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Yieldcurve

US10yrs-US03yrs : cautious territoryUS Curve is pricing some kind of slowdown (specially due to higher inflation than expected) As you can see the 10yrs US yields- 3yrs and close to 0.00% Due i expect more escalation of Russian War, not just against Ukraine, also against Moldova and Georgia. The conflict will continue for many months causing a potential global recession. Central banks may have to reduce interest rates increase steps (for example FED or ECB). ECB may have to increase rates just 25 bp but in 2023 not at the end of 2022. Stay tuned. I expect wild volatility over 50-70% Regards, Potential downside for SP500: 3,800 points april-may 2022
TVC:US10Y
by PACDealer
Why You Should Learn To Trade Interest RatesIf you're trading this market right now you have to keep your eye on Interest Rates. Why? Interest Rates have the largest web in the market. They impact every market we trade (even crypto :) What rates are doing not only impact the markets we trade, they impact us in everyday life. In this video I go over the best way to trade interest rates and even if you're not interested in trading interest rates, I go over the best markets to keep up on your quotes to see what rates are doing. Past performance is no guarantee of future results.  Derivatives trading is not suitable for all investors. 
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CBOT_MINI:2YY1!Education
by anthonycrudele
27
In depth analysis of bond yields & the USD! Macro series pt2Part 2 This is the second part of the macro analysis series. In this part we'll focus on analyzing the current situation around the US bond market and the US dollar, while trying to map out the future depending on how the Fed and the economy move. You can find the rest of the analysis on the links down below. After going in depth about interest rates, the USD, the Fed and the economy, it is time to accompany everything with some charts. In the first chart we have the 2year yields of US government bonds which have been in a downtrend for more than 30 years. Based on technical analysis there is resistance for yields at the 1.3-1.5% zone, as well as 2-2.5%. The fact that we are so close to the first resistance is matching well with the fact that after the first rate hike the Fed might not raise rates again, and rates might actually start falling again. Even if that’s not the case, if the Fed tries to push the narrative that it will raise rates even more, we could see the 2y bond yield go up to 2% and stop there, by respecting the long-term downtrend. That also goes well with the fact that inflation could be potentially coming down and even be below 2% by the end of 2022 or with the fact that at that point markets might start to collapse, forcing the Fed to lower rates again. In the second chart we have the 10year yields of US government bonds, and the downtrend in this one is much cleaner. This one is very close to major resistance already, yet it could climb up to 3-3.5% before it tops. Breaking above the resistance channel doesn’t mean the downtrend is broken until we get a close above 3.5%. It is key to note that both charts are showing major signs of long-term bottoms, which could last for years but until we see these trends break it is early to confirm a reversal. For example, the 10y reclaimed its 2012-2019 lows and is showing some strength, while the 2y has had a perfect round bottom and is currently going up strong. The truth is that their bottoms in March 2020 really look like a proper capitulation bottom, ones that could signal the end of a major downtrend. By looking at the actual price of long-term bonds ($TLT, $UB etc), we can see that they had a proper blow off top. Before we get into our views on bonds though, something we need to clarify for those that don’t know much about bonds, is that bond yields are inversely correlated with the price of bonds, which means that when yields go up, bonds go down and when yields go down, bonds go up. Therefore, the blow off top in bonds could be a major signal that bonds have bottomed for good (yields could be headed higher). To an extend the current drop in bonds could be attributed to the fact that the same way the pendulum swung too much on one side and it is now swinging on the other. This is a pretty reasonable assumption as the bond bull market has been raging for years and in Feb-Mar 2020 it got extremely overbought. Hence shaking out traders who believed and still believe that yields would turn negative soon might have to suffer for a few more months or years before they see their ideas play out, if they ever do. Having said all that is we need to remember that the blow off top was accompanied by some fairly strong actions by the US government and the Fed, in order to save the bond market and the economy, both of which were under immense stress and almost collapsed. Nearly 2 years later and all the support is being withdrawn as the government has cut down its spending, the Fed will raise rates and shrink its balance sheet, and the pandemic seems to be over as Covid has become endemic. These are having notable effects on markets as the 2y yield has been rising faster relative to the 10y and they are now only 60 basis points apart, while in March they were 160 basis points apart. That means that the yield curve has been inverting, which is a major signal that future growth expectations are muted, yet another sign that the Fed might now be able to raise rates much. Essentially the bond market is telling us that there could be some short-term inflationary pressure and growth, but in the long run we won’t have much growth or inflation. Finally, the last key observation is around the Fed doing Quantitative Tightening (QT = shrinking of the balance sheet), which empirically tends to depress long term yields. Usually when the Fed buys bonds, yields go up (when in theory they should go down) and when the Fed sells bonds, yields go down (when in theory they should go up). The reason behind this is that when the Fed buys it creates a risk on