Nothing is set in stone, including the 30yr yield stopping at our 4% upside target.
That said, if you’re going to have targets and chart based road maps, it’s best to keep in mind why you have them as the market operates according to plan.
This morning September payrolls came in firm and here we go with the cost-push inflation fears and yields being driven up (they actually started to move up again on Wednesday after making a daily chart bull flag).
So the herds are getting yet another carpet bombed dose of inflation/Fed hawk fear. There goes gold, getting hit with the inflation stick again. Silver too, but that’s to be more expected.
Just as with the HUI big picture road map to a potentially bullish future (still technically undetermined per this public article but in my opinion significantly more likely than not) this road map has brought us to a point of hysteria about inflation. At this new gateway (4%), we’re going to find out if the whole thing, including Fed perma-hawking, is real or a preparation for a dramatic reversal of the things that are in the financial news and increasingly Main Street’s news, 24/7.
From the upcoming decision point the yield will either reverse or it’ll break on through. If it’s the former, we’ll prepare for a gold mining bull. If it’s the latter we’ll prepare for what is ahead, which would include interest bearing cash equivalents and potentially a net cast out globally to whatever markets/sectors have a favorable global macro (this would also take into consideration the increasing divide between the west and much of the rest of the world) under such a new interest rate regime.
It’s serious business when the cost of borrowing money (funny munny) rises impulsively like this. The Fed needs it to reverse, we are preparing for it to reverse (in the interim) and it is now going to do what it is going to do. In my opinion caution is still warranted across assets/markets until this is resolved. Much more to come, obviously, as events unfold.
