10yryields
AriasWave VS Fundamentals VS InflationLately I have felt that I need to touch on how AriasWave and fundamentals are inextricably intertwined.
AriasWave being primarily a technical analysis tool has led me to want to understand how everything operates on the macro level, although it is technical, humans are humans and these patterns are based on psychology and ever since discovering these patterns it has led me to ask more and more questions about how everything connects together.
I am not a financial advisor. This is just my own opinion. I encourage you to do your own research and learn the waves because they fit together, they are one and the same thing.
If you don't know the long term pattern shouldn't you be doing your research instead of just following the crowd?
10 yrIH&S pattern broke up the 200 weekly ema. Bond yields will most likely be testing around 1.66% and as long as the markets stay up I think we will enter a blow off top.
I can see 1.66% on the 10 yr or maybe even higher with sp500 making a monster run blow off top to 4200 plus B4 any larger correction.
10y-20y yeilds 20ema crossing the 200ema20ema crossing 200ema as the yield curve steepens. Usually not so good for markets. We will see if the FED can hold onto the market, I have no idea if they can or not. Goodluck!
Monday Morning Market BriefFutures are trading higher on Monday morning (at new ATH's again), to kick off the second week of February. The S&P tagged a 3900 handle with the democrats $1.9 Trillion dollar stimulus proposal back in focus. We've been discussing stimulus for quite some time now, and it seems the most effective stimulus is the one that never comes, just like the best trade deal with China, was the one that never came. The buy the rumour is the trade of the decade, as traders chase perpetual narratives of hope, and optimism, over valuations, growth, and logic.
Crude is catching a bid, and is showing a 60 handle, while the 10Y yield just saw it's highest level in almost a year at 1.20%. We discussed the path that rates are on, and the 10Y yield looks poised to test the 100 MA (w) around 1.355% as early as this week. We're also seeing Bitcoin at new high's around 42k off the back of news that Elon Musk's Tesla has bought over $1 Billion worth of the asset. Gold is rebounding off it's recent low of 1785.13/oz, and as of this morning, we're trading back around 1823/oz. The dollar saw some light selling on Friday after tagging a high of 91.60. We're currently sitting at 91.20 in premarket trade, and looking strong.
The Vix is back at a 21 handle, and is seeing some support just below the ascending trendline, which was lost on Thursday last week. We saw a low of 20.90 on Friday, but we've since caught a bid, and we're trading around 21.70 as of 8:30AM. This is among the lowest post March crash lows. The daily RSI appears to be reversing around a 45 handle, but is showing room for further downside in the nearterm, as investors and traders alike, bask in their quasi-inebriated state of euphoria.
The Put/Call is showing extreme complacency among investors, as evidenced by recent price action, but we haven't been seeing as many extreme skews as we were before. We're sitting around a .50 handle, with .30 - .50 range setting a strong mold for interim trade/sentiment. Finally, the SPY is set to open around 389, with essentially no resistance overhead, except logic. If the bulls don't show up with strong demand for risk, with participation being as horrible as it is the past few weeks, we may finally be in store for a notable correction. Considering the fact that there is no value in the market, instead of taking on risk via equities, we're taking a closer look at the cryto space, as well as commodities, for near term profitable trading opportunities with a low risk profile. More on this as the week progresses...
Thanks for your time today guys! Head on over to www.hedgeoftheworld.com for our live analysis to begin shortly. Cheers, Michael.
*The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. I am/ we are currently holding positions in UVXY, HUV, HQD, QID.
Yields Could Reach 1.5% By End of 1Q.I'm just thinking of current FedSpeak. Of course they're setting the long-term outlook for rising rates. Nonetheless, the manipulation has begun.
10Y Yield Under Pressure From Strong Auction DemandThe risk free rate took a breather yesterday, and then again today, as (yesterday) the 10Y auction was a smash success, followed by a near record 30Y auction today. We saw $38 Billion in demand in the 10Y auction, driving yields lower, toward the 1.11% level. Then after the 30Y auction today, the 10Y yield was hammered back to 1.08%. Members of the FED made their rounds in the MSM, convincing market participants that the FED had no intention of tapering asset purchases, nor did they see the need to hike rates in the near term. Let's see how things progress as the YCC (yield curve control) conversation becomes the focus on trading desks everywhere. When will the FED institutionalize YCC? Could be as early as the next meeting on Jan 26th. But, I highly doubt they'll admit, yet again, to the world, that everything they've done, hasn't worked. Then again, I've been wrong before. who knew you could just simply change every rule in the book. I digress.
