Bonds
Bonds Break OutBonds have lifted, breaking out of the narrow range held for the past three days. We broke the upper bound at 120'14, and hit our next target exactly at 121'00, as predicted. We are seeing red triangles on the KRI suggesting that we are facing resistance here. The Kovach OBV has picked up, suggesting genuine momentum may be back. If so, the next target is 121'28. If we retrace, we should have strong support from 120'14 and 119'23.
10yr - keep an eye!10yr keep an eye
Got a H&S formation, keep an eye if we break down further there are key support areas IF this continues further. However, we are at key support and don't forget month end.
Have a great weekend 🎉
TJ
Monster Bear Flattener AheadHistorically - inflation has never been defeated except when a long term bond (in this case the 30 year) yield is above the rate of inflation. The collapse of supply has meant too much money chasing too few goods. This means more and more capital is sucked into a blackhole of wage-price spirals. Currently the US has trapped itself against a wall and a hard place in that the 30 year treasury yield is well below the inflation rate. A situation which hasn't happened to the US in 100+ years (I can't speak for the Civil War Era, I haven't found data back that far). You can see the 30 year yield history by searching Google for "Fred 30 year yield" (Can't post links yet).
The only logical path to achieve this is a bear steepening when people realize that inflation cannot come down otherwise and then begin a sell-off.
Yield curves will stay inverted since the FED has put a floor on interest rates which the treasuries are already starting to get close to.
"Restrictive rates" = = a bear flattening environment. We are currently in a "bull steepener" attempt which will fail.
SPY SPX S&P 500I believe the next 6-12 months will put the s&p potentially higher than my previous target, depending on whether or not this is in fact the start of a wave 1 of 3, part of the 5th wave of a higher degree (purple) wave 3.
If current turquoise wave 3 is extended, then wave 5 will more than likely perform a "throw over" in relation to the 45 degree channel in this chart
However, failure to break the previous X wave, will result in one Final down before a purple wave 5, invalidating the current impulsive count. (potential WXYXZ is still visible on chart)
As of right now, I can say with confidence that the 200 MA will cross the 3200 ma on this 1 hour time frame, by the time it reaches the 3200, the price will be ~4400$ +
for a longer-term and complete Wave Count of S&P500, An Older post is tagged below
5 year yields probably topping out5 year bond yields in the US look like they might be topping out.
Incurs a negative bias on the wider economy.
Return to the historical trend around the yellow line?
NDX is painting the biggest Head and shoulders in Nasdaq History This pattern getting painted filled with false hope of people thinking the damages from QE since 2008 and the Pandemic printing are over is very alarming if it plays out.
It was terrible enough seeing people lose fortunes / life savings during the recent collapse of the simpleton's running VC funds with insane leverage without telling people where their funds was, I caught onto this with Luna and a some lending platforms but not many people listened due to euphoria of price only go up.
Now the global economy is about to retract due to governments not supporting supply side of the business cycle and only creating demand via printing causing inflation and more poverty (due to businesses failing to meet profits causing less staff and a deflationary death spiral), this is magnitudes larger than what happen in the crypto space and what happen in 2008 combined with 2000. If this market starts to turn bearish and margins are not met, money that does not exist starts to get claimed, defaults start to happen, panic starts to happen.
Now is a great time to re evaluate where your funds are, are they safe from bail in inflation? are they protected from bail outs?
The federal reserve has one plan and one plan only.
