Black FridayUp to 80% OFF

US02Y

One of the Most Important Charts You Will Ever SeeThe bond market often has an inverse relationship with the stock market since it is considered a 'risk off' asset. Bonds generally yield more interest for longer maturities. For example, a bond investor in a healthy economy would expect a greater yield for a 10 year treasury compared to a shorter duration. However, the yield curve can 'invert' (shorter term bond actually pays greater interest) when bond traders believe a recession is imminent. Since the Fed's reaction to a recession is to drop short-term rates to 0% and recessions cause 'risk on' assets like stocks to drop, the smart money will rotate from higher risk stocks (like tech, since it's future cash flows are highly sensitive to the cost of capital) and hide out in bonds to weather the storm and minimize downside risk. Yield inversion info: www.investopedia.com This chart shows the interest spread between 10 and 2 year treasuries in blue. Shaded vertical boxes show where the yield curve inverted in the past. The S&P is in red (at least I think it's red. I am color blind). Note how the shaded boxes start just prior to the dot.com peak, the GFC peak, and even the Covid recession. Currently the interest spread is heading back towards zero as the Fed is set to hike short-term rates to combat inflation, likely beginning in March. At it's current drop rate, the spread will invert in ~Q4 of this year, which means a recession is on the table for the first half of 2023. Keep checking back for updates as I will be watching this one VERY closely.
TVC:US10YShort
by HypnoticStrix
2
Black Swan - Risk Parity EventIdea for Bonds: - US05Y and US02Y printed immense spikes in the pre-market. Glitch? Probably not. Bond market in general is having extreme events globally, US markets not immune. - Not shown on TV, but HYG also printed -7% in the AH on Friday... and traded there for several minutes. - Dollar is unstoppable with global shortage. Pension funds have elected to use leverage to meet a 5.5 trillion dollar liability gap. I'm betting they will not succeed. In the context of everything, more likely it is a dark pool trade and people are running for the exits. GLHF - DPT
TVC:US05Y
by UnknownUnicorn1043646
5
My Forecasts: PostscriptLet me say this from the outset; within the 2's5's curve is a manual, given that I do not have a great deal of time, it is not possible for me to go into great dimensions or detail I have chosen. Instead we will have to content ourselves with the revolutionary charts/diagrams both before and of the period where I have gone into more details. The same is true of the other important charts (VIX and Unemployment Claims) I refer to below. So now that we are all prepared and understand the knowledge, we must start to turn the dusty pages. Firstly lets review a chart on which I stack tremendous value: I would not wish to enter into conspiracies. There have been a handful of inversions in the manuscripts over the past three decades which all speak historical truth in advance of the crisis. The advance in the 5 year suggests salvation from the Fed can only come in the medium term as the 2 year lags behind. And now to the point around Alpha Protocol Seeking Immediate Extraction . The 2's5's is already under the nature in an impulsive form. The prior three inversions (Housing and Credit, Dot com, GFC) also suffered from a lagging Fed, that of being at least 10-12 months behind! This means that it is not uninteresting to highlight the totally overlooked inversion in 2019, it was a loud SOS signal that the economy was clearly running out of steam. I was the one who was able to properly understand that manoeuvre in both Unemployment Claims and Vix ahead of time, calling the move from 12 to 85; with complex inversions, always look to play against the crowd. See our opening in US Claims and VIX before the fact: Given we are facing both inflation via contractions in globalisation and deflation via advancements in technology etc all at the same time, it is causing a major paradox/dissonance across the board. It would serve no purpose to mention or not hint at what will happen next; my personal sense is that because the Fed ALWAYS lags behind, we will see another example of the long end of the curve driving the flows ( for those interested in bull steepening and bear flattening I have also omitted the exclamations in bold ). This would suggest that it is likely that we could be heading into an environment where you see nominal yields receiving a booster shot while real yields flatten causing further pressure on USD.
TVC:US05YLong
by ridethepig
8
..an attempt to showcase the flatteningFlattening for the close. Getting a couple of questions re; flattening after the hints in previous idea, for those following 10s30s you will notice the test of 55/54bps is underway. ↳ The latest breakdown is implying we are at the minimum here in an ABC expectation leg towards support ↳ Inflation readings will be key to drive this one, this is signalling a dangerous environment for equities and risk in general going into September. ↳ To the other side, buyers will need to break through 11th May highs to call for reassessment in the flattening view.