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10 yrdaily wick formed a bearish hammer IMO. Looks like yields want to retest the break out around .95. From there we watch, this means a pull back is likely coming to stocks at some point we r talking 16 basis points so could do some damage.
But the DXY looks a bit mixed up and also looks like downside should continue.
The 4 hour 10 yr chart looks strong so this will likely be very choppy and not a straight drop, my original target of 3880 top in SP500 looks questionable. Im basically day trading pulling quick profits until I think this drop is complete.
Still long my crypto XLM XTZ as DXY weakness is apparent and my TP $88.50 still not tested so I can't really be sure today whether the DXY gets massive support & bounces off said level or if that level fails as support. But the correlation between stocks & 10yr is much stronger than stocks DXY IMO. That being said The 10 yr chart looks very similar to DXY.
Futures Flat, Rates up to BatUS futures traded sideways in the overnight session, as investors took in the view, and breathed in the thin air from the top of Mount Everest. We saw a light sell off yesterday, which was relentlessly bought into, and the moral of the story was this: bulls were able to successfully defend the 21EMA on the hourly at the open, throughout the day, and again at the close. The status quo projection by market participants, is that the Biden Administration is about to release a colossal stimulus proposal, which could potentially make the recent one seem like a weekly allowance. The truth is, Biden previously said he plans to raise taxes, and may even implement a wealth tax to fund much of his incredibly expensive plans. But, how does that make any sense if he plans to also cheer on the FED as they continue to debase the dollar, while growing the fiscal deficit even further? Why tax anyone, ever again, if you can just print new money constantly, and borrow even more if need be?
European markets traded down in the overnight session, as many european nations continue to struggle with COVID-19, and the effects of lockdowns on the economy. Bitcoin bounced back immensely from a 32K handle back to 36k, no surprise there. The 10Y yield is skyrocketing (seemingly unnoticed), and hit a high of 1.175% overnight. We've discussed what the implications of this move might be, and where rates may be heading next. For those of you who haven't been following, the 10Y yield is now up 130% since the beginning of August. Having said that, there's a possibiliy the FED may continue to change the rules of the game, and institute yield curve control (YCC) in the near future, to continue to artificially suppress rates. The mere fact that everything they've done to this point, hasn't worked, is no surprise to me. How could they have solved any (real) economic problems, when they're implementing solutions that simply aren't effective for main street?
According to Nomura, CTA's could turn short US Treasuries at any moment, due to the fact that we've now breached the key 1.10% level. This would result in a market correction of about 20% according to analyst projections at Morgan Stanley. We've been seeing downward pressure in the bond market in recent months, as the mere mention of tapering asset purchases by members of the FED, spooked bond investors. The dollar has held onto a 90 handle overnight, but is seeing some pressure here as the base case remains to be further dollar debasement. Oil is rallying hard, and is back to 10 month high's as of this morning, and we're now back at a 53 handle. We may see some pressure in oil markets as the week progresses, due to the anticipation of shrinking demand, and Exxon apparently finding a new massive reserve in Guyana.
Gold is looking awfully toppy, and we're seeing a clear reversal on the monthly candle, with both the MACD, and RSI rolling over. SPY is back at the 21EMA on the hourly, and looking weak as we approach the open. The weakness could be attributed to the circulation of a new report by Goldman discussing the rise in real rates, and it's potential impact on equity prices. Trade accordingly!
Next Stop on the 10Y Yield Train: 1.41%I've been hearing from many of my colleagues, most of whom are experienced traders, that rates are not going to rise anytime soon. 2023, 2024, 2025, all common projections for when rates will rise. Yet, we've observed the 10Y yield rising a whopping 120% since the beginning of August, to 1.13% today. Morgan Stanley said in a recent report, which I've mentioned in some of my other analysis, that the Nasdaq could be in for a 22% correction if the 10Y hits 2%. If the prospect of rising rates doesn't have traders and investors hedging their risk, nothing will. Trade accordingly.