• Raise reward rate for reverse REPO (Build a functioning bail out dam that can be literally controlled released)
• Raise Interest rate's collapse the bubble in all major markets (hoping to contain the current inflation outbreak)
• Panic mode but here's where the FED will step in and start to reduce the reward rate to ZERO
• Money starts to flow back into normal markets as any money still in the RRP will be earning nothing
• Majority will flow into US 20 year bonds causing the yield to collapse, funding the government, THIS is what JAPAN is counting on happening as they're directly involved, they hope to be able to make up for their unlimited bond purchases by selling US Government bonds at a premium
• Some money will start to flow into all equity markets from Government funding new infrastructure, and money going directly into markets from the RRP
• The will be all unfolding when the RRP award rate starts to fall do not focus on reserve rates
• All of this to reset the biggest bubble in history that will clearly put the world into a deflationary spiral to avoid needing to hyperinflate right now, everything I just explained is essentially to avoid hyper DEFLATION the big money from the QE / Stimulus is sitting in the RRP like the FED wants to be ultimately unleashed like the Three Gorges Dam during or after the collapse of the global economy
ALERT - - - - - - - IF this does not work to restimulate markets and there is still deflationary pressure the global reserve banks will be forced to start printing more money than you have ever thought possible think hundreds of trillions, the thought of hyperinflation will be accepted if the world is in a hyper deflationary death spiral this could genuinely end our human species due to quality of life dropping dramatically
Everything is happening now because of the absolute stupid decision idiotic insane unthinkable theory to start a program of unlimited QE and stopping the bust of the the natural boom and bust cycle filtering out all the bad actors, avoided the bust for what? everlasting inflation that the average person cannot outrun and start a family and population decrease is starting to happen. .
Good luck people -
US 10 year yield potential HnSIn the next 24-48h TNX may dump. That's bullish for other markets crypto, stocks...
JP10Y - Trend ReversalDouble bottom leading to a complete trend reversal
I am seeing this suggestions of trend reversals across the board on the bond market
GDP RealityThe Federal Reserve will suggest they projected a slowdown in Economic activity.
Effect Indicated, Effect Observed.
Solid work.
_______________________________________________________________________
Outside of the Matrix, the Depression slumbers on within the confines of Real Sentiment.
....The Deal Breaker.
"7" was misstated - "6" is the GDI hedonic, it's been a long overnight Session, apologies.
USBONDS - Descending Scallop Examples US10Y on this daily timeframe shows a large descending scallop
On the right another example of this pattern is shown, however just it has been completed
Descending Scallops are a bullish reversal pattern
US10Y Inflation has peaked according to the bond yieldsThis is a critical update on the U.S. Government Bonds 10YR Yield (US10Y) as it has formed a Head and Shoulders (H&S) pattern. This is a technically bearish formation that we typically see on market tops with a reversal following. It gets even stronger considering the fact that the Head of the formation hit (and got rejected on) the Higher Highs (top) trend-line of the Megaphone pattern that the market has been trading is since 2013.
There is however a possibility of not dropping to a correction before one last test of the Higher Highs as it happened both on mid 2018 and the September 2013 H&S patterns. As a result, we should approach this in terms of Resistance and Support break-outs. Above the Resistance, expect one last Higher Highs test, below the Support expect a plunge towards the 1D MA50 (blue trend-line) and the 1D MA200 (orange trend-line).
But why is this US10Y top formation pattern so important and what does it have to do with the Inflation Rate (red trend-line)? Well as you see within this 9 period price action, the two symbols are very correlated. In fact, every time the US10Y hit the top of its Megaphone pattern, Inflation peaked and started to follow the US10Y lower on its correction.
As a result we can say that this is the first indication we've had in a long time that the raging inflation that started in May 2020, may finally be getting under control. If so, this could be the ideal time to get back into stock buying as early as possible.
--------------------------------------------------------------------------------------------------------
** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. **
--------------------------------------------------------------------------------------------------------
10-Year Treasury Yield Faces Head & Shoulders, Lookout Below?The 10-Year Treasury yield has been consolidating since April as traders grappled with inflation and recession woes.
Now, a bearish Head & Shoulders chart formation is prevailing. At the time of publishing, prices finished forming the right shoulder and were trading at the neckline, which seems to be around 2.70.
This is as the 100-day Simple Moving Average is holding up as support. It could still maintain the dominant uptrend.
Otherwise, confirming a breakout under the neckline and the moving average may open the door to a broader reversal.
