Category: Interest Rates

Bonds, Interest Rates, Market Indicators

New trend being set on the 10-2yr Yield Curve

Yield curve steepening, but there’s more to the story The yield curve can steepen under inflationary pressure (e.g. 2020) or deflationary pressure (e.g. 2008). The most recent steepener was inflationary. This new one well, my bet is the opposite. So to repeat, everyone is on one side of the macro boat and a post-inversion steepener usually comes with an economic bust. This market is rapidly … Continue reading New trend being set on the 10-2yr Yield Curve

Gary2 Comments
Inflation & Deflation, Interest Rates

New Curve steepener still inflationary (duh)

Yield curve steepens again, under inflationary pressure Look, if we are going to kill the hysteria of the day it is not going to be killed in a day. It is going to be killed over weeks and months of grinding up and down, flitting brain cells trying to quantify and make sense of daily happenings while the picture churns so slowly as to try … Continue reading New Curve steepener still inflationary (duh)

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Inflation & Deflation, Interest Rates, Risk Management

The Continuum; center stage during next week’s inflation data fest

The 30yr Treasury yield takes center stage as inflation data come in With next week’s inflation data orgy we may find out if this chart is truly on its way to a 4% long bond yield and maybe even von Mises’ crack-up-boom territory or just a more epic whipsaw and reversal. The 30yr yield is definitely in full frontal inflation mode at the moment. It … Continue reading The Continuum; center stage during next week’s inflation data fest

Gary4 Comments
Bonds, Interest Rates

In order to change the secular trend in the 30yr yield…

The 30 year Treasury bond yield is in its multi-decade downtrend until the November, 2018 high is taken out In early 2021 we projected the potential for an Inverted H&S, which would theoretically measure to the 4% area on the long bond, at the lateral resistance area noted on the chart. That would set a new trend in the secular picture for the yield and … Continue reading In order to change the secular trend in the 30yr yield…

Gary2 Comments
Inflation & Deflation, Interest Rates

2 years later inflation drives the Continuum to target

30yr Treasury yield finally hits target Ah, but it’s not that simple. Targets are not necessarily stop signs. It’s at the decision point. Will the yield do what it has not done in decades and break the limiters for real (instead of just poking them as before) or will it do what it has done for decades, which is to fail here? People mocking the … Continue reading 2 years later inflation drives the Continuum to target

Gary
Commodities, Copper/Industrial Metals, Gold, Interest Rates

Two macro charts

If you’re only watching market prices (and drama) you’re missing key points beneath the surface I have not posted yet this week due to being preoccupied elsewhere, due to having done a lot of work lately getting in tune with what’s going on across the markets, due to being bored with the idea of being the guy telling gold bugs don’t buy gold because of … Continue reading Two macro charts

Gary
Bonds, Federal Reserve, Interest Rates

Fed Jawbones mean business [w/ edit]

3 month T-bill yield is demanding the Fed raise the Funds rate And the Fed is listening. [edit] After this post was published another Hawkish jawbone came in the form of James Bullard and a call for a larger rate hike in March. CME Group Fed Futures traders quickly adjusted their expectations to a .5% March hike at the behest of the Bullard jawbone. The … Continue reading Fed Jawbones mean business [w/ edit]

Gary
Federal Reserve, Interest Rates

SPX, CRB & Gold performance after 1st Fed hike

Stocks, commodities and gold after the Fed raises the Funds Rate The S&P 500 has been positive upon the first hike of the Fed Funds rate on the last two cycles. Gold did not do badly either, while commodities languished on the most recent cycle (it was a dis-inflationary yield curve flattener, after all). Barring some kind of economic Armageddon, the 1st rate hike is … Continue reading SPX, CRB & Gold performance after 1st Fed hike

Gary
indicators
Commodities, Federal Reserve, Interest Rates

Fed Funds Rate, CRB & 2yr yield; a macro picture

2-year Treasury yield indicates rising Fed Funds to come The link between commodities and Fed policy has been hit or miss (at best). However, when you add in the 2 year yield, AKA the short end of the bond market that is directing the Fed, you can see a better correlation to the Funds Rate. Indeed, in 2013 (which you will recall was the beginning … Continue reading Fed Funds Rate, CRB & 2yr yield; a macro picture

Gary
Interest Rates

Continuum to continue? What about the inflation trades?

One indicator of the inflation trades may be starting to fail With the understanding that inflation expectations continue to be in post-FOMC recovery mode and that there are few danger signs (yet) for the markets gauging by junk bonds and associated speculation, long-term Treasury yields are still taking a hit as the post-FOMC ‘buy the (taper) news in Treasury bonds’ play continues, resulting in a … Continue reading Continuum to continue? What about the inflation trades?

Gary
Federal Reserve, Interest Rates

Bond market to buy the news?

FOMC is set to cease bond buying The worst kept secret in the financial world is that the Fed is going to taper the bond buying macro manipulation that kick started the inflation trade and the cyclical economy along with it. That would theoretically be bond-negative and yield-positive. But is it possible that long-term Treasury bonds have already been sold down pre-announcement, with a decline … Continue reading Bond market to buy the news?

Gary
Inflation & Deflation, Interest Rates

Continuum: Right shoulder, present arms!

The Continuum continues to form its right inverted shoulder In the spring the NFTRH plan was for a “summer cool down” in inflation expectations and the inflation trades. This after noting that the situation had become overdone in the public consciousness, untenable to the (self-consciously inflating) Fed and thus, unsustainable. Inflation indicators then spent the summer backing off and the 30yr Treasury yield Continuum dropped … Continue reading Continuum: Right shoulder, present arms!

Gary
Bonds, Interest Rates, Market Indicators, Notable Posts

Yield curve and 10yr Treasury yield: Our story since August 2019…

The yield curve and the nominal 10yr yield are at a critical macro juncture The chart attempts to tell you what I think without me interfering, right up until August, 2021. As for the current grey boxes highlighted for the yield curve and the nominal yield, I’ll tell you what I think. I think that another inflationary steepener has tried to get going (as evidenced … Continue reading Yield curve and 10yr Treasury yield: Our story since August 2019…

Gary