As CPI will attest, consumer prices are certainly not suffering at the hands of the pervasive global deflationary environment. Housing, Healthcare and other services are not easily going to give back embedded price gains. In NFTRH 356 I tried to express this in an admittedly muddled Indicators segment.
Policy makers see these price gains (including that of the stock market) and that in my opinion is the case for a rate hike, despite what traditional measures of inflation are saying. So I decided to check out the technical state of long-term Treasury yields and what I found was the TBT (bond bear, rate bull) fund looking constructive to turn up from a lateral support cluster.
This ‘+’ update is sent to all subscribers as opposed to just NFTRH+ opt-ins, because it works as a macro update. We might be on watch for a general ‘inflation trade’ again and rising yields could be a feature of that (i.e., the opposite of a deflationary backdrop). Even if just for a bounce, it could be trade-able. I am also watching other commodity items, like Crude Oil, closely now as well as indicators, like inflation protected vs. unprotected T bonds (TIP-TLT).
Recall that our original projection for the 30 year bond yield had been around 3.6% to 3.7% per the ‘Continuum’ chart.
A final note is that this could also play into some of the long-term global bear charts we reviewed yesterday. Many of them would preferably take a bounce back to resistance areas in order to provide short setups. Could USD weakness and an inflationary bounce provide the bounce back in those global items? It’s an evolving story, but deflation has certainly gotten all the headlines of late.
Back to TBT…
Buy Target: 43’s to 44’s
Sell Target: 47 to 49
Stop Loss: To suit below 42
A reminder that chart based NFTRH+ updates are just trade setup ideas, which may not be revisited as the parameters are already noted. They are meant as a starting point for further research if interested. Fundamentals-based ideas are also provided for your further research only. I will not personally buy every item highlighted and will sometimes sell – without prior notice (because this takes time and resource away from NFTRH’s main functions) – any item that I do buy, below target, which is something I often do as a trader. Also please be aware that I am not a fundamental stock analyst.