World's most important and the largest financial market is the US Treasury. Annual issuance of U.S. Treasuries has exploded. A record USD 23 trillion of treasuries were issued in 2023.
This market is experiencing gradual but notable shifts due to the Federal Reserve (Fed) recent tapering of quantitative tightening and the Treasury buyback. Collective impact has...
A Sick Feeling in the Belly of the Yield Curve
Another sign that Fed credibility is waning.
The socioeconomic point of view is that, as the Supercycle bear market develops, central banks will lose their mantle as being omnipotent directors of markets. Whereas in the bull market, central bankers like Alan “the Maestro” Greenspan were lauded because positive...
10Y/2Y Yield Spread & Unemployment Rate
Originally shared back in July 2023 (see below charts)
Its interesting to see that the yield curve is rising fast (up towards the 0 level)
We are reaching into dangerous recessionary territory. No guarantees, just a significantly increased probability.
Continuous jobless claims are reaching pre-recession warning levels...
The Federal Reserve Chair Jerome Powell spoke again today at a Brookings Institution event. His comments sparked a rally in markets (likely including short covering) that pushed the S&P 500 SP:SPX up about 122 points, or 3.10%, to close at 4080. The Nasdaq 100 NASDAQ:NDX rose 4.58% on the day, closing at 12,030.
But the bond market is sending less sanguine...
TL:DR
The NDX & Yeild Curve Inversion Pattern suggests that price is bouncing very technically and logically at a long term support trend line. The bubble phase will be complete when price action gets a lot of "white space" between itself and the trendline and the yield curve inverts again in about 2 years.
Introduction
There is definitely a lot of...
• 2s30s spread : The US2US30 spread refers to the yield spread between the 2-year and 30-year U.S. Treasury bonds. The chart visualizes the difference, or spread, in yield for these two bonds over time.
The 2-year bond represents more of the short-term outlook, whereas the 30-year bond is more indicative of long-term expectations. So, when people refer to the...
A lot of market participants are falling for the Fed's illusion that a soft landing has been achieved. However, the charts are still warning that a recession is coming.
The chart below shows the extreme degree of inversion between the 10-year Treasury bond and the 3-month Treasury bill. The current inversion is the worst in over 40 years.
A yield curve...
Macro Monday (2)
Potential Recession Time Horizon
Below you will find a breakdown of how many months pass before a confirmed Economic Recession (shaded grey areas) after the yield curves first definitive turn back up towards the 0% level:
1) 13 Months (Dec 1978 – Jan 1980)
2) 9 Months (Nov 1980 – July 1981)
3) 16 Months (Mar 1989 – Jul 1990)
4) 12 Months (Mar...
It has been some time since we delved into the intricate world of interest rates and their prospective trajectories. With the yield curve experiencing significant movement in recent weeks, it's high time we reassess our stance. Following a staggering 500 basis points increase, we now find ourselves potentially nearer to the end of the rate hike cycle than ever...
We have an inverted yield curve today - When the near end yields or interest rates is higher than the far end, we have an inverted yield.
What is its implication and any attributes?
To understand the implications of an inverted yield curve, it is crucial to know what a yield curve is and how it works.
A healthy yield curve –
It shows the relationship between...
what if we have a yield curve that hasn't been inverted this much in 40 years
what if we've enjoyed 15 straight years of bull markets
what if this is just the start of the correction
what if I told you that I've tested 50 indicators and identified that this correction (on a weekly scale) thus far has matched identically to the START of the dot com bubble (on a...
Having covered Gold & the Equity Index last week, this week we will look at how we could leverage both to trade on the move we’re watching!
Quite a happening market we first covered Gold two weeks ago.
Firstly, the interest rates market had a sizeable correction, with the 10Y-2Y yield now trading at close to -0.45% instead of the -1% range just 3 weeks ago....
US stocks vs the Federal Reserve Funding Rate vs the unemployment rate vs 10yr-2yr treasury yields. When the 10yr vs 2yr yield goes negative it means that a 2yr treasury bond is yielding more interest than a 10yr treasury bond and it is also known as a yield curve inversion. The red vertical lines in the chart are drawn from yield curve inversions which are...
What is moving this week? Our weekly eyeball into the different markets.
Interest rates likely to be breaking its all time high again, get ready for another volatile month ahead.
Difference between yield and interest rate:
Borrowers take reference from interest rates and lenders take reference on the yield. Interest rates and yield moves in tandem.
Minimum...
Inflation is plateauing and likely to end flat in 2023, so what will that impact the markets?
Though inflation peaked at 9% last year and has been declining to 6.4%, CPI seems to be plateauing and may close flat in 2023, but this is not good news at all. Why? Because the Fed wanted to see the CPI or inflation coming down to 2% in a sustained manner.
Studying...
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...
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...
