CBOT: Micro Treasury Yields ( CBOT_MINI:2YY1! , CBOT_MINI:5YY1! , CBOT_MINI:10Y1! , CBOT_MINI:30Y1! ) Is the US economy heading towards a “no landing”, as opposed to a “hard landing” or a “soft landing"? There is a heated debate among economists and market strategists. What is a "no landing"? It is a new term drawn up by Wall Street, which describes the...
From Friday People discounted the US #Dollar $DXY but it came back beating historical tendencies (usually breaks lows before eventually coming back 1, 2 & 10 Yr $TNX Huge inverted #yield curve =expecting turbulence short term #inlfation may FORCE #FEd to keep raising bit more
The Fed funds rate is higher than the 30 year treasury interest rate. The last time that happened was in 2000 and 2008. What happened back then was that the stock market and the 2 year treasury interest rate both dropped significantly. Will history repeat itself?
This week, we thought it will be interesting to review the trade from last week given the reaction post-FOMC, as well as discuss an alternative way to set up this trade. Firstly, let’s review the post-FOMC/employment data reaction. - Nonfarm Payrolls surprised to the upside, as over half a million jobs were added way above the estimates of a sub 200K...
Those who have been reading our past 2 ideas will know we’ve been harping on and on about expected rate path and policy timelines. Why the recent obsession you ask? Because we think we’re on the cusp of major turning points. So, for the third time, let’s look at the market’s expected policy rate path. With FOMC coming up this week, we are expecting a 25bps...
The Fed chairman has given the market a very important clue on 13 Dec 22. At what level will he consider an interest rate cut? He said “I wouldn't see us considering rate cuts until the committee is confident that inflation is moving down to 2% in a sustained way,” meaning only if CPI is heading nearing 2% then it is hopeful to see a rate cut. Market consensus...
Forget the "Santa rally," it's time to brace ourselves for a potentially tumultuous 2023 as concerns mount over bond market developments and their impact on Q1 earnings Santa is tired, Kids It is uncertain whether the annual "Santa rally" will occur in 2022 due to the bear market. There are concerns about the recent developments in the bond market and their...
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Yield curve is inverting. Is this a sign of more downside?
If there is any tell-tale sign that a massive recession is coming, it is this: 2-Year - 10-Year yield curve inversion. If you look back in history you would see that every time this yield spread has inverted, the economy and the stock market has gone into a recession. The problem is that this is the deepest inversion from an historical perspective - deeper than...
I tried to predict Treasury yield cycle using Trent lines. I would like to see if the treasury yield follow the cycle along the trend lines.
In recent weeks, the bond market has been sending a strong signal to the Federal Reserve: it may be making a serious mistake. The yield curve, which measures the difference in interest rates between short-term and long-term bonds, is currently more inverted than it has been since the early 1980s. An inverted yield curve occurs when short-term interest rates are...
After inversion, re-steepening signifies the impending materialization of the stress in the financial system and economy. Looks like this is just the beginning of this downturn and imo we're headed for a massive recession.
This post will provide a quick macro update concerning the yield curve inversion in US bond markets, which have often (though not always) been followed by a bear market in equities. Note the various yield curve inversions in the 10-2 Treasury yield. This compares the 10Y US Treasury yield with the 2Y US Treasury yield , and when the 2Y yield exceeds the 10Y...
Now we have a period of high inflation that, in my opinion, will continue for some time. Even if it falls (as the M2 money stock decline points out), we may have a second reversal wave of inflation during the revival after the current bear market. For this reason, a lot of people are waiting for a pivot, which, according to them, will mark the low. This statement...
This chart suggests that the coming recession will be anywhere from Q4 next year to Q4 2024 which is much later than what the 10 minus 2 year chart could be saying. There's also a possibility that the recent inversion is a false signal but unlike the 1998 fakeout, it went deeper and is much more likely a legitimate signal.
Why is the S&P500 ready to go short again? This question can't be answer, I'm not a magician and no one will know what the market is going to do, but let's see what's giving me the hint of the short idea. Let's start from the Real GDP . We're going to consider the Real GDP which I'll be calling GDP during the post. After doing some research you can see how the...
All the fixed tenure yields have broken above their four decades of downtrend. - 2yr, 5yr, 10 yr & 30yr To note, the shorter end, the fixed 2 year tenure yield is climbing faster than the longer end, the U.S. fixed 30 year tenure government bond yield. The year closing, it will be crucial to determine the trend transition; from this long-term downtend to uptrend.