamentals. To understand Fundamentals, we need to know what exactly the MARKET MAKERs see/do.

What are they actually seeing and doing now with respect to EURUSD?

The see 2 things -
a) US10Y going further up and not sure how high it will go
b) DXY might possibly be strong once the Fed STOPs hiking

We can say that with both the rates and the USD being EXPENSIVE now, borrowers are practically nonexistent. So dollar DEMAND is actually dampened.

Now is the time for LENDERs to take action. What will they do with all their MONEY? How do they take ADVANTAGE or profit from what is happening now?

If you see a and b above, what will you do? To know the answer, you have to think like a MARKET MAKER. Not like the ordinary Jane & Joe trader running around clueless, always depending on their trendline and stupid indicators.

Good luck.
The more I begin to understand the way they work, the more respect I have for them. If I only knew what they knew earlier. Their foresight and timing are simply amazing!

EURUSD = buy now

The first leg of the operation to drive down EURUSD is now complete. The motive is simply to move USD to Euro, and to serve the purpose better, USD needs to strengthen so that more Euros can be exchanged. Reason is that they know much earlier that US bond yield is going to drive higher and it is pointless to buy them NOW. Hence it is better to hold Euro bonds for the time being.

They are Buying TIME to the eventual day when Fed stop raising which mean the economy is in serious trouble. Perhaps it is 3 or 4 months from now. So now is the STARTING point when they need to move EURUSD back UP. Why? Isn't it simple. They need to change back the Euros into Dollar so that they can BUY US BONDs, just when they KNOW the Fed is done and the economy is in serious trouble.


Good luck.
Many are asking if bond yield, both 5Y and 10Y would continue to rise.

Many thinks that 10Y would follow 30Y which recently hit 5%.

To know the answer, we look to OIL - It has stop rising and with it, I can say that bond yield looks like its going to come down lower. Also looks like Hedge Fund is going to get fcuk if they think they are gonna drive bond price lower.

EURUSD = higher
USDJPY - lower

Good luck.

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