environment, so the banks that sold them their bonds go buy other riskier stuff, and when the Fed sells it creates a risk off environment, so the banks that buy the bonds want more bonds. To sum it all up again and put it in a tradeable idea, we could see yields trade higher and higher, and actually peak in March around the time the Fed plans to stop purchasing bonds, a clear buy the rumor sell the news idea. Next chart is the USD Index, or else known as the DXY. I’d like to start by saying that although this isn’t the best way to measure the performance of the USD relative to other currencies, it is the most commonly used one. Just a few days ago the DXY had a major breakout with a lot of strength and it could go higher, despite the fact that we didn’t get immediate continuation. Since 2015 the DXY has essentially been going sideways, and has formed a pattern that looks pretty similar to 2008-2015 period, something someone could call accumulation or in this case re-accumulation. In our opinion the probabilities of the DXY getting to 112-120 first are slightly higher than getting to 80-84, as the short term and long-term trends are bullish, while the medium-term trend is neutral. Of course, it wouldn’t be surprising if it gets to 80-84 to bottom and then go to 112-120 if things get very volatile with Central banks and especially the Fed taking a lot of actions. In case it goes above 105, then the Fed, the US government and other Central banks will seriously have to think of a way to devalue the USD or there is a risk the global economy will face extreme problems. Despite the fact that these problems could be somewhat preventable, taking any sort of action now will probably have a huge political cost. Everyone wants a weaker dollar as most people owe dollars, not own them. The world is short on dollars, banks in and out of the US aren’t really creating many new dollars, the Fed isn’t creating dollars and yet more and more people rely on the dollar as a store of value or as a medium of exchange. Eventually the world needs to get off the ‘dollar standard’, though this is more likely to happen when push comes to shove. Governments and Central banks will eventually find a way to devalue to the dollar and transition to a new system, but they aren’t ready yet and this is more likely to happen after we get another major financial crisis.
TVC:US02Y
by BitcoinMacro
BTC and SPX correlation to US 10 year - 2 year spreadThe hypothesis is that since 2018 BTC has behaved like a high beta equity. As monetary conditions tighten (yield curve flattens between 2 year and 10 year treasuries), investors move away from risky assets like BTC. When the yield curve moves towards inversion the market's appetite for BTC decreases significantly. Market participants may recall the many times in the past when yield curve inversions have correlated with recessions around 18 to 22 months after the inversion.
BITSTAMP:BTCUSD
by clarenceleezt
UPDATE: USDJPY Long PositionFundamentals : See previous updates.... Technicals : The price moved from bottom to top of the band in what appears to also be a break out and a retracement to support. On top of this, we can see that a chart of US bond yields, which predict the direction of the USD, remain supportive of the USD going forward. Therefore, buying dips on USDJPY. For several other reasons, I prefer UJ first to tackle the benefits of a strong USD in the coming weeks until March 2022. My stop on USDJPY us 113. Targets@ 116.33 and 117.85 or 121. Positive MACD Stronger RSI Pullback to support after a double bottom Fibs Horizontal support Pitchfork support Daily View: 8 hour view: 8 Hour view scrunched out: 1 Hour Chart view:
Long
by Rocketman
BTC: The Big Short 2022 📉🐻When people live on hopium they detach from reality and refuse to look at the bigger picture Analysis paralysis is an inability to make a decision due to over-thinking It’s usually accompanied with an overall sentiment of wishful thinking in the financial markets This translates to extreme fear and greed, the more fearful or greedy investors are, the harder it gets to predict the next market move. This is especially true when markets are at new all time highs or lows. You guessed it, current market readings are overbought, everyone is greedy and wants in, and prices are at new ATH Sooner or later this leads to one end… and it’s much simpler and uglier than you think Crypto first, others follow Crypto markets has relatively proven to be test grounds for conventional stock markets , as almost every major crypto crash is followed shortly by a stock market crash I strongly believe we’re on the verge of a recession at the very least, others might even call it a depression My view depicts an imminent bitcoin & crypto market crash, followed by a stock market crash initiating a long-term bear market and a chain reaction of global recession Without further ado, let’s dive in! The Technicals Yield Curve The yield curve shows the relationship between short-term & long-term interest rates of U.S. Treasury notes Usually, the longer the duration, the higher the interest rate, but when the rates draw closer to one another, the yield curve flattens. An inversion of the curve is typically seen as a warning signal for the market Long story short, The yield curve has flattened recently, with long-dated bonds nearing their lowest point for a year Last time this happened in 2018 bitcoin crashed hard! Consumer Price Index (U.S.) CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services in the U.S. Pre 2008 recession, the CPI was at an all time high of 5.6%, currently it’s at an ATH of 6.8% Money Stock You can’t print money forever! Scarcity is the definition of value. If everyone have it, why would they want it? In fact, this is why economies plunge and currencies become worthless just like in Venezuela and Lebanon Quantitative easing (QE) is a monetary policy whereby a central bank purchases predetermined amounts of government bonds or other financial assets in order to inject money into the economy to expand economic activity This fancy term simply