Macro Indicator: T-Bond Continuum

Maybe our best macro tool has been the simplest, the long-term monthly view of the 30 year US Treasury bond yield with its 100 month exponential moving average (red line) acting as a limiter to inflationary hysteria every time interest rates approached it for over two decades now.

As but one example of its value, NFTRH prepared for a coming downturn in inflationary fears as the ‘Bond King’ Bill Gross famously proclaimed PIMCO was short long-term T bonds (a bet that interest rates would rise) right at the limiter in early 2011.  Commodities (including silver and eventually gold) topped out soon after and a Goldilocks phase of disinflation soon began.

Will the Continuum work forever?  Probably not, considering the ever more present interference by the Fed in the Treasury market. But when something has worked flawlessly for over two decades, its message should not be taken lightly.