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T-BOND

Grab some treasury on a full bus of bears! Despite the bond bubble right now, I believe there's some room for another rally in bonds. The election of trump have seen stocks driven to record highs, and bonds/treasury/gold crushed. The longest stretch of inflows into US equities since 2014 when the dollar rallied 20%. Net short in 10 year bonds are currently at record lows: (-500,000) i.imgur.com (courtesy of zerohedge) A large covering of shorts could drive bonds much higher in the coming days into Q4 earnings season. I believe a buy at this level is a pretty reasonable risk reward on the backs of the majority in the market... (4% stops, 20% tgt)
NASDAQ:TLTLong
by LastBattle
Euro Bund in reversal zoneThe market have got into the possible reversal zone projected by Fibonacci external retracement levels. This zone also contains major and minor trend line cross. Fibonacci time extensions from last medium degree highs pivots as the wave B and wave 1 appear to match possible reversal day with in the wave (iii), and previous highs of wave (3) and wave 1 Fibonacci time extensions show that price is in zone of 138.2 - 161.8%. As we expect the price to go into correction after reversal in previously discussed zone there is support zone of the correction end projected by Fibonacci retracement levels and pattern invalidation level. This is the minor degree corrective pattern expected to follow. Thus we do not want to trade it. The idea is to wait and look closely for the correction to end and as it unfolds we can project smaller reversal zone of time and price zone.
G
by venckusarunas
Gold Surprises as Dollar Gets Monkey-Hammered LowerIn " Gold Leaps Higher as Worries Mount ," I briefly pointed out how those very same institutions that championed quantitative easing policies implemented by the Federal Reserve are now coming out to proclaim quantitative easing added no substantial benefit to the real economy . Gold was pushed lower on the assumption that central banking policy would all pan out and that the U.S. would finally achieve escape velocity; but the exact opposite is occurring. Despite the near 12 to 16 months of absolutely horrendous, even recessionary data, market participants believed that if the Fed began to tighten monetary policy then the economy must be alright. Central bankers,misguided by classroom academics and abhorrent to real world economic dynamics, believe that if you tinker with interest rates that somehow inflation will magically begin to rise. Not so because it is real, meaningful growth that produces inflation; and it is more evident now that the these policies do not produce meaningful growth. I mapped out the dollar's downward trajectory, which was largely based on the floundering economy and the inability for the Fed to take action that will pop asset inflation. I still believe this is based on the above factors and that the dollar will likely gather strength as the US slips into deflation. Traders and CNBC pundits think that if deflation takes hold then gold will surely decline into the abyss. And just like their "lower gas prices equal booming consumer spending" myth, gold falling off a cliff during deflation is just as preposterous. Gold is unique in that if can act like an insurance policy against both sides of tail risk (inflation and deflation). It is well-known that gold had a massive bull run when stagflation took hold of the US during the 1970s. Inflation ran amok. However, nobody mentions that gold tripled, in inflation-adjusted dollar terms, during the early 1930s (the Great Depression) prior to President Roosevelt outlawing the private ownership of gold. As I wrote last April: " There is an assumption that the dollar and gold’s performance is strictly inverse of one another, but that is not so. The WGC (World Gold Council) indicates that between early 2014 and March 20, 2015, the dollar has gained over 20 percent while gold only fell 1.2 percent. Historically, gold prices more than double on a weak dollar than it falls on a stronger dollar. Thus, a stronger dollar is not indicative of massive gold depreciation. When the dollar declines, gold has appreciated 14.9 percent. Yet, when the dollar strengthens, gold has only fallen by 6.5 percent, according to the WGC. " If you look at this chart, you will notice one thing: gold sure looks to trend with the SPX. There is an argument that this due to simple asset inflation. Notice the massive divergence began when gold began to top in 2011. The divergence is what I call the "perception" gap. I expect that divergence to close. It's no secret that I was right about the volatility of 2015, along with other key macro trends. I believe by the end of 2016 and 2017 is when the real fireworks begin. Gold's recent move has been huge, and, of course, there will be profit taking. But those who follow me know that the underlying fundamentals for gold has been strengthening for some time. (Note: the gold chart is the same I used in the above mentioned gold idea, but the minor uptrend (along with new resistance) were added). Please follow me @lemieux_26 and check out my other ideas, which have links to previous writings.
COMEX:GC1!
