Get started

Rates

Interest rates to rise and top out a year from now?Looking at the 10yr treasury as a gauge for the overall rate environment and the revised GDP data, I'm predicting the US will see rates rise for roughly the next year before coming to a peak around 3.75% on the 10yr before beginning a new wave lower, just in time for the coming recession in the summer of 2019. Expect to see 30 year fixed US Mortgage rates above 5% for 2019 with a peak level of 5.5% to 6%. Central bank action could delay peak yields to the summer of 2020, ahead of US Presidential election. History predicts a recession occurring within 18 months (or less) of short + long term yields inverting. I expect we'll see this inversion of the yield curve occur in December 2018, following what will be the Fed's 4th rate hike of the year. This next recession will be a real doozy, likely putting 2008 to shame with the Fed likely responding with (what else?) QE on steroids, sending rates down to (or below) the lows witnessed in June 2016 following "Brexit".
TVC:US10Y
by jdharward
The bond bear is not here yet.... use a log scaleThere have been a lot of talks of a bond bear market over the past year. That would be a big problem, but it's not here yet. The biggest problem is that too many chartists are using and circulating charts of trend resistance breaking in bonds that do not use log scales. I get that it seems intuitively dumb for a yield chart to use a log scale, but that's how this has traded for the better part of the last 20 years. Trade what is, not what you think should be. Turns out we haven't yet hit the top channel here, so we're not in a bond bear. It also turns out that touching the top channel occurred every time the fed quit hiking rates over the past 30 years, which preceded the last 3 recessions / bear markets by 1-2 months at least. Short term, we're in a rising wedge that the bond market has obeyed quite well. If we rise directly to the top of the channel, that would imply a May 2019 break of this uptrend and a recession / bear market starting around mid 2019 into 2020. Who knows how this actually plays out, but I know we haven't hit a true bond bear yet, and even when we do, it'll probably be far less exciting than people want to believe.
TVC:US10Y
by GTStockmaster
2
EURUSD Currency Pair Falling Faster Than a MeteoriteThe EUR/USD Currency pair will continue to fall. Why will t his happen? There are several factors directly responsible for the rapid decline of the Euro. The first one is interest rates. Bond investors invest their money in countries that have rising interest rates, such as the U.S.(2.25%). On the other hand, bond investors withdraw their money and investments from countries with low interest rates, such as the Euro Zone (0%). Another reason for the rapid decline in value of the Euro is GDP. Euro Zone second quarter GDP growth edged down to 2.1% from first quarter GDP readings of 2.4%. More technical factors explaining the recent decline of the EUR-USD currency pair are discussed here .
by mstardom
Calm before the stormYields have found resistance and support in the early market yesterday. Today they were poised to go higher but didn't brake through the tripple resistance, a little congestion in the range 3.117 - 3.127. Then again rates found support earlier today and maybe formed a new trendline up. Given current market conditions I don't see rates going much higher. At least for now. Today market is calm but BTFD at the open and then dead cat bound style of move to the close is looking rather uncomfortable. Watch the 45 degrees trendline and triple resistance I mentioned earlier. I would wait for a better opportunity to enter.
TVC:US10Y
by Slimsy
Divergences: ES, US10YStarting off the day with diverged asset classes. 10Y note yields has gone lower while SPX futures showed some resistance and look like they are about to break out higher from the small (and a little bit crooked) wedge that formed. During writing of this post the divergence is disappearing :( SMI suggests downward move but this may not be the case. Watch closely along with european equities. Last monday was negative even though it was showing strength in the pre-open session. Watch the main trendline
CME_MINI:ES1!
by Slimsy
Watch S&P500 Channel and Divergence SPX is currently trading in a parallel channel. From a pure technical point of view, it looks like price could bounce from the lower limit. A strong divergence on the daily chart supports that idea as well (RSI going up). However, I would be very carreful, as tangible consequences of the trade war start appearing - Industrials may not declare earnings as good as expected, and tech companies such as amazon also disapointed. In addition, the world outlook has changed since most developped countries (US, Canada, Europe...) are increasing rates. Investors are worried that good earnings (boosted by the tax cuts) will only make us stocks fall from higher. In this context, I believe we could see a technical bounce, but the overall trend remais bearish. If price breaks below the limit on Monday, this would be extremely bearish.
SP:SPX
by Tutur
Current markets statusS&P 500 opened two times BIG gap down (1.2%-1.3%) within the last 3 days! Something which has not happened neither during 2015 and 2016 corrections nor during XIV imploding in february this year. This is spectacular situation as neither of those gaps were completely filled. This signals that the downsloping trendline is indeed very strong. Moreover spoos have bounced today from fibonacci 76% retrac. This is pretty low for fibo standards. The trendline also hold very tightly. All of the major equities indices are below 200-SMAs The plunge could not be stopped by companies reporting better than expected earnings. This also shows strong downward pressure. Comments from companies like TXN don't help either. High Yield bond spreads gave up and went high which translates into de-risking mood probably. Here I provide some totally not significant market members insights: > Smart Money have been selling since february and now the move intensified, > HFs fear of being closed down as they provided horrible results this year (now, they may have incentives to bet on eveything that moves even if it crawls losing even more money in the process) with their favourite FANG stocks dropping like a rock, > speculative bets on treasuries are being squuezed out of the all-time low shorts (this will intesify rates moves downward) PS. Traders are waiting for mysterious Plunge Protection Team to deliver them from evil as everything seems lost
SP:SPX
by Slimsy
Rates fallRates fall below 3.100 and below all the supports. Currently continuing the downsloping trendline. The plunge found support at 3.076 and 3.06. We may expect a bounce up to 3.085 and then if the trend is broken, it will signal short term bullishness for stocks. Otherwise, it will be bearish for stocks and equities may enter a bear market. Also have to be careful at this point about the comments from FOMC members, who may be more dovish. It would however mean the dependence of Trump's presidency and I doubt that. I expect they won't comment no more on stock's moves than just "a healthy correction" leaving the job to Plunge Protection Team which may not provide enough help.
TVC:US10Y
by Slimsy
2
Clear Leading Diagonal - time for a pullback - then up, up, awayThe minute leading diagonal has clearly broken the larger downward wave, which ended in a larger ending diagonal... Expect a short term pullback to the wave iv level and then a continued rise at least 1.618 times the length of this first leading diagonal wave... Short term pullback would be consistent with a modest recovery in equities early next week before a larger sell-off in equities as the treasury rates resume their rise...
TLong
by broughro