Weekly Downside for 2 yr yield Short 01:57:49 (UTC) Tue May 19, Weekly Downside for 2 yr yield Short 01:57:49 (UTC) Tue May 19,
US02Y
FR US yields vs EURUSDInterest rates are crucial in the movement of currencies. The blue is EURUSD. Those things are not 100 percent correlated but it is something that needs to be paid attention to.
In this post I will demonstrate the relationship between French American bond yields (interest rates) differential and EURUSD.
We use 2 principal yields 2 yearly and 5 yearly composite differential.
As you see, once the yields differential hits the resistance or reversal level (here we use DeMark and Camarilla reversal levels) - there is a reaction in EURUSD. EURUSD keeps moving some 30 pips more (fakeout?) and then turns as well.
On weekly differential chart we see that the differential is at 0 level after a poor bullish breakout. There is also fractal pattern in play.
We also see DeMark monthly pivot squeeze on 60 min (DeMark squeeze predicts volatility and turns in the markets).
You may also use German yields instead of French ones - not much difference actually.
Both American and European yields are in their lowest levels. German ones dropped below 0.
ridethepig | US10Y Market Commentary 2020.04.10An important chart update for all early and late cycle players, the lows in US10Y Yields are not yet locked and this is holding the window open for a final leg to the downside cooking in Global Equities and risk markets.
A lot of buying interest in bonds towards 0.85 / 1.00 highs which will be enough to keep the downtrend in pay. I am looking for a full ABC completion from a strictly technical sense to complete the pattern. It will make things a lot easier for later in the year / into 2021 (and beyond).
On the map a very simple area to track:
Steel Resistance 0.89 <=> Strong Resistance 0.77 <=> Soft Resistance 0.69 <=> Mid-Point FLIP 0.6 0 <=> Soft Support 0.48 <=> Strong Support 0.39 <=> Steel Support 0.30
Thanks as usual for keeping the support coming with likes, comments, charts and etc... jump in with your questions and views!
ridethepig | One For The History Books...Negative US Rates !!!Negative rates are finally here for the US with the 6mo t-bill ticking below -2bps (feed is slightly delayed here). Simply meaning that you will now need to pay the US government for 6mo cash deposits. This is the only way they can continue in the "end game" strategy.
It is a well known phenomenon that the US 2's 5's was ringing alarm bells last year , those who were able to conduct their middle-game carefully were able to build credible trading ideas that leave the opposition hopeless in the endgame.
One of the main requisites for BTC to succeed in the endgame is based on the ability that FED can continue to confiscate while the "People vs Establishment" narrative deteriorates via lack of confidence in monetary policy. The endgame is much more the part of trading in which advantages are needed from economics. Now, the realisation of advantages, specifically advantages in Volatility .
In order to understand the flows across the entire board, you must learn about the endgame by starting from its individual elements, because it has such elements, just like the opens and middle-game strategies. We have previously already dug into these in detail that allow you to form ideas like this for the crash in German Equities.
Thanks as usual for keeping the support coming with likes, comments, charts and etc!
Interesting days are coming.Interesting days are coming. In my analysis, I indicated that there could be a 50 basis point cut in interest rates. Although intervention could have been anticipated, early in the morning, it surprised everyone. Let's look at the analysis. Apparently it did not affect market pricing. We have reached the technical target price. This is 0.611% (The chart in the analysis is the yield curve for two-year bonds) This means that the market expects such a rate for the next two years. In other words, we can say that Future is a curve of interest. In my opinion, the exchange rate can now calm down. A back adjustment may be made to the 1% level of the interest rate band. After that, the market greed may start again. The market may price interest rates close to 0% (0.1%).
Dollar interest rate cut by 50 basis points.Dollar interest rate cut by 50 basis points. 2020.március.18. www.cmegroup.com My analysis charts the market expectations of a dollar cut in interest rates. The reason I like to use the US02Y chart is because it gives you a much clearer idea of what the market is doing. With a fractal analysis, the future movement of the interest rate path becomes foreseeable in weeks. CME TOOLS also confirms my chart analysis as a percentage. What do I expect? The market continues to move ahead with interest rate cut expectations. Market expectations could reach 0.6% for the FED Open Market Committee meeting on March 18. Of course, the Fed cuts interest rates by 50 basis points. Up to this point, the dollar will weaken. EURUSD is rising. Then there is relaxation. The dollar can gain a lot of strength. But this will apparently be temporary. Because the market is once again taking out the "original lesson" and playing for further interest cuts. From here on, the situation may be more interesting, but later ........
ridethepig | US02Y Market Commentary 2020.02.25Play may go as far a 1.115%. A counterattack from FED needed to save Equities... BTFD always wins? Not this time...When major forces on both sides come together, it comes down to a sort of exchange case 1, which we shall call:
" Selling life as expensive as possible "
Buyers play ... Sellers happy to exchange at the resistance line, but since FED is condemned to death, it is quite understandable for those wanting to sell Bonds are the highest price possible. Generally speaking, such a telegraphed move is much stranger to the novice than an experienced:
Virus worries and Japan confirming recession is trigger a move in vol, and it makes the US05Y-US02Y attractive. Treasuries will outperform for the coming months, Equities will remain soft until later in the year.