Key levels to watch to the downside include the 61.8% and 78.6% Fibonacci retracements at 2.36 and 2.05 respectively. Beyond the latter sits the March low at 1.66.
Overturning the Head & Shoulders entails a push above the right shoulder, which is just below 3.15.
TVC:US10Y
A Look at 30y US Bonds, Fed Fund Rate and InflationTreasuries are an intersting play right now. Depending on your home currencies it still might be a good moment to consider stocking up on them in your portfolio.
Couple of notes looking at the chart.
FOMC participants’ assessments of appropriate monetary policy: Midpoint of target range or target level for the federal funds rate was shown to be around 4% (per June 15 '22 Summary of Economic Projections).
The bond market had been signaling the need for FED fund rate hikes for some month already.
Looking at it from a EUR buying perspective you can currently get 30Y treasuries at around 3.3% (2.75 - 3% nominal plus slightly stronger EUR at the time of writing yield with an ~5% lower price still.
Forecasting a continued weak EUR and a top of the fund rate at around 4% these treasuries ought to be bound to rise latest in 2024.
Newly issued bonds ought to be reaching 4% soon. If so those will be attractive too.
It should be noted that there is no guarantee that the FED (nor the ECB) will be able to contain inflation or the starting recession.
The EU is likely to be hit harder for both.
That said the FEB may continue and we may end of up with much higher FED fund rate of above 4% (5%, 6%, .....).
This scenario seems unlikely as such high interest rates would break the financial markets and econimies.
It is to be noted that the FED's fund rate it approaching to be break a downward trend since 1984. On the chart the trend from 1988 has already been broken.
This chart does give some indications of the dependencies of these three key figures. But one can easily spot that it is not a clear when X goes up then Y does too.
--------------------------------------------------------------------------------------------------------
** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. **
--------------------------------------------------------------------------------------------------------
!! Donations via TradingView coins also help me a great deal at posting more free trading content and signals here !!
BTC/US30 Quick Analysis | BTC 📉 Although BTC may be considered as a 'new safe heaven', 'digital gold' and etc., it is actually one of the least safe investments. Whereas, 30 year US bond yields tend to be on the safest side in comparison to all financial assets. By analyzing financial assets against commodities or safe financial assets you take away fiat currency fluctuations. Which are generally dependent on government policies, balance of trade and sensitive to supply/demand shocks.
Thereby, I believe pairing a financial asset of interest against these more stable, less volatile assets (e.g, gold, bonds) may be beneficial for analysis.
This makes trading Cryptocurrencies a little clearer/easier
US Bonds: Risk is On. For NowInverted yield curve, portending recession(likely next year), is on track and before the big dump is a pre-recession pump for equities and cryptocurrencies.
Junk Bonds are testing a 7 month old downward trendline!If you’re chasing portfolio income, you may be eyeing high-yield bonds, also known as junk bonds, which typically pay more interest but carry greater risk.
Since interest rates and bond prices move in opposite directions, U.S. junk bond values have dipped to the lowest levels since May 2020. But yields are at 7.5% as of May 17, up from 4.42% since the beginning of January, according to the ICE Bank of America U.S. High-Yield Index.
However, high-yield bonds have greater default risk than their investment-grade counterparts, meaning issuers may be less likely to cover interest payments and loans by the maturity date.
FaGBL maybe is going upAccording to our analysis Fgbl completed its down trend and we expect a reversal now
A bearlish scenario for HYGThere are no bad bonds, only bad prices. So Dan Fuss, Loomis Sayles’ vice chairman, has often observed—a lesson gleaned from more than six decades of experience managing corporate bond portfolios. After what seems likely to go into the books as the worst first half of the year for fixed-income markets on record, prices now look a lot better from the standpoint of investors aiming to buy low.
The savvy ones that sold high were major corporations that issued bonds at record-low yields in the past two years. Bond prices move inversely to their yields. So, with benchmark 10-year Treasury yields roughly doubling since the start of the year, to over 3%, and corporate-credit yield spreads increasing over risk-free government securities, corporate bond prices have fallen sharply.