TVC:US30YShort
by ridethepig
3
ridethepig | US10Y testing resistanceA timely update to the US10Y Yields chart as we approach key areas. The 1.35% pivot level in the very short term is our line in the sand and will define which battlefield we will play Q3 on. ↳ The waterfall lows from 2020 started the next five wave impulsive sequence to the topside, it will take years for the moves to unfold but critical to understand our long term direction (higher yields). ↳ Typically we will see ebb and flow, particularly in summer months. Now with 1.35% & 1.45% the key resistance areas defined and ready to monitor, all we need to track is for a sustained breach above as will imply buyers are in control and demand reassessment in the view that a base is already in . ↳ Here actively tracking for one more leg lower towards 1.00%, it should be enough to unlock the pressure valve in USD one more time before we see the next leg lower in global equity markets in October (more on this over the coming weeks). [/chart
TVC:US10YShort
by ridethepig
1
Macro - Reading The CurveForecast for Macro: - Falling Wedge Breakout must be re-tested. - Bear Flattener coming as short-term rates rise with Fed tightening expectations: - 2x ATR spike in US02Y: - The Fed members will probably all have their turn to make comments, leaning hawkish. This should cause a rally in the US02Y. - Bonds Volatility Technically Bullish: - However, this will be followed by a steepener, respecting the Falling Wedge Breakout, as the Fed implements monetary policies to control Deflation, creating a Stagflation environment. - US30Y, this is bearish and deflationary: - USOIL, deflationary. The US economy depends on Oil: - US Manufacturing Employment Index, looks to be at the top of the range, and on a decline: - Capital goods are the heart of every economy. Without manufacturing employment, no capital goods. No capital goods, no innovation. - CN30Y, also bearish and deflationary: - China's Credit Impulse, and consequently - global credit impulse turns negative. - No more credit flows means no more liquidity to flow into risk assets. - M2V declining, if the economy was booming and growing, money velocity should be increasing: - Business destruction cannot be inflationary. Thriving tech businesses lead the recovery, but Tech is inherently deflationary. - Reading the curve will be critical to see the macro turns coming! GLHF - DPT
TVC:US05Y
by UnknownUnicorn1043646
1
US10Y - Strategy WeeklyA couple of things to note here as the chart clearly shows the attempt of a break on the log-chart. We now know Sellers are attempting the strategical and important pin on their opponent. It is clear the inflation trade is deteriorating, and in the most profound sense looks rather like a deeper mission that is underway. On the technical side, the next levels in play with a break on the chart here are at 1.00% and 0.50%. The next charts is clearer as to what we were tracking, firstly the US10Y has completed the full retrace back towards 1.5%/1.75%, and secondly, a lot of unwinding has begun in Commodities and Cyclicals as Oil retreats from the key 75 resistance. With a break in the log-chart, these larger areas of the chart are now rendered useful for freer manoeuvring and can trigger a sharp uptick in volatility for those who are becoming quite rigid. We need to keep an eye on the state of affairs in inflation and wages in particular, although when looking at the headings cooking for the US via fiscal tightening and etc, it looks like the inflation trade as a lot further to unwind yet.
TVC:US10YShort
by ridethepig
2
Game, Set and Match!📌 ridethepig | Game, Set and Match! In order to inform ourselves about the dangers of this move, we shall in what follows point to a few live charts which we called live together from 2019 that the 2s5s was going to invert frantically , and was a bad sign. It enables occupation of the dominos, which for those following long enough will know the one thing we always through individually is our playbook . 1️⃣ Every other time this happened it ended badly for the global economy via recession. ✅ 2️⃣ A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". ✅ 3️⃣ The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet , one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. ✅ ✅ Powell's noble attempt to pick a fight with the end game in an economic cycle can be regarded as having come to nothing. The threat comes from confidence and credit . Aiming for a complete annihilation across risk assets later in 2021, the presence of the inversion was sufficient. Now this move is being made with momentum. Game Set ... & Match The simplest example is to explain the move with diagrams which was the wish here. To occupy a piece of tradingview real estate with a live walk through in the end of an economic cycle. This could be considered as a momentum move in the sense of the word. The rule is: I’m long vol for a very long time. Insane risks are palatable but you need to understand the game otherwise you have a very high likelihood of total destruction. Stay long vol short dollars. We are entering into a series of exchanges between public and private assets, the door is closing, like in the Star Wars movie when Chewy and Harrison Ford are running to the doors, we can see the door closing in China, and in Russia and yet we still have a chance to get out. An exchange towards a decentralised world is possibly into 2032.
