Introduction to Yield Futures In the complex world of financial markets, Treasury Yield Futures offer investors a pathway to be exposed to changes in U.S. treasury yields. Among these instruments, the Micro 10-Year and Micro 2-Year Yield Futures stand out due to their granularity and accessibility. These futures contracts reflect the market's expectations for...
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...
We have observed interesting price action in the 10-year yield, most noticeably the double top that has emerged within the 425-435bps range. On the heels of the Fed sticking to 75 basis points worth of cuts in the most recent interest rate projection, this could be the top in yields in 2024. Key Developments: Recent releases of Feb CPI and PPI were hotter than...
The 10-year Treasury note interest derivative contract has been ticking down for a few weeks. We expect to see it bottom out well below 4%. Our inclination is to go short on a close below 4.1.
Markets are notorious for exaggerated expectations. They sense a tiger when all they see is a cat. Expectations on rate cuts have been no different. Despite the Fed’s speak on measured changes to policy rates, markets got ahead of themselves since late last year. Markets are now starting to align their expectations with reality. US economic data from January...
The collapse in Treasury bonds in 2021-2023 now ranked among the worst market crashes in history. Since March 2020 to 2023 fall, Treasury long term bonds with maturities of 10 years or more have plummeted over 40% while the 30-year bond had plunged over 50%. That's just under losses seen in the stock market when the dot-com bubble burst. The bond rout was worse...
At the latest FOMC meeting on January 31st, Jerome Powell stated, 'The Fed is not ready to start cutting,' which immediately caused the yield to pivot higher. During an recent interview on Sunday, February 4th, he reiterated that the US central bank is not yet prepared to cut interest rates, resulting in another increase in the yield. Today, we will discuss the...
Introduction In the dynamic world of financial markets, Micro 10-Year Yield Futures stand out as a pivotal tool for traders and investors. These futures offer unique opportunities to navigate the complexities of interest rates, particularly in an environment influenced by key economic indicators. This article delves into how traders can leverage both fundamental...
CBOT: Micro 2-Year Yield ( CBOT_MINI:2YY1! ), Micro 10-Year Yield ( CBOT_MINI:10Y1! ) and Micro 30-Year Yield ( CBOT_MINI:30Y1! ) The latest US jobs report showed that employers added 216,000 jobs for December while the unemployment rate held at 3.7%, reported by the Bureau of Labor Statistics (BLS). That compared with respective market estimates of 170,000 and...
Retail sales surge higher than expected on October 17th, Industrial Production comes in higher than expected, and Atlanta Fed GDP Now for Q3 was revised higher from 5.1% to 5.3%. With the economy and the consumer remaining resilient, is the 10 year primed to break out to new 52 week highs? Rates will continue to be dependent on economic data, and further...
The US Government runs a large budget deficit which in turn has helped enrich several emerging markets by creating a massive market for their products and services. These deficits are financed by issuance of treasuries. Given US’ global heft, treasuries are considered “risk-free” assets, held by institutions and other central banks as reserves. Investors hold...
2 year, 5 year, 10 year and 30 year yield are all showing a similar characteristic: · Low established in 2020 · Major support trend started forming since then · Seem to have completed its retracement with a double-bottom · Resuming on its major support trend · Target to break above its recent all-time high set on Oct...
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...
So much cash sitting on the side, can't wait to buy when everyone is screaming sell. bottom-nailer-3000 activated.
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...
CBOT: Treasury Yield Spread 10Y-2YY ( CBOT_MINI:10Y1! CBOT_MINI:2YY1! ), Micro Dow ( CBOT_MINI:MYM1! ), Micro S&P ( CME_MINI:MES1! ) On Wednesday, the Federal Reserve raises its benchmark Fed Funds rate by 25 basis points to a target range of 4.5%-4.75%. The move marked the eighth consecutive hikes that have began in March 2022. The overnight risk-free rate is...
@ Dec meeting Dec 14 Cur Rate 3.75 4 3.75 4 3.75 4 4.25 4.5 Fed Hikes 0.25 0.25 0.5 0.5 0.75 0.75 0.25 0.25 Future Rate 4 4.25 4.25 4.5 4.5 4.75 4.5 4.75 4.125 4.375 4.625 4.625