NFTRH+; markets are ‘anti’ this key element

Interest rates have bounced since the big Payrolls report. These rates are generally supportive of USD when they rise and not surprisingly have been in correction for much of the same period that USD has since September/October.

Here are 30yr and 10yr yields bouncing above the 50 day averages.

30 year treasury yield and 10 year treasury yield

Meanwhile, on the short end the 2 year yield is stalled a bit today but has also taken out the SMA 50. Note that it is attempting to compromise the topping pattern we’ve been tracking.

2 year treasury bond yield

The interesting thing is that as yields bumped up earlier today, markets were weak, as they eased mid-day markets firmed and now as they have bumped back up, markets have reversed back downward again. It’s all in-day stuff, but it is interesting.

Even more interesting is that sectors that traditionally correlate positively with rising long-term yields have also been ‘anti’ yields today and of late. So it’s not as if we can go running to the ‘inflation’ or ‘yield’ trades (e.g. banks/financials, energy, base metals, etc.) * at this time if yields and inflation fears kick up again. At least that is currently not signaled, and likely won’t be signaled as long as the Gold/Silver ratio and/or the USD remain in bounce/rally mode (ref. this morning’s update).

The trends continue to be intermediate-term biased down in inflation signaling, including the yields above. But these should be watched in the event that a post-Payrolls blip becomes something more. Rising yields would indicative of a still hawkish Fed out ahead.

I’d consider fighting that, except for the very over-bullish sentiment backdrop that has come into play for the broad US market (and likely other markets as well). From NFTRH 743…

smart money and dumb money market sentiment

* Although there is one place to take harbor and receive interest while we’re at it. Cash, baby. That is the default play for me personally as I poke and speculate a bit here and there.