The 10yr-2yr yield curve is grinding out a would-be steepener after the secondary extreme inversion
The yield curve is pulling back currently as the Wizard has resumed complete control. Jerome Powell tilted publicly last week to make his most recent statement of complete control.
So it is not surprising to see the fledgling yield curve steepener taking a pullback. To review, we have projected that the July extreme was a secondary inversion (and statement of complete policy control), and after that double bottom (double top in Fed policy control) a new curve steepening was likely.
Said would-be steepening is still well in play as it stair steps upward, pulling back into this morning in a very normal looking structure.
The implication of a steepening yield curve? Well, with the understanding that the macro does not make profound moves on any given day, week or month, the implication is for a coming ‘bust’ side of the boom/bust continuum we have been locked within since Alan Greenspan birthed the age of Inflation onDemand, AKA extreme monetary policy interference in financial markets.
Due to dynamics beyond the scope of this brief post updating the state of yield curve, a curve steepening can come under inflationary or deflationary pressure. I currently favor both, actually. The curve steepening in 2007-2008, for example, started inflationary, morphed deflationary and then wrecked the markets and economy.
Be ready for a change in the macro over the coming months. Possibly a profound one, when you consider that long-term Treasury yields have done this for the first time during the span of the age of Inflation onDemand.
For “best of breed” top down analysis of all major markets, subscribe to NFTRH Premium, which includes an in-depth weekly market report, detailed market updates and NFTRH+ dynamic updates and chart/trade setup ideas. Subscribe by Credit Card or PayPal using a link on the right sidebar (if using a mobile device you may need to scroll down) or see all options and more info. Keep up to date with actionable public content at NFTRH.com by using the email form on the right sidebar. Follow via Twitter@NFTRHgt.