Macro Indicator: T Bond Continuum ©

continuumMaybe 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, but when something has worked flawlessly for over two decades, its message should not be taken lightly.