NFTRH+; USD, Treasury bonds & market thoughts

The US dollar broke above resistance at the 2016 high (not shown on this daily chart), dropped back to test the SMA 50, popped back above resistance, faded to test it and has now turned it to support. While doing so, it relieved some of its overbought readings. USD is the anti-market, so it is no surprise that market stress is reappearing elsewhere in stocks, commodities and precious metals.

With Treasury bonds gaining a bid, however, an element that will be positive for gold and gold stocks is still engaging. That is the fade in inflation signals and expectations. Once we clear the inflation bugs things will get interesting.

Here is the 10yr Treasury note, positive again this morning as the inflation trades continue to unwind. It’s important to note that bonds are still in their downtrends (yields trending up), so let’s not call a significant change yet. Let’s call it a move in the right direction where undoing the inflation trades – at least on an interim basis – is concerned.

I speculated that the market bounce might be more than ‘mini’, which is why I have some positions. I’ve tried to bias them to non-inflation stuff like Tech/Growth to get a little contrarian after the bear market those segments have been through thus far. But after yesterday and now this morning, that’s not looking too smart. If today unfolds the way the futures imply, I’ll probably do some trimming, especially of the few commodity/resources related items held.

Bottom line is that it’s a bear market, the macro may be slowly shifting from overtly inflationary to something different. Inflation signals are waning and it remains to be seen how it resolves, whether as a deflationary liquidation (ref. 2008, 2020) or a painful correction to a new inflationary macro. But what I do know is that USD has been bullish for over a year now, uninterrupted. That means something, and with gold (as uninspiring as it is, technically) outpacing silver, copper and other more risk ‘on’/cyclical markets, USD needs to be respected as the anti-market. It remains bullish along with Gold/Silver and Gold/Copper.