Rates are falling (bond yields)As Crude breaks down, so do rates. Crude is the last domino to fall in slowing down inflation. Bond yields won’t come down until growth and inflation break down. The bearish head-n-shoulds pattern tells me bond yields are near a breaking point. Weaker than expected housing data should confirm the economic slowdown. The Fed is actively sucking liquidity from the market. Rate will come down.
Sideways Correction in BondsBonds are oscillating in the narrow range between 117'19 and 119'01. The Kovach OBV has leveled off, suggesting there is little momentum at the moment to move then needle either way. We appear to be in a sideways corrective phase, after topping out at 120'14, then retracing to 117'19. If we catch more momentum, we could test highs again at 120'14. If 117'19 does not hold, watch for support at 117'08 and 116'20.
Ugly Markets - Embrace the TrendsThe trend is always our best friend in markets across all asset classes. While many investors and traders waste their time interpreting the new cycle and other factors, the path of least resistance of market prices is a real-time indicator of the current sentiment.
Stocks and bonds fall in Q2
Four of six commodity sectors post losses
Rising interest rates and a strong dollar
Economic contraction- Copper tells a story
Go with the flow
Market prices rise when buyers are more aggressive than sellers and fall when sellers dominate buyers. The current price of any asset is always the correct price because it is the level where buyers and sellers agree on value in a transparent environment, the marketplace.
The results for Q2 were ugly in most markets. Stocks and bonds fell, the dollar index rose, and four of six commodity sectors posted losses. The best performing sectors reflect the supply-side issues created by the war in Ukraine, sanctions on Russia, and Russian retaliation.
Uncertainty in markets creates price variance, and markets reflect the economic and geopolitical landscapes. As we move into the second half of 2022, uncertainty is at the highest level in years. Meanwhile, market liquidity tends to decline during the summer vacation months. Lower participation only exacerbates price variance as bids can disappear during selloffs and offers often evaporate during rallies. It is a time for caution in markets across all asset classes, but the trends on a simple price chart tell us all we need to know about the path of least resistance of prices.
Stocks and bonds fall in Q2
The stock market was ugly in Q2:
The DJIA fell 11.25%
The S&P 500 declined 16.45%
The tech-heavy NASDAQ dropped 22.45%
Over the first half of 2022:
The DJIA was down 15.31%
The S&P 500 fell 20.58%
The NASDAQ plunged 29.51%
As the Fed began increasing the Fed Funds Rate and reducing its swollen balance sheet, the US 30-Year Treasury bond futures fell 8.19% in Q2 and were 13.75% lower over the first half of this year as of June 30. The long bond fell below its technical support level at the October 2018 136-16 low and reached 132-09 in June before bouncing.
Four of six commodity sectors post losses
While the energy and animal protein sectors posted gains in Q2, base and precious metals, grains, and soft commodities moved to the downside. The quarterly results by sector were:
Energy- +6.77%
Animal proteins- +3.31%
Gains- -3.46%
Soft commodities- -4.12%
Precious metals- -12.91%
Base metals- -27.24%
Over the first half of 2022, four of six sectors were higher than at the end of 2021:
Energy- +43.86%
Grains- +14.65%
Animal proteins- +10.96%
Soft commodities- +1.46%
Precious metals - -5.43%
Base metals- -13.07%
The results reflect the economic and political landscapes. Energy and food prices rose as the war in Ukraine threatens the global supply chains. Metal prices declined because central bank policies and economic conditions led to rising rates and a strong US dollar.
Rising interest rates and a strong dollar
The US Federal Reserve blamed rising prices and inflation on “transitory” pandemic-related factors throughout most of 2021. The central bank waited far too long to address inflation and is now playing catch-up when the war in Ukraine and geopolitical tensions impact the global economy’s supply side. Central bank monetary policy can affect the demand-side, but they have few tools to manage supply-side shocks. The rise in energy and food and the decline in metal prices tell us that central banks are struggling to address the current economic landscape.