translates to creating more money whether physically or digitally out of thin air! The Federal Reserve has printed unprecedented amounts of money to support the coronavirus-stricken economy Data from the Fed shows that a broad measure of the stock of dollars, known as M2, rose from $15.4 trillion at the start of 2020 to $21.18 trillion in December 2021. The increase of $5.78 trillion equates to 27.28% per cent of the total supply of dollars. It means more than one in four dollars was created in 2020 and 2021 ! U.S. Dollar Strength U.S. Dollar Index (DXY) represents the value of the United States dollar relative to a basket of foreign currencies, most significant of which is the Euro, accounting for 57.6% of the basket As of this writing, the DXY has failed twice to break historic resistance level of Fib 0.618 around 100 and unless it’s able to break it this time (which i doubt considering the over-bought RSI) it’s expected to pull back to previous support of 80 at least, if not retest ATL of 70 The EUR on the other hand is expected to rise as a hedge against the USD Bitcoin Technical Analysis: Overview Looking at the weekly and monthly time frames, you can clearly see ~$70k price rejected twice with a double top, zoom out a little and a head & shoulders pattern is half complete with a declining volume, an over-bought RSI, a bearish MACD, and a widening BB. Price action Scenarios Best case scenario is we climb up one more leg to hit the last Fib 4.236 retracement from 2017’s ATH to 2018’s ATL at around $73.5k-$74k (depending on the exchange) The only way we can have another bull-run continuation is if we manage to break-out and close weekly above $74k Average case scenario is an H&S right shoulder at $53k, if we manage to break-up, it could be a bull trap retest to $58k-$60k Worst case is we just keep dumping to retest previous key support levels at $42k, $36k, and $30k which is the neckline of the double top If we can’t hold $30k then it’s downhill from there to $20k, $16k, $13.5k, $11.5k, and lastly $9.5k which could be the last time ever for BTC hitting 4 digits again, as $20k will be the new support This has confluence with the intersection of 0.5 pitchfork (19850-3217-64802) and 0.5 pitchfork (64802-28149-68974) and Fib 0.382 (19850-3159) at $9534 which makes sense when viewed on a log-scale chart on the 1W frame, you can clearly see a strong support zone there. BTC Dominance The inverse correlation between BTC price and its market dominance means that when BTC is at ATH, BTC.D is at ATL This is exactly the case right now where BTC.D is currently at 40.5% and seems en route to retest previous support at 37.5% thus forming a huge double bottom ready to bounce back up strongly ----------- Stay Safe, Don’t lose your money, It’ll be painful for the unprepared See you on the other side, inch-Allah Godspeed ----------- You can read more here: I predicted the 2018 bitcoin crash... It's time to sell 📉 DISCLAIMER: Not Financial Advice! Please trade at your own risk.
Short
by TannerJ
5
Let the US yield curve guide - viewing the 2s v 5s UST curveAs we approach a world where the Fed look set to hike in March, with 3.4 hikes priced by Dec 2022- we are also now hearing an open discussion around allowing maturing securities on its $8.8t balance sheet to run off (QT) -so, it's worth going back to the Dec FOMC minutes for real insight. With the market having had time to pour over the wording, it feels clear that the key paragraph is the one highlighted on the chart - with the Fed saying that history has not been so kind when hiking into a flatter curve. This suggests that if the curve does head towards inversion - and I've chosen the 2s v 5s - then the Fed will do its utmost to counter that - this suggests: 1) the Fed desire a steeper yield curve 2) will favour QT/ balance sheet run-off if we see a flattening curve In the situation of continued high inflation, wage pressures and full employment, the Fed now have maximum optionality, but to counter the impact of higher fed funds on demand, utilising its balance sheet could be the key focus over hikes. So our central guide on the Fed's thinking will be the yield curve...and judging by the FOMC minutes if this is flattening and headed towards inversion, the lessons of 1986, 1988, 1999, and clearly 2006 are our case study by which we can wok with. So if the curve steepens and heads to 1%, the Fed will be compelled to hike concurrently with BS run off... but should if flatten then rate hikes will be priced out - This should offer excellent trading opportunities to go long US 2year Treasuries, and US rates (fed fund and ED futures) and may weigh on USDJPY initially before the market puts more weight on future relative balance sheet differentials. Gold should rally on a flatter curve. CW
TVC:US05Y
by Pepperstone
1
Descending Triangle in Bank of AmericaBank of America attempted a breakout in October, but some newer patterns suggest a potential change of direction. Notice the series of lower highs since December 1 as BAC tries to hold roughly $43.60. That’s a potential bearish triangle. Interestingly, the support line is near the June high of $43.49. Second, most of the candlesticks recently have been solid, meaning that highs have been sold. Third, price has gotten trapped under the 50-day simple moving average (SMA). The 8-day exponential moving average (EMA) is also under the 21-day EMA. Next, MACD has been steadily falling since early last month. Switching to the weekly chart, BAC just formed an inside candle. That kind of compressed price action may suggest volatility is getting ready to expand. Finally, the macro backdrop may be more difficult for the company because the Federal Reserve’s tighter policy is flattening the yield curve. TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more. Important Information TradingView is not affiliated with TradeStation Securities Inc. or its affiliates. TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means. This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates. Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com .
