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.

In 2022 the Continuum made an epic move off of the inverted Head & Shoulders potential we’d been tracking since mid-2021 and this move hit and exceeded the measured target of 4%. Something that was in place for decades (green supportive, formerly red resistant moving averages) has changed and this is a major macro change that must be managed in the coming years. And manage it we will.