2 year Treasury bond yield continues to firm

The 2 year Treasury bond yield is up on recently revived inflation expectations after the January Payrolls and CPI reports

One has to assume that the January Payrolls report instigated thoughts of cost-push inflation in the herds and the CPI report ticked up just enough to fan that flame a bit. I’ll continue to be open to a preferred plan that had seen an interim deflationary phase of some kind (it’s already happened with respect to inflation easing since H2 last year), but at this time it could be an ‘interim’ to the ‘interim’ (i.e. a gasp of inflationary signaling before disinflation resumes). Or possibly the next major inflationary leg engaging sooner than expected, which I’ll continue to view as a lesser probability for now.

The 2 year Treasury bond yield ticked above the December high, which we had noted in NFTRH and/or reports as the point I’d not want to see exceeded if it were just a minor twitch in renewed Fed hawk expectations. Well, it’s more than a twitch and due to this chart I released 1-3 year Treasury bond fund SHY yesterday in favor of more good old interest paying cash.

2 year treasury bond yield, daily chart

Some day the “Death of the Dollar!” brigade may be right but today is not that day. Uncle Buck is paying increasing interest and the Fed is nowhere near flipping dovish as yet.

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This Post Has 4 Comments

  1. Moe j. Watson

    So do you think gold and silver stick to plan or $1620 gold and $17 silver here we come?

  2. Gary

    I think they stick to plan… until the don’t. Not to be wise about it, but it’s always supposed to feel bad during a correction, even when you’ve anticipated it like we have. If I see the macro funda continue to degrade however, lower would be on the table. But I am trying to take it a step at a time and combine technical and funda to keep a narrative going.

  3. Gary

    Oh and cash is paying interest, which helps in the patience area. ;-)

  4. Roger

    So wait with buying the miners until we see proper signs of bottoming combined with macro signals intact? or buy at these support levels with stop-loss? Guess both are ok, just ok to know what is your prefered way

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