NFTRH+; Bond market indications

Long-term Treasury yields are rising this week within their intact daily uptrends. Bearing in mind that we are in the midst of a silly season, where I don’t think market signals are generally as reliable. The yields are testing the break below the SMA 50 again, within the uptrend.

30 year and 10 year US treasury bond yields

If yields were to rise again (trend is up after all, but inflation signals are fading) it would be bearish for gold… if the 2022 blueprint were to endure. However, 2022 came against a flattening yield curve. So it is notable that this bounce in the yields above comes with a bounce in the (10yr-2yr) yield curve.

yield curve

Bottom Line

Long-term yields are testing a breakdown below the daily SMA 50 (above) within a fully intact major uptrend. They are bouncing from support areas (basically, bonds are pulling back from resistance).

Dialing up the 30yr big picture ‘Continuum’ view, we see the yield bouncing from where it was supposed to bounce; at 3.4%. This after the inflation/yield mania blew out a couple months ago.

tyx, 30 year treasury bond yield

It’s the holidays and one might think that there’s no better time for a ‘screw ’em all up’ move like this. Whatever it is, a move like this was likely.

Now, if the yields continue up and the yield curve does too, it would probably signal another inflationary yield curve steepener.

If yields again find resistance at the 4% (+/-) zone and turn down anew (still favored) and the yield curve steepens, it would signal a deflationary yield curve steepener, which continues to be my favored view for 2023.

What is not favored is a disinflationary ‘Goldilocks’ flattening situation. Risk is immensely in favor of a steepener of one kind or the other.

All I can really do is read maps like the above and draw upon an interest in psychology (especially mass psych) to the best of my ability. YC steepeners would theoretically be bullish for gold either sooner (inflationary) or maybe later (deflationary) and if it’s the latter, the miners would leverage it in their operations in a positive way.

As for the view of nominal yields, I’ll stick with the view that 2.5% on the 30yr could come about in ’23.

Meanwhile, I made a humorous post about an imagined bull pattern in SPX. So there’s that too. We’re in the midst of silly season and my word salad above is meant to dump some of what I am thinking on to you, rather than be a cohesive piece of analysis. But it and the SPX post are at least food for thought.