NYSE:BAC
by TradeStation
Fade the rally in yields: What is the bond market telling us?We stand at a crossroad. First, market conditions mirror the global economy in 2018. Back then, the FED was getting to raising rates when the Eurodollar curve inverted. Flattening US bond rates too indicated that economic growth in 2019-2020 would would slow. Now, the FED is expected to be aggressive on asset purchases taper in next week's meeting. Three rate hikes have been priced in the markets with the first rate hike in May 2022. A ghost from the past - inverted Eurodollars & flattening US bond yields - is back to haunt the markets. This implies growth is expected to slow down at least during the next two years. It is important to notice the bounce in US yields should be used to fade out of equity positions in the recent rally and into bond positions across the curve. Buy long-term, sell short-term durations. Bond volatility has soared I think the past two weeks indicating that something heavy is brewing under the surface.
TVC:US10YShort
by GrizzlyBearBee
3
Bond market volatility rocks the EuroData released Thursday showed that U.S. GDP growth slowed sharply to a 2% annualized rate in the third quarter. Meanwhile, investors continued to price in rate increases by the European Central Bank, while dismissing President Christine Lagarde’s effort to push back against such expectations. Market expectations of higher interest rates has brought out bears, with Danske Bank strategists expecting the euro to fall to $1.10 over the next 12 months.
Short
by GrizzlyBearBee
Bank of America: Old Highs in Play?Bank of America is jumping to new 14-year highs after a strong quarterly report. This raises an important question: Will the megabank now return to its previous all-time highs from before the subprime crisis? BAC peaked at $55.08 in November 2006. It inched lower over most of the following year, before the selling cascade hit. Prices hit a nadir of $2.53 in February 2009. They’ve gradually staggered higher since. A key moment occurred in March 2020, when BAC held the 2014 and 2015 high of $18. Since then it’s been a steady recovery. The stock was back over $40 by June. BAC then started a consolidation phase with a low above $38 in mid-June. There was a dip toward $36.50 in July and another stab toward $38 last month. The result was an inverse head and shoulders / high basing pattern. BAC flew back from those lows along with the SPDR Financial ETF (also forming an outside week). It made a new 52-week high before easing back to test the August peak of $42.84. Then came a strong earnings report, with healthy loan growth, and BAC was hitting new highs above $45. (It also formed another outside week.) The stock continues on that trajectory today, with no clear resistance on the chart. Given the steepening yield curve and ongoing economic recovery, BAC may continue its move. TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
NYSE:BACLong
by TradeStation
1
What is your opinion of the current and upcoming trend for BTC?Here you can see I am a slow and patient bear who ate his oatmeal and slept away Q4 & Q1 For all the stores were bear as well, So I bought moar oatmeal. DXY looks like oatmeal Not that I know anything ser's........ I like oatmeal Me can only buy me oatmeal with DXY Not really feeling like explaining this........I'm sure me shall be shamed for loving me oatmeal moar than me bloatmeal. BTC Earth Or Moon? Leave a Comment Below
BNC:BLXShort
by ILL_Midas
1
Bitcoin: Yield curve will give the future directionThe yield curve, calculated as the difference between 10-year and 2-year treasury yield, is a great indicator to watch to figure out Bitcoin's direction. When the yield curve steepens, it means economic growth and inflation and when it flattens, it means the reverse. Inflation was not a concern until last year after central banks across the world coordinated the biggest monterary policy response during the COVID-19 pandemic. Because of its inflation-protection properties, Bitcoin has been trading with high correlation to the yield curve since then. Sometimes that yield curve leads Bitcoin by at least a couple hours so it's worth looking at. The yield curve seems to have finish a triangle and is about to exit any time, it's a 50-50 in either direction. What's important is to react accordingly on breakout as it will guide the future direction for the next couple weeks.
