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ZN - 10 Year Note Futures / Monthly @ 20 Yrs / The Abyss of DEBTIt is often said by Quantity Theorists echoing, Milton Friedman - "Inflation is always and everywhere a monetary phenomenon.” Conditions... matter, they change as does the "moneyness of money" - but you can't keep the Chicago School of Economic mind poisoning down. That could be why I didn't play with academia, it is a toxic sandbox wed to a beach at times. Polluting the incoming tides. Friedman could not have imagined how awry his QT has been turned on its collective head. Gold Bugs to this day, quote this - scores of times every single day. "Were Gold Priced in DEBT it would be $250,000+" No one cares, least of all Central Banks who Demonetized it but made it legal to own under Nixon. You all swap fungibles for... Silver? A Weimar home? Taco Bell? Good luck, it's a Tier 1 asset on the Books of Central Banks for a reason and trades at a varying rate as it always has. Q of M clearly isn't tied to it and it's not chasing away Good Money for Bad any longer... those storied days passed very long ago. _____________________________________________________________________________________________________________ Money loses its purchasing power parity in a number of ways - not simply through more money chasing goods and services, this is merely one-sided - "ceteris para bis" Jedi Mind Fuck at its finest. Causation is always assumed from the money supply increase to price rises...a very basic truth, but ONLY a precondition and not a fate acompli. ____________________________________________________________________________________________________________ The Fundamental causes of a general price inflation are still supply-side factors - for example, rises in wages or prices of factor input costs - which we see in the PMI data - to date not fully passed onto Consumes due to Supply-Side Shocks ) or demand-side ones - high demand causing price increases in markets. The fatal flaw is QMT assumes an exogenous money world and the wrong direction of causality. The contraction in Broad Money with a Credit Money System aka Bank Money is destroyed as people move to acquire CASH money or what is perceived to be a CASH Equivalent. _____________________________________________________________________________________________________________ Simply Put: Aged Theory is flawed beyond. Supply Side Cocktails and the Ingredients of the CREDIT MONEY Elixirs are quite different than in 1963 Uncle Milty. ______________________________________________________________________________________________________________ Speaking of Credit (DEBT MONEY if you can al it that) the BOE recently raised rates. China, faced with new lockdowns surrounding the - Credit Squeeze (TY to Shevchenko for the prod to dig in and determine WTF) . Turns out 6 property developers including the "Grande" have deferred wages the CCP now says must be paid by the start of the Lunar New Year, oh and... yer gonna need to pay $21.37 Billion in Bonds or default. Sounds bad huh? Not remotely... Back wages amount to $174.38 Billion, can't pay 'em? Lock 'em down, which is precisely what the CCP is setting up to avoid immense Social upheaval. ______________________________________________________________________________________________________________ Are we seeing a trend appear? We are indeed. Debt Defaults have been propped by Governments to stave off tragic Social disruptions. Hardly a footstep in the direction of Trust for Journey of 1,000 miles to default. S'ok China, yer not alone, we proudly stand with you, although we've been at tit longer on this turn, so we're just better at wallpapering over it with Currency Seniorage. Yaun / Renminbi - only one works inside and one outside. Hmmm... That could not possibly happen here in the US of A, could it? Naw. _____________________________________________________________________________________________________________ When you destroy the Moneyness of Money with it goes all attendant prior theory as well as the very thing used to bring Money into Circulation @ Tier One - The BOND MARKETS. Fractional Reserve Banking merely extends it to obscene levels of Leverage and DEBT which are far beyond repayment. Toss in the 6% Vig the FED takes for this privilege and after a hundred or so years, they end up owning everything. They are, after all, the lender of last resort, the DTC merely the record keeper for when the payments halt and DEBT becomes unserviceable. What are your opportunity costs to Debt? What do you value? Forget Price it's no longer a metric for the sane, merely a distended and starved stomach. _____________________________________________________________________________________________________________ Moral: When Risks are ignored, they are mispriced...