The US 30-Year Treasury bond futures chart shows the pattern of lower highs and lower lows. While the long bond bounced from the June low, the bearish trend remains intact in early July.
The US dollar index, which measures the US currency against other world reserve foreign exchange instruments, rose 6.21% in Q2 and was 9.28% higher over the first half of 2022. The dollar index settled at the 104.464 level on June 30 and rose to a new two-decade high of 107.615 on July 8. Since the US dollar is the world’s reserve currency and the pricing benchmark for most commodities, a strong dollar caused raw materials to rise in other currencies, putting downward pressure on dollar-based prices.
Economic contraction- Copper tells a story
The US remains the world’s leading economy. In Q1, US GDP fell, and it likely declined in Q2. The textbook definition of a recession is two consecutive quarterly GDP declines.
Copper is a base metal that trades on the London Metals Exchange and the CME’s COMEX division. Copper has a long history of diagnosing the economic climate, earning it the nickname Doctor Copper. In Q1, COMEX and LME copper prices rose by around 6.5%. In Q2, they plunged, with the COMEX futures falling 21.82% and the LME forwards dropping 20.41%. COMEX and LME copper prices were down over 15% over the first half of 2022.
The chart of COMEX copper futures shows the move to an all-time $5.01 per pound high in March 2022 and a decline to a low below $3.40 in early July. The descent below technical support at the August 2021 $3.98 low and nearly 30% drop as of July 8 are signs that recession is not on the horizon; it has already gripped the economy.
Go with the flow
Inflation remains at a four-decade high, and while raw material prices have declined, the economic condition is far higher than the current Fed Funds rate. The central bank has pledged to fight inflation with monetary policy tools. Higher interest rates could put more downward pressure on raw material prices and the stock market as the economy contracts. Time will tell if the Fed continues its hawkish path or reacts to current market conditions. Waiting far too long to address inflation in 2021 suggests the central bank will likely remain hawkish regardless of market conditions in 2022.
It is impossible to pick tops or bottoms in any market as prices often rise or fall far beyond where logic, reason, and rational analysis dictate. A market participant’s most effective tool is to follow the trends until they bend. The path of least resistance of asset prices can be the most significant factor for future performance. In these troubled times, where uncertainty is at the highest level in years, don’t fight the trends and go with the flow. In early Q2, it remains bearish in many markets across all asset classes. Stocks, bonds, commodities, cryptos, and other asset classes are making lower highs and lower lows, while the dollar index is moving in the opposite direction.
Markets are ugly, but nothing lasts forever. Trend following can be the best route for capturing the most significant moves. You will never buy the lows or sell the highs when following trends, as they will cause short positions at bottoms and long positions at market tops. However, trend-following allows for extracting a substantial percentage from a significant price move. Embrace those trends until they change.
--
Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
U.S. Bonds – It’s Major Uptrend Has Broke BelowU.S Bonds market is larger than the largest American companies combined, therefore it is important to also track the health of the bonds market.
• U.S Bonds size - market value estimated $46 trillion
• Largest American companies size - market capitalization estimated $42 trillion
The bonds market moves in tandem with the stock markets, meaning when the general trend of the bonds is up, so will be the stock markets. Similarly, when the bond markets are bear, so will the stocks.
The decades of U.S. Bonds uptrend were broken in the month April 2022. This indicates a long-term downtrend for the bond markets.
Source and reference:
As of 08 Jul 2022 from companiesmarketcap in U.S. The total companies 6,332, total market cap: $81.241T. The largest American companies by market cap, 3,269 companies 3,269, total market cap: $41.66 T.
As of 2021, the size of the bond market (total debt outstanding) is estimated to be at $119 trillion worldwide and $46 trillion for the US market, according to Securities Industry and Financial Markets Association (SIFMA).
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
Feel free to leave any comments below, I love to exchange ideas with you.
Also to check the video link below...