TVC:US10Y
by quantmaven
5
Bond Curve - Long End where Fiscal Funding is FundedThe Dollar has very large Trendline support as well as the 50SMA. The pressure this exerts can be extreme. The rising trend indicates the potential for an extreme move in the Rate of Change (ROC) once again. The move will be very strong as 2 events are in play: 1. DX Hoarding 2. Net Drains @ FED and US Treasury * Of Note, the future of stimulus was made clear this week as California announced their intent to provide Universal Basic Income at a flat rate of $1000/per person. YCC remains active ahead of the September Federal Reserve Policy Statement. Frankly, a non-event imho. Since the end of March 2021, the 10Yr has dropped from 1.74. The question being asked - What is the Bond Market indicating? Answer - the FED smacked their noses for attempting to call them out on their endless BS.
CBOT:ZB1!Short
by HK_L61
6
10-year Gilts 1-day classic patternsQ: What has the highest probability of occurring? Since early July there have been 4 tests of 132.000 resistance. There is a combination of 2 classic patterns forming at resistance. The double top, where both tops have been rejected at 132.000, is currently valid. The head and shoulders, the head consisting of the double top, would need to break the neckline ~129.750 to become valid. Both patterns equally project 128.250 as the target. Objectively looking at the entire base beginning around the high volume bar in February it is curve-like. Looking to the weekly timeframe it is quite possible this is the formation of a cup with the handle to follow. So there is some conflict in this area which can lead to a large number of market participants getting it wrong and as a consequence more momentum. It is quite probable that market participants have already shorted the double top breakout. Waiting for the head and shoulders to confirm with an ~129.750 neckline breakout before entry is advantageous. Stop placement above what appears to be a right shoulder at ~130.750 yields a 1.5R target. It would also be beneficial to visualise the 1-week handle as a means of guarding against the 1-day head and shoulder pattern failure.
UShort
by xciiitradingco
1
#DJI: DJIA leading the charge?We have an interesting situation, at least for the following 6 weeks...After the jobs report, the market is repricing the timing of tapering and eventual rate hikes it would seem. Financials had underperformed for some time, and $QQQ and $SPY moved higher thanks to growth names regaining strength, while bond yields were falling and a big unwind of losing yield curve steepener bets were unwinding. I had pointed out the strength in growth and bonds before, and rotated away from value and financials/energy when I figured out the reflation move had ran its course. At least financials are prone to do very well for the next few weeks, as the weekly uptrend in $TLT expired, and predicts a 6 week sideways or down move in bonds, which is connected to mean reversion following a furious move caused partially by the unwinding of big yield curve bets. News of the hedge fund that took the hit were recently published, which made me think the move in the yield curve is overdone and bound to mean revert. This will favor US banks for some time again. We also observe this behavior in the $DJI chart here, and the $SPY and $QQQ weekly charts. Both $SPY and $QQQ have weekly trends that expire in the next 2 weeks, which can lead to a sideways or downside move after the last short term upswing takes a breather. I'm still bullish longer term overall, in names like $AAPL, $TSLA and $NVDA to name a few, but they might correct or consolidate in two weeks, while US Banks soar. The trend will likely go back to lower bond yields and outperformance of growth later on, but for now it is the time of the $DJI to shine over $SPY and $QQQ, specially in 2 weeks from now. Cheers, Ivan Labrie.
TVC:DJILong
by IvanLabrie
2
US Treasury Yield Curve and Inversions.This chart shows three times during the past three decades in which the yield curve inverts. An inversion is when the rate of a shorter term debt security is higher than the rate of a longer term debt security. This is identified on this chart in 2000, 2006, 2019. Treasury Debt Securities: Bill; less than one year to maturity at issue. Note; greater than one year but less than 10 years to maturity at issue. Bond; greater than 10 years to maturity at issue. In 2000 the yield of the 3 month US Treasury Bill was about 6.3% while the yields of both the 5 year Note and 30 year Bond were around 5.8%. In 2006 the yield of the 3 month US Treasury Bill was about 5.1% while the yields of both the 5 year Note and 30 year Bond were around 4.9%. In 2019 the yield of the 3 month US Treasury Bill was about 2.3% while the yield of the 2 year Note was around 1.8%.
TVC:US30YEducation
by ThrivingProject
1