CBOT:ZN1!
by HK_L61
7
TNX - The Event we've been waiting for since July We have repeatedly indicated the "Everything Must Go Sale" would begin once we saw 10 Year Note Yields Cross 1.645 and then move beyond 1.71 to 1.76 and onto 2.12% All asset Classes being sold is NOT something the Majority of Investors remotely understand or believe it possible. Preferring Correlations and Inverse Correlations to remain the Norm. It isn't and the September Sell-off appears to have been forgotten. Not surprising, memories are short, convictions are strong. Price does not care what you "believe" - rather it demonstrates the convictions of your beliefs. Belief in the 11X Bond Complex... remains at all-time highs. Return of depreciating Captial is favored to Equities which continue to be the perceived Inflation Hedge. The circular Logic is a complete Sh_t Mix of Mass Delusions as participants will discover one the Next Great Unwind begins. Everyone losses a hand. _______________________________________________________________ With last week's one Day Wonder spiking @ nearly 10% while the DX began to move over 95... RCO's are again heating up. _______________________________________________________________ We indicated the Infrastructure Bill would end up @ $1 Trillion after all the non-sense - Ultimately it was the FEDs handlers who reduced the increased threat of a Bond Market Accident. Suggesting DC piddle into a far less Aggressive Final number, Rates were tamed down, preventing an even larger protest from the 007s. Monday, President Biden signs into Law - $ 1 Trillion Infrastructure Bill. AKA - another Giveaway to Insiders. _______________________________________________________________ How much time does this Buy for the Equity Complex, we shall see. It will become yet another nail in Confidence Coffin as Inflation continues to Beat Expectations. _______________________________________________________________ Q4 begins to see squaring of Position for yeat end begin into December. With Notional Bets to a Strong finish to 2021 for appearance's sake, there IS something out there... that will blindside the markets. _______________________________________________________________ The 30 Year Auctions Failure... did not go unnoticed.
TVC:TNX
by HK_L61
4
Bonds Establish ValueBonds have dipped but have found support at the levels we identified yesterday. ZN retraced from relative highs at 131'02 to 130'19. It has since rebounded and is currently testing 130'26. The Kovach OBV was quite strong, but has dipped with the retracement. We appear to be forming value between 130'19 and 131'02. If this is the case, then expect further support at 130'19 and resistance at 131'02. Beware of the vacuum zone below to 130'07. The next target above is 131'12.
CBOT:ZN1!Long
by quantguy
1
10 Year Note Yield - 2%+ AheadPCE Data Friday rose to a 30 Year High for August 2021. Record levels at a year over year scale - with the FED remarking "Inflation remains frustratingly high". The Prior peak in 10 Year Note Yields provided the bottom for the ES (SPY, SPX, S&P500) @ 1.765. Yields have formed a Bull Flag in which Price should begin to Chop and complete for the Breakout of the pattern. Price objectives above are the prior highs @ 1.765 followed by an extension to 2.12 - 2.25%. This level should provide the lows for the Indices, they may well reach their Objective lows on the Break of 2% with the final push lower between 200 & 400SMAs. Patience will provide entry for the Final Long - 5/5 on the larger Daily TF. Bonds are simply pricing in - "Inflation" as we indicated would arrive in September/October. US Debt is seeing a broadening of concerns among Market Participants while Inflation begins to wreak havoc on Consumers. Supply shortages will continue for the foreseeable future, ultimately the shortages will create a large waterfall decline in 2022 of 50-70% as a complete loss of confidence in Arrangements concludes. Wall Street will seek entry for the next SELL as the 10Yr Note Yield pullback and ranges within the Bull Flag for Yields. * The Equity Markets remain a "Funding Mechanism" until they are not. 5/5 will be a large move for 2022 off the approaching Lows.
