Recessions & UnemployementAs you can see in the chart, Recessions tend to start when unemployment rate bottoms. We're starting to see a bottom in the unemployment rate. Will we see a reccesion next? Let's wait and see FRED:UNRATEby itamarsab2
housing corrections since 2007analysis of US housing corrections since 2007. taking the standard deviation from the analysis we can predict where this current correction or possible crash will take us in price and in time.Shortby trevorboyenger112
prime rate unlikely to drop much below '3% above fed rate'Mortgages tend to be right at the prime rate over time, falling a bit below or above (recent decades) depending on sentiment, but large diversions would be relatively unprecedented.by GeoffGolder111
Corporate Credit Conditions: Part 3As discussed in part two (prior installments linked below), the duration mismatch between LQD and HYG renders the ratio useless as a tool to assess credit distress or changes in investor preference. Credit ETFs, must be compared to a duration matched ETF, Treasury security or index to be useful. There is also the difficulty in comparing spreads across investment cycles. For instance, credit quality across both investment grade (C0A0) and high yield (H0A0) indexes have changed significantly over the last three years. During the pandemic recession over 200 billion of investment grade (IG) debt was downgraded to high yield (HY). This improved the quality of IG, making it less susceptible to a downgrade cycle. Additionally, the debt refinancing wave of the last three years left record cash on IG balance sheets, sharply reducing their need to issue new debt into the higher rate environment. In fact, IG interest coverage is at a record high of 12.8 times. The combination should result in significantly less IG spread widening than in past recessions/downgrade cycles. A way to monitor risk preferences is to utilize the arithmetic difference between HY and IG OAS. The idea is that as investor preferences swing between risk on and risk off, that the spread between the risk premiums will reflect this. If credit conditions are deteriorating, the spread will widen as investors demand a greater risk premium. When the Fed began tightening the spread was 226 basis points (bps). The initial surge peaked in June at +529 bps and has now narrowed to 339 bps, only 113 bps higher than the start of the year. Viewed in this manner, it is again hard to see why the Fed would be overly concerned. To place this spread difference into historical context I again plot 1 and 2 standard deviation bands around the regression line. Its not surprising that with both IG and HY OAS at their historical mean (see parts one and two) that the spread would also be at its historical mean. Again there is little in the data that would suggest that the Fed should be alarmed with credit or suggesting that there is compelling investment value. In the final part of this series we will examine the extremely high all-in-yields of IG bonds and use traditional technical methods to reach an opinion on BBB (the lowest rung of IG) credit. And finally, many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum. Good Trading: Stewart Taylor, CMT Chartered Market Technician Taylor Financial Communications Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur. Editors' picksby CMT_Association44190
Money supply erasedMoney are dropping. As you can se we had a small pump back to the averages but sei to h the current tightening even though there is a lot of pivot sentiment, we have no other choice but go lower.Shortby l4s7re4lg4mer112
Walking Inflation (United States of America) heres a chart with inflation at 2.63 over 6-7 year period im going to start running for biden administration - hopefully we can get trudeau out sooner- lol - like flagged comment follow do as you choose - take care Shortby mooncrest-holdings-ltd111
Walking Inflation (Canada)heres a 6-7 years period of walking inflation - the government talks about 2% but its been four decades since they last had 2% inflation so walking inflation-----more up to date likely in this time of age--- like flagged comment follow do as you choose - take care Shortby mooncrest-holdings-ltd0
Sp500 will capitulate if inflation downturnsChecking the dates month by month i noticed that when inflation rate graph crosses the yellow MA downward a Capitulation on the SP500 is followed.Shortby arickrasant1
GDP is Bad and You Should Feel BadThe GDP number of 2.7% growth is being propped up by net exports, while consumption is at a cycle low. This is horrible for earnings expectations and risk assets. Net exports were at a low in prior quarters, making the economy look worse off than it was. Now the economy is actually worse off than it is and the metric is instead making it look better. This is why the NBER doesn't use "two quarters of negative GDP" to date recessions. There are too many false signals. Don't fall for the GDP meme. The pain is coming.Shortby coinhoIioUpdated 4
