Post-CPI, “Inflation on the Rise”

All according to plan, I might add. Well, the “sending markets tumbling” part is its own animal. But as far as inflation fears and Treasury bond yields go, we’re on plan. Click the graphic for the Bloomberg article.

So now it gets interesting. We have put forward very clear targets of 2.9% on the 10yr and 3.3% on the 30yr. Here is how they are shaping up after the CPI uproar. The 10yr is and has been essentially, at target. The 30yr still has headroom.

treasury yields and bonds

As we’ve shown, the 10yr bond (anti-yield) is in a contrarian bullish situation (by public sentiment and commercial hedging data) while the 30yr is in a more middle ground.

I have 3-7yr and 7-10yr bonds as portfolio balance against other positions (risk ‘on’, inflationary and otherwise, and initial shorts on Semis & Tech).

As Kevin Muir so well noted yesterday, nobody knows how things will play out, but it is sure getting interesting.

While inflation certainly can get out of hand on the intermediate-term, the question I’ll ask on the shorter-term is whether the 10yr yield is going to obey the linear chart and its trend channel and EMA 140 or perhaps a log chart (2nd below) and its more favorable setup. I use mostly linear charts for a reason, their more literal view and I’ll stick with what has held forth for decades, but also be open minded because as the man said, nobody knows for sure what is going to happen in this market.

tnx

tnx

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