TVC:US05YLong
by ridethepig
67
A Macro Thread on YieldsThe bond market can be quite tricky. In terms of yield curves consider the following: Bear steepening Bull Steepening Bear Flattening Bull Flattening > Steepening (the premium for longer debt is growing) > Flattening (the premium is shrinking) For example, bull steepening, which is exactly what we have been doing this since the start of this year: The short-end of the yield curve (typically driven via fed funds rate) falls faster than the long-end, steepening the yield curve. The long end of the yield curve is driven by a wide range of factors, including - economic growth, expectations, inflation expectations, and supply and demand of longer-maturity Treasury securities and etc 📍 A bull steepener ↳ is a shift in the yield curve caused by falling interest rates - rising bond price - hence the term “bull”. 📍 A bull flattener ↳ is the opposite of a steepener - a situation of rising bond prices which causes the long-end to fall faster than the short-end. 📍 Bear steepness and flatteners ↳ are caused by falling bond prices across the curve A bull steepener is a change in the yield curve caused by short-term interest rates falling faster than long-term rates, resulting in higher spread between the two rates. A bull steepener occurs when the Fed reserve is expected to lower interest rates. This expectation causes consumers and investors to become optimistic about the economy and bullish about prices in the stock market above the short-term. Thanks as usual for keeping the feedback coming 👍 or 👎
TVC:US02Y
by ridethepig
21
It's Different This Time... Right...📌 Endgame in the economic cycle and illustrating a painful recession Yields had the opportunity to move and successfully played the 'elastic band' rejection from the inversion in 2019, which despite the length of the global CB combination, can be expressed in no other terms than reckless. FED was obviously aiming for the ideal position (the frontal defence from Fiscal this time around) which is a well known counter when the issue comes from private debt, however they were forced to 'bend the knee'. Things proceed as follows: 1️⃣ Every other time this happened it ended badly for the global economy via recession. ✅ 2️⃣ A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". ✅ 3️⃣ The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet, one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. 👈 'we are currently here' The Whitehouse has decided to follow hyperinflation, Dem voters were naive in this sense and thought they could hold rates lower forever without any consequences. Now we must waste more time pursuing their distant dream that taxation is a solution. Wishful thinking if you ask me... the kind of overdrafts these governments have run up are several multiples beyond even Piketty's theoretical tax base. This ending of a cycle is a pragmatic demonstration of the lust to keep 'putting it on the card' and leaving private debt problems to future generations because of time being finite. Finally a notion which carries its own duties: In a debt crisis, as Japan have known for some 30 years a) you do not want an appreciating currency as the cost of servicing those debts will skyrocket in real terms and b) remain nimble...(get a peloton if necessary). Thanks as usual for keeping the feedback coming 👍 or 👎
TVC:US05YLong
by ridethepig
127
ridethepig | 10Y Treasury Note📌 Yields are clearly hesitant to subscribe to the V shapers in Global Equities. An important observation in an extraordinarily difficult trading environment. The 0.90% - 0.50% range is clearly defined and from time to time we have had to get involved with a gentle grin and attempt to play both sides. The 0.50% lows are 🔑 for this battlefield, as long as they are holding there is nothing to see to the downside. Losing the lows creates a freedom manoeuvre towards 0.17%. Otherwise all sellers are to be viewed as sacrifices and necessary in the basing formation. Expecting an eventual solution to the topside with 1.0% and 1.45% targets into 2020/2021. Thanks as usual for keeping the feedback and charts coming 👍 or 👎
TVC:US10YLong
by ridethepig
2
ridethepig | Recession Strategy📍 This chart update comes from the ' Alpha Protocol - Seeking Immediate Extraction ' The cramped inversion should aways be considered the end game of an economic cycle. But of course we will get the v shapers and naysayers who obliges that stonks only go up. The space available to operate against the Robinhood army is becoming more flexible. Sharp speculators are seeing more of an advance in the 2's 5's curve and abandoning ship when it suits them. The threat of recession completely materialised and shows the importance of outguessing its weakness. You can learn from this inversion that: 1️⃣ Every other time this happened it ended badly for the global economy via recession. ✅ 2️⃣ A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". ✅ 3️⃣ The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet , one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. Powell's noble attempt to pick a fight with the end game in an economic cycle can be regarded as having come to nothing. The threat comes from confidence and credit. Aiming for a complete annihilation across risk assets into 2021, the presence of the inversion was sufficient. Now this move will be made with momentum.
TVC:US05YLong
by ridethepig
41
Real Yields vs. Gold (Divergence of the Year)What are real interest rates? The real interest rate is the rate of interest an investor, saver or lender receives after allowing for inflation. It can be described more formally by the Fisher equation, which states that the real interest rate is approximately the nominal interest rate minus the inflation rate. Now, two scenarios unfold. One, the gap in the chart closes when real yield goes back below zero. As we transitioned into QE this year--rightly so with bonds inverted 6 months before-- before COVID. It was the catalyst. Now with 5 years of the fed funds rates being near 0 to "average out" inflation, how to you think this chart will respond? A tip. QT is the opposite of QE.
U
by TayFx
45
ridethepig | End Game in the Cycle📌 This diagram portrays the final stages in the economic cycle which I called in 2019. The position arose after Equities began extending beyond reality; all sellers needed was an intending cause. The construct of the ingredients here are clear and simple, after Fed cleared the runway till 2022 you can see the risk coming out of bonds. Of course now it creates the "following subtle trap" where the belly of the curve begins to move towards the front end which then brings the 30Y with it. It is worth pointing out where other countries in the world are as there is little divergence on the rates differentials now: 📍 Spain 📍 Singapore 📍 Canada 📍 UK 📍 Japan 📍 Germany There is no reason why the US cannot see a retracement back to 0.9% / 0.8% levels ... Watch for the next dominos in Equities and Gold based on deep knowledge of the flows as we can call it. More risk to come.
TVC:US30YShort
by ridethepig
1