Will the 10yr - Drive the price of Gold lower?As we all know, we witnessed another smash on the metals market again. There are several drivers to this other than JP Morgan lol, bitcoin, profit taking, the dollar, politics and risk on for stocks. I am seeing the 10yr yield gaining some momentum, if this get back to the 2 or 3's, we can anticipate a bearish environment for gold.
However, with the dems in full control we all know the narrative to come with stimulus. My question to whomever would like to chime in, whats your prediction on the 10 yr, and the dollar being pushed higher to the 95-97's within the year. I am reading some interesting forecast this year.
Compare the monthly on gold with the 10yr.
Thanks!
Rich
US 10 year T-note; Clearly a Continued SHORT!Despite appearances US T-Notes & Bills will absolutely obliterate US equity returns in this investment cycle! - The math being inescapable, despite all the wishful thinking in the world.
Let's put an exact number on it; How does >+4% annually over US Equities sound?! (Yes, do check the math - as I'm sure of it!)
Incidentally the U$D is bottoming here and it is a Massive LONG, for now.
E.g. The decline in US T-Notes is likely to be slow and shallow.
10 yr noteThis is a pretty big bear div on the stochastic rsi on the daily TF. So this is a HTF div that continued down all say while bond yields went up.
Something is coming and its a bear.
10 yrThinking the 10 yr pushes up .95 b4 election and a big stock market push higher.
After that crashes back to .72 for what could be the most volatile election since Bush vs Gore.
Then we end the year back up around 1.3 with Joe Biden winning and markets on a F**king tear
The myth of hyperinflation series- #2. Fed's toolsEvolution of Fed's QE-
Treasury/municipal bonds-> corporate bond ETF-> individual corporate bond-> Yield curve control (in potential development)-> Maybe... Individual stocks in the future...
As Fed adds more debts to its balance sheet, it hampers its ability to effectively intervene the market in the future. It will need progressively more and more stimulus packages to get us out of the subsequent financial crisis.
Forward guidance-
Odyssean forward guidance: Fed publicly commits the FOMC (Federal Open Market Committee) to a future action.
Delphic forward guidance: Fed merely forecasts macroeconomic performance and likely monetary policy actions.
Try to imagine the following highly improbable scenario- If Fed announces tomorrow that it will raise interest rate to 10 percent and slashes all the govt bonds on its balance sheet, how will the market react? Even something much less extreme of an announcement will and can drive the public sentiment and change the public perception of the market instantly even before the action is actually carried out. Now, that is the power of forward guidance.
Yield curve control (YCC)-
Basically, Fed has strong control over the short-term interest rate, but much less so on the long-term interest rate. In order to influence the long-term yield, Fed would shift purchase toward longer maturities and target some longer-term rate and pledge to buy enough long-term bonds to keep the rate from rising above its target. Fed employs the strategy of selling short-term treasuries and uses the funds to buy longer-term bonds in order to stimulate and spur borrowing, investment and economy if brings short-term rates to zero isn't enough.
Next, we will look at how effective these tools really are by examining few of Fed's past market interventions.
US10Y: Consolidation leading to 0.900 - 0.950.The 10 YR Yield is posting the first red 1D candle after a strong bullish streak of 5 candles. The 1D chart turned bullish (RSI = 64.680, MACD = 0.012, ADX = 28.379) after 2 months. Assuming the 1D MA50 supports, the price may find enough momentum to consolidate in order to post the final push towards the 0.955 Resistance. Attention is needed as the 1D RSI is waving a bearish flag (only indicator to do so), so keep stops tight.
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10 yrThe 10 yr has pumped on H4 touching WTIC blue line, I think the next move will be to the SP500 line in orange, this would be very bullish for all risk on assets.
$SPY New 52 Highs Towards Re-ElectionAfter watching the Fox interview with POTUS. He seems almost confident the market will be seeing all-time highs leading to November. The dollar ( DXY ) has been weakened, TVC:USOIL still getting bids, and TVC:TNX closed higher. The market has usually been used to manipulate the real economy, and with NYSE:AZN phase 1 data due tomorrow... this could be the catalyst to push higher.
Warning: Anything can happen and this market is currently in a euphoric trance. But politics aside, the market is all this administration has.
