Big Picture View of SPX, Gold & Yield Curve

I was conversing with someone on Twitter about the yield curve and decided to go looking through the macro charts list for some visuals, and this beast popped out at me. I created it at some point over the last 2-3 years. The monthlies are great because they just lumber along, not changing much until dynamic events put the screws to them.

It’s a history of the relationship to the US yield curve, SPX and gold. The chart tells its own stories on the different phases, so I’ll save ink in this pot. But let’s turn our attention to the most recent phase, where stocks have risen during the Trump rally, the curve has flattened (which goes with a boom) and gold has made what some TAs are calling a “complex” bottoming pattern (ha ha ha… there is nothing complex about it; it’s slowly grinding out a would-be trend change and testing/weakening resistance over a span of years).

The grind in gold is logically coming against a grind of another potentially bearish kind in stocks and a grind in the yield curve, as it makes an attempt to stop flattening and turn the trend to steepening.

Since the yield curve is at the center of so many outcomes, let’s update its status from last week’s post…

The Yield Curve’s Unpleasant Macro Hint

Here is the weekly chart from that post, updated to show a pullback and test of the lower moving average. A would-be trend bring a whole new ballgame out there folks. If the it fails, it’s back to the drawing board for the bearish stock market case.

yield curve

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