US Stocks Vs Inflation ReadingsUS Stocks Vs Inflation Readings. What happened when the inflation rate ticks a high then starts to reverse. Will History repeat itself?by cbostard281921
MORTGAGE RATES VS FED RATE and 10 YRComparison of the mortgage, fed and 10 yr rates to determine correlation.by stockpreacherman1
30-Yr Mortgage 7% TargetMortgage rates will continue to rise, 7% is a conservative target.Longby MULMANUpdated 1
Mortgage rates follow Fed funds rate There was a question about the correlation of Fed rate to mortgage rates. This chart should make it clear.by stockpreacherman0
Inflation summaryinflation summary for the cycle from the covid low. misinterpreting data, and cherry picking biases leads to poor decision making, know the data.by UnknownUnicorn33903062
T10Y3M: Recession Still FarThis 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. by Indotermes3
Credit Conditions and the Fed: Part 2In part 2 I take a quick look at high yield corporates and describe a common mistake made in using ETF ratios to monitor changes in credit risk. Part one and an earlier piece that described how to use the TradingView platform to monitor secondary market credit spreads are linked below. If there is any one thing that will produce a Fed policy a pivot, it is credit distress. Credit is far more vital to economic functionality than equity. If companies are unable to secure funding, they may face liquidity issues, and if liquidity problems become widespread, they have the potential to become systemic. In 2008 and again in 2020 credit markets were frozen. Particularly in 2008, many companies ran into barriers that inhibited their conducting their ongoing daily business lines. There were plenty of offers but, as I so painfully remember, in many cases zero bids…. None…at any price. It was this credit distress that convinced the Fed to move. In part 1 we looked at the weekly chart of the option adjusted spread (OAS) of the broad ICE BofA Corporate Index and concluded that the there is no evidence of the kind of credit distress that would galvanize the Fed, and that, at least on this basis, that there was no compelling value (rich/cheap) argument to be made. What of high yield? Does high yield OAS suggest a meaningful deterioration in credit markets? Again, I plot a regression mean and one and two standard deviation bands above and below. Just as in the IG market, high yield OAS has widened, but only to its long term mean, and this following a lengthy period of being nearly a standard deviation rich. In short, while spreads have widened somewhat, there is no compelling rich/cheap argument and certainly nothing that would suggest to the Fed that credit conditions are meaningfully impaired. I frequently see commentaries that use price changes in the high yield ETF (HYG) and the investment grade ETF (LQD) as a measure of investor risk preference. Since the January high, LQD is down 26.15% versus 19.65% for high yield. At first glance it appears as if investors prefer the lower quality HYG. But the price changes do not account for the differences in fund duration. Put simply, LQD at 8.36 years duration has roughly twice the interest sensitivity of HYG at 4.06 years. In other words, a 100 bps change in rate, will change LQD 8.36% and HYG 4.06%. LQD in Ratio with HYG and Ten Year Futures in Ratio to Five Year Futures: I also see analysis that uses the ratio between LQD and HYG to ascertain risk preference. But the direction of the ratio is almost completely due to the difference in duration. You can see this by compare LQD/HYG to the ratio between ten year and five year note futures. LQD/HYG ratio is almost entirely correlated with changes between five and ten year treasuries. When rates are volatile and directional the total return of many rate products generally a reflection of rates than it is investor quality preference. And finally, many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum. Good Trading: Stewart Taylor, CMT Chartered Market Technician Taylor Financial Communications Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur. Editors' picksby CMT_Association9982
USIRYY: inflation possible growthUs inflation possible growth model based on 5:0 pattern and normal fractal model. by Njusick1
NFP 261K is mid! 2016-2017 NFP Average = 168k (Trump Era) 2017-2018 NFP Average = 198k 2018-2019 NFP Average = 164k 2019-2020 NFP Average = -796k (COVID-19) 2020-2021 NFP Average = 474k (Biden Era) 2021-2022 NFP Average = 410k There was a time when 261k would have been outstanding, but following on from the big job reset in 2019/2020 the average was above 400k.by Macrobriefing2
Housing Elliottwave count valid above lows. Showing an impulse five wave sequence by theonetheonly3100
RRP Yield, US01MY, and RRPTop chart shows the RRP yield and US01MY. Bottom view shows the RRP. The theory is that, if the RRP yield is attractive, money will flow into the RRP from bills. When RRP increases, Net Liquidity decreases. (Dowwward pressure in the market.)by dharmatech8
Turkey: TRYUSD, MoM Inflation, Interest RatesDescribing FX, Inflation, and Rates out of curiosity. by userfriendly11