The long bond’s yield is now above the daily SMA 200.
The 10yr is right behind it, also in a constructive stance to have made its lows.
The 10yr-2yr yield spread is steepening.
The 30yr-5yr is as well.
If the inflation>reflation trades are going to succeed (and some of them are looking good right now) rising long-term yields are likely part of the play (unless the Fed goes balls out to control the long end).
KRE made a break for it at the SMA 200 but was turned back. If yields continue to rally this probably will too unless the whole market soils itself.
In NFTRH’s Market Internals segment every week we track the progress of the ratio of the Pigs (KBE) to the Pig (SPY) as one way to gauge the reflation. The ratio has not broken its downtrend and has not even necessarily taken out and held its SMA 50, but the play has a shot to work as another way to continue slowly rebalancing for 2021’s inflation/reflation trades. It’s still a long and contentious (in more ways than one) Q4, so I am not in full commit mode by any means. Not yet.
In my opinion, the policy will be supportive no matter which crappy candidate and party wins. Reflation by inflation is the only trick they’ve got right now because Ben Bernanke and Janet Yellen already tapped out the Goldilocks-fueled boom that came with a previously flattening yield curve.
For “best of breed” top down analysis of all major markets, subscribe to NFTRH Premium, which includes an in-depth weekly market report, detailed interim market updates and NFTRH+ dynamic updates and chart/trade setup ideas. You can also keep up to date with actionable public content at NFTRH.com by using the email form on the right sidebar. Follow via Twitter @NFTRHgt.