by CommoditiesTrader
11
Relationship between Bund and Euro US DollarWhat is the Bund? The Bund is the German 10-Year Treasury bill, also known as a government bond. A holder of a bond is a creditor, and the issuer of a bond is called a borrower or debtor. When the price of the Bund increases, the yield received on that bond decreases and vice versa. What is the relationship between Bund and EURUSD? Why is this relationship there? The relationship between the Bund and EURUSD is inversely correlated - when the yield of the Bund increases, the Euro is bullish, and when it decreases it is bearish. One thing to note is that the price of a bond and the yield received is also inversely correlated. The relationship is there because during periods of uncertainty, people generally look for less risky positions (they may liquidate any equity positions they may hold and invest in bonds if they have low confidence in the stock market). This new demand for bonds pushes the price higher, but forces the yields down. A quick equation can show why this occurs: Let's say we have a bond priced at £1,000 with a 10% coupon rate (the amount you can expect to return per annum). The equation would be (£100/£1000) where yield = coupon value/price of bond. If the price of the bond increases to £2000, the yield decreases (£100/£2000) = 5% PA. For a bond holder looking to sell the bond at a later date, this is good as they have already locked in the rate of interest that they will be paying. However, as a buyer of a bond, you want to be buying low to lock in a higher yield. A concise explanation about what influences bond prices can be found at Investopedia (www.investopedia.com). I have borrowed from that below. The factor that influences a bond more than any other is the level of prevailing interest rates in the economy. When interest rates rise, the prices of bonds in the market fall, thereby raising the yield of the older bonds and bringing them into line with newer bonds being issued with higher coupons. When interest rates fall, the prices of bonds in the market rise, thereby lowering the yield of the older bonds and bringing them into line with newer bonds being issued with lower coupons. Bond yields and FX The spreads of the 10Y bonds can be used to gauge the direction for currencies as well. When the yield spread increases in favour of a certain currency, it is likely that you will see that currency appreciate vs others. When a yield spread tops or bottoms out, you can expect the related currency to begin to fall/rise in the following months. Playing on interest rate differentials is known as carry trading. Above graph explained The Bund is testing back to its 200 day EMA. On the recent occasions when it has tested here, it has failed to break above, however, the upward momentum appears to be intact . In the short term there is clear divergence between Bund & EURUSD. Furthermore our model shows the Bund as being a weakest bear suggesting it would like to go & turn bullish and indeed it would be back in a bull trend through 154 vs close last night of 152.9. Form your own opinions. Losses may exceed deposits.
FX:BUNDEducation
by DavidBelleFX
8
10-Yr Treasury Note, Follows Major Market MovementsSomething I noticed today while look at the 10-yr bond in general (reflecting loan rates). If you didn't already know, the price of the 10-yr bond directly affect any and all loan rates available. Mostly of course affecting housing loans. That's another point aside, but it does look like the price of a mortgage will be expensive over the summer. Anyway, what I also uncovered while looking at this is how well the peaks in the 10-yr bond correlate to the major market changes for the US. Take a look at this Wiki link for time frame references - en.wikipedia.org Most every major direction change (and peak) is associated with a market event since the 1980s to today. I have highlighted those peaks on both price and RSI with vertical lines and bubbles respectively. It's also worth noting that the burst before the 2008-2009 housing bubble crash was preceded by a rising wedge...which finished out its pattern as you would have expected. (spoiler: rising wedges end in price trend correction - downward price movement). Looking forward to the end of 2013 and the beginning of 2014, we have another peak. This one is not very close to the price trend line BUT shows an obvious peak in the RSI chart. Judging from previous events like this, I assume the market will not react graciously? Do I know? Of course not. It's just a guess. More important than that is the new pattern being formed (Symmetrical Triangle) from the 2011 to 2016-17 time frame. This could be a continuation pattern OR a reversal pattern (sym triangle vs. pennant). Can't be sure until we see the pattern finish itself out to the end, however, I can take a pretty strong guess at what lending rates will look like for the next 2-3 years. Lending rate guess: 2015 (Summer): rates will peak by September then start to fall 2016 (Spring): rates will fall to its low (on the trend line) then start to rise (March-ish) 2016 (Summer): rates will peak by June/July 2016 (Fall): ??? For rates past Fall 2016 I'm not sure what may happen. I do not have a viewpoint past that time frame other than to "wait and see". My guess is that this pattern is going to be a reversal but it still has a long way to go to break through the long term price trend line.
T
by cmharkey
2
31 Year US Bearish Bond Yields Coming to an EndThere are many reasons why bond yields should go down, however, there are many more positive reasons why bond yields will go higher. Demographically Challenged Our largest demographic population on the planet, not just in the US, is the baby boomers born 1944 to 1964. Largely early baby boomers born during WWII and up to the late 1940's have already started collecting on retirements. For these seniors to live comfortably in retirement they will need to draw down on a steady income derived from higher US Bonds yields. Boomers can no longer afford to risk money in equity markets, they will be forced to invest conservative in fixed incomes. US Political Movement For more than 30 years the US has run up debts with both political parties at fault. However, more recently we are seeing a shift towards a popular following of younger fiscal conservatives in the Republican party. Many of these fiscal conservatives candidates govern states and have taken on the challenge of run away debt spending. Fiscal Conservatism will also appeal to the US largest voting class, baby boomers. Baby boomers are fully aware that more debts equals more instability in the US, and want to see a more fiscal responsible governments. To appease the baby boomers wishes, whoever it is that leads the US, they will implement a strategy of spending cuts and debt reductions. Spending cuts and debt reductions will also help US Treasury Yields increase. Federal Reserve Raising Rates Our own Federal Reserve has been sounding off the warning now for almost a year, it's only a matter of time before Janet Yellen starts raising benchmark rates. Although US economy has entered another soft patch, which will require the Fed to talk down the rate increase in 2015. However, sometime in 2016 we will see our first rate increase in the US. I expect other countries like Great Britain to follow this trend of rate increases.
TLong
by QuantitativeExhaustion
30