Hesitant to build full sized positions till we have a technical break as we are aggressively outguessing the next move from FED. As usual thanks for keeping the support coming via likes and comments! Jump in with your charts below!
FED interest rate cut refilled.FED interest rate cut refilled. If you look at the forward interest rates on 2-year US bonds, the market has been pushing for further interest rate cuts in recent days. The figure shows that, technically, the Fed's benchmark interest rate starts at 0.96%. Therefore, I believe the dollar may start to weaken in the coming weeks.
US10Y - US02Y -- Yield Curve Cycling LowerThis is a Weekly Chart of the US10Y yield minus the US02Y yield. (This composite is sometimes referred to as the Yield Curve and if the spread or difference goes below 0.000, then that phenomena is termed to as Yield Curve Inversion).
This spread is widely followed worldwide as any number below or close to 0 tends to indicate impending slowdown in the US Economy, (which is the world's largest) and thus the most important.
You will notice that the Yield Curve tends to cycle and that the initial low point, marked as Point 1, was in 1989; when the US Economy suffered a total collapse in domestic manufacturing and started to initiate the concept of outsourcing manufacturing, particularly semiconductor fabrication to Taiwan, heavy shipbuilding to South Korea and automobiles and domestic electronics to Japan.
The fall of the Berlin Wall in 1990, which was joyfully called the "End of History" was when US Corporations found themselves in the unique situation of no longer having to give in to their workers demands for unionization and normal humane conditions; in order to pacify them and have them stop demanding the same work and social security conditions of their fellow workers within the Soviet system meant a boom till 1992. Those workers did not have a leg to stand on from 1990 onwards.
Point 2 is the dot.com crash of 2000, Point 3 is the Great Financial Crisis or GFC and the collapse of the Mortgage Backed Security or MBS global housing market in 2006/07.
These two events were frantic attempts to keep the US Reserve Currency system afloat as well as to inflate the US Stock Markets and keep failing corporations commercially viable. This was achieved by the total and absolute destruction of Iraqi Society and subsequently the total annihilation of Libya as a functioning sovereign nation, in order to keep the Petro-Dollar system concurrent.
We are now approaching Point 4, which is a Currency Crisis and a collapse in the US Dollar or the USDX or DXY. This will lead to a massive convergence towards digital currencies and IMF/World Bank sponsored attempts to replace fiat. The question remains; will the debt burden of those same workers within capitalism be written off and if so, will that be initiated via a Bernie Sanders led Administration in the US before the situation gets totally out of hand.
ridethepig | US 10Y Yields At 1.50 Support A deliberate soft closing down at the 1.50 lows (instead of breaking through allows for an underestimation in the bounce); here, the systematic approach of buying the dip deserves victory. We can cast some light together on playing through the flank:
In the extraordinarily traditional sense an inversion which we are looking at always leads to a recession and volatile positioning. This change of cycle that I have mentioned usually crops up in Vol first:
But what is typical of the big leagues, and this of course is no exception in US10Y, is and will remain advanced playing fields for advanced swing traders only. Retail making use of this soft close and betting on the continuation will provide the fuel for a spike as they cover and become trapped in a squeeze. Even when smart money appears to have a gun pointed at the head, it always finds the time to mass his troops in defence (now you see why this weekend was vital!!!!)... If you are keen to learn, you should model yourself around these premises.
All the best and thanks for keeping your support coming with likes, comments, charts, questions and etc!!
USDJPY and the US 2 YEAR YIELD CORRELATION 'CRACK'Since the YC inversion in August last year (2019), there has been a "crack" in correlation between the US02Y and USDJPY.
I expected the YEN to strengthen as the Japanese short the dollar against the YEN to hedge against the rising US Govt bond prices (due to the rate cuts) considering Japan holds a significant amount of US Govt debt.
My initial thoughts on this is that the BOJ is focused on keeping the YEN weak to stimulate its export sector which accounts for a significant amount of its trade.
At the expense of its debt ballooning ?????
I'll be looking into this during the weekend.
-Surecapital
ridethepig | US 2s10s Curve Breaking HigherI have been talking about the curve steepening for some time after we cemented the lows. From a technical perspective, the breakout is implying a test of 60 over the coming weeks and months. The US 2s 5s Bond Curve also looks to be triggering a major break up:
This will reflect a medium term breakout with large forces clashing against each other and diverging at the prior lows in a long-term swing. A mixture of profit taking and momentum tiring. A break above is triggering the flows, with next key levels in play at 35.5bps, 49bps and 60bps as the final target.
US10Y
DE10Y
As usual thanks for keeping the support coming with likes, comments, questions and etc! Feel free to jump into the conversation in the comments with your views/charts.
ridethepig | US 2s5s Curve Screaming Recession in 2020A timely update to the 2s5s US Curve which is breaking higher with the resteepening after flattening from 2016. This breakout indicated we have marked a meaningful base with the next target in play at 29bps which is the measured target from a breakout.
