NFTRH+; 30yr Yield, USD & the Reflation Trades

As you know, our ultimate target for the 30yr yield is around 2.5%, at which point we’ll come to a major macro decision point between failure and deflationary liquidation or a ‘different this time’ break through the Continuum’s limiter (monthly EMA 100) as almost happened in late 2018.

Since long-term yields have been our primary guide to the reflationary macro it is well worth considering whether this morning’s little pullback (well earned BTW) could precede a pullback to the 50 day moving average (blue) as originally expected on the last pullback. If so, that would likely signal a cool down in the reflation trades and possibly a renewed bounce by USD, which is pulling back again this morning.

The last disturbance came just below the 2% zone but as you can see, now it has hit that zone and is thus a candidate to cool the macro for a bit.

Here is USD, pulling back to test the SMA 50 but still in a bounce posture. I may add to my UUP positions this morning, if nothing else. But profit taking is also still legal, so I’ll consider a bit of that too.

A final note: Since the gold sector is not a reflation beneficiary, a pullback in yields could be beneficial if the gold bugs don’t start selling a USD bounce for fear that inflation is failing.