TVC:US10YShort
by HK_L61
8
NQ - ES YM RTY ZN TLT / Final Commentary - 10/7/2021 Macro Observations As the Global Economy continues to weaken, DEBT is beginning to weigh heavily on the same. Inflations have many Vectors - Monetary, Fiscal, and Confidence. Throughout the history of the United States, the "Debt Ceiling" has always been a Glass Roof. At present, decades of abuse since the 1980s have come home to roost. The result of multiple stimulus measures aimed at combating the pandemic's economic impact... Congress will run a budgetary shortfall this year equivalent to 13.4% of GDP or approximately $3.1 Trillion. It is axiomatic, Fiscal and Monetary Policies have failed. The crisis will continue to worsen over the coming years, 2022 it will reach its zenith and fail in the most unimaginable ways. Confidence is nearing all-time lows. A Panic is in the air within the "Investing Complex" - it has just begun for Retail Investors. Buy the Dip, the FED has a Put under the Equities Markets is slowly, ever so slowly giving way to the recognition, All is not at all well. The "Everything Must Go Sale" is gaining momentum. And by "everything" - we, indeed, mean everything for reasons which have been discussed repeatedly here within this sliver of TV. The Boat will tip, list, and capsize into 2022, for now, a healthy correction is ahead as indicated. Higher rates are axiomatic, the Federal Reserve will begin to move further into the Shadows with its Operations. Dark Pools will continue to position into the Sell. It won't be The End, it will, however, "feel" like it. There will be one last high to put bring an end to the Longest Bull Market in History. That will be THE END. For now, Buckle up, the Sportiness is ON. ______________________________________________________________________________________ NQ ES YM RTY ZN TLT The Nasdaq chart above illustrates the larger Daily Price Objective. How it gets there will be quick and dirty, a rather nasty affair as reality sets in, takes hold and dumps the sordid mess on its collective head. Whether or not there is a consolidation zone prior to the large DUMP, will depend upon Distribution patterns and the Budget news cycle as well as the middle of the UST Curve, namely the 10 Year Note. It is not a no-mans land, but the very inflection point on the Yield Curve. It is overdue, for reasons we have covered repeatedly. Over and over and over to the point, they no longer bare repeating. Simply review the past several months of commentary to EDU yourself. We have grown wary of rehashing our Thesis. It has been proven correct and is now in Trade. It takes time to form a top, it is a process until it becomes an event. The Technical Conditions have been growing increasingly weak for several months. 3x and 4x Divergences have been building on Larger timeframes and are now beginning to assert themselves. It will remain choppy to Down and as October unfolds, the larger Sell will arrive. The ES & YM will follow the NQ, the YM will remain the Laggard as will RTY until rotational failure will occur. It is best to observe the Weekly and Monthly TF's there for levels. We believe the 200SMAs, as well, the 400SMAs come into play in October, no later than November. One fairly significant cleansing of Speculative Juices among the Retail Investing Herd. ZN & TLT, again, for reasons we have covered repeatedly are in a confirmed SELL. We believe the 10 Year Note Yield will see new highs, the ROCs we noted are gaining immense traction. An explosive move higher is unfolding. 139s will print on TLT, ZN could dive well into the 120s. Debt Obligations will demand higher rates at a time when the DEBT edifice itself is going to be difficult to string together. Pushing on a string comes to mind. Conventional Correlations are DOA, insisting they are functioning is simply ignoring reality. Yesterday is today shall be tomorrow... best of luck to you in this Dogma. Lagarde and Powell both speak this morning, furthering the All Digital agenda. We will be absent for a number of trading Sessions as we relocate our arrangements over the coming days. Hopefully, to return no later than October 7th. Be well - HK
CME_MINI:NQ1!Short
by HK_L61
23
ZN - JPY/DXY - Trouble in AsiaWith DX Strength coming from the JPY Pair... The Red Swan continues to build from our months long indicated Vector - China. The CCP announced they will only bail out Domestics. ETF Passives hold, indirectly, a far larger stake in China's Economy then is openly acknowledged. Never has the South China Sea - been this active militarily. TSML... in questions as to how that evolves. The 6e is weak, very weak. It has yet to break the .382s on RTs. FX dislocations, as indicated - are here. 8 AM EST will set the tone trade for the Longer End of the Bond Curve. ZB has been far more reliable in providing indications as to how Participants are positioning. The Flight to Bond Safety is coming into question again as Bond Holders are challenging the FED's narrative: "There is no Inflation IF we remove it from our Models" Genius Jerome, there are some statements during the press conference... He should simply give up on these PR stunts. They have become a complete and total F A R C E
CBOT:ZN1!
by HK_L61
3