(1) Every other time this happened it ended badly for the global economy via recession.
(2) A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time".
(3) 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.
For those tracking the renewed steepening there are plenty of opportunities if you know how to capture the symmetry; for example Banks outperforming was a no-brainer:
Defensives outperforming:
Rotation in full swing:
End of the Cycle? Smells like it...
Recession is calling...
Thanks for keeping all the support coming with likes, comments, charts, questions and etc! Best of luck those tracking for the end of the cycle... this chart will be one for the history books.
ALPHA PROTOCOL: SEEKING IMMEDIATE EXTRACTIONYou have opened the grave of an economic cycle. Before we dig deeper into the nature and consequences of our discovery, we will discuss the background to the thesis and consider first what we know from history a few lessons;
(1) Every other time this happened it ended badly for the global economy via recession. A
(2) A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time".
(3) 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.
Protectionism is a serious error. There is no yellow brick road to success with protectionism, and it is no surprise the US via media manipulation have the masses deluded. This is a necessary component to the makeup of the next economic cycle; but it must be in balance, any overshoots or undershoots will destroy the effectiveness in manipulation.
Central Banks have been buying 20% of Gold supplies, expressing a view on global risk at rates we have not seen since the Nixon era when mortgage rates were surpassed by wages and no surprises this is also happening again now! Those with a background in fixed income will know alarm bells are ringing louder than usual in bond markets with wages ticking higher than mortgage rates. This is not sustainable and when danger threatens and the crowd does not smell it, don't stand like a sheep, rather run like a deer.
Now that Pandora's Box has been opened, it is equally important to understand the consequences and have a pulse to guide us on how to proceed:
Utilities starting to form a top:
Consumer Staples in the decade long chart:
For those with a background in waves you will know this is a typical example of a 5 wave count. This is time to start paying attention for any signs of a meaningful top forming. We know that once this final wave is completed a corrective chapter will begin. This chapter down is only a third of the pages compared with the rally and we can 'read' through it quickly.
Rotation in full swing:
Cyclicals vs Defensives :
Tracking Unemployment closely :
Vol sitting on the launch pad
Use this chart to good advantage, time to start paying close attention for early signs of a turn. As usual thanks for keeping the support coming with likes and we can open the conversation in the comments for all to share ideas and questions.
SPX - We are facing a Bear Market?The last drop in stocks markets and a recession fear makes us suspect if we are facing a bear market... Read more.
The Bond Market - Historical Levels
We are currently witnessing levels is the Bond Market that have never been seen before. Again today, the US02Y-US10Y have inverted multiple times. The US01M-US03Y have now also inverted. We currently live in a time where debt is out of control and unfortunately there is no end in sight.
History shows, within 6-18 months after a US02Y-US10Y inversion, the US economy falls into a recession. The question now becomes, does history repeat itself once again?
We all know that the US Stock Market has been on what many would call a parabolic uptrend. Is the US Stock Market at fair value? Or does it at some point return to fair value? That remains to be unknown at this time as all we can do is allow the future to play out.
I've currently been working on a script (Pictured Above), that helps me visualize the Bond Market and Yield Curve in a different way. The moves again today have been very interesting.
Best wishes,
OpptionsOnly
Comparing US02Y vs US10YBy decrementing US10Y from US02Y we see the actual breakout so to speak.
Volatile. Already touched the previous Global Resistance with a huge spike and most likely next 2 to 3 years are going to be volatile as well coming to an end around Nov 2021 - the point that looks pretty similar to what we already saw in 1991 | 2001 | 2008 and notice since 2008 the move down wasn't that significant comparing to the previous two(1991-1993 and 2001-2003) thank's to US QE I guess? We might actually end this trend or maybe just maybe from 2021 to 2023 going below the ZERO which you can comment the possibility of that happens and how do you prepare yourself ;-)
According to this time analysis in Nov 2021 "the disaster" is going to be at the peak.
US02Y: BUY or SELL?12 years of doubts before the actual recession
OR
12 years that the trend is going to change?
US02Y: Aug 2019 - time to panic?Good afternoon. This is the chart that everybody yelling about.
May this year price close below monthly support. Today (Aug 2019) we have a green 9 and doubts. The importance of this level is significant, but
first let's compare 1991 vs 1995 vs 2000 vs 2008 vs NOW(2019)
You can do it yourself and come to any conclusion you will, but I want you to know that since our last cycle longed for 12 years I believe our next cycle is going to long 12 years as well just like it did in 1991(5Y cycle) and 1995(5Y cycle) with the worst years of recession falling on the 2030's from this point of view. So the worst could be right upon ahead of us and still there is quite significant time we have till this recession and who knows maybe even 2012 was THE lowest low and so something going to change that trend in future since it is a 3rd time in last 3 decades(!)
Everything possible. This is not about predicting the future, this is about predicting opportunities that may come in future.
Be well, my friend!
When the interest rate cuts, we are to short S&P in long-termWhen the interest rate cuts, we are to short S&P in long-term.
