75 basis points predicted movepeople are predicting a 75 basis points move yet we need something like 150 lol
US02Y trade ideas
Waiting for a 2 -year -old treasury increaseTreasury returns are also expected to increase as the Federal Reserve aggressive rates continue and we are close to a 16 -year peak.
US02Y : The bond market agreesNow this is something interesting. The BOND market seems to accept the slowing down in Fed Rate Hikes by 25bps.
What was previously accepted as per 09/2022 dot plot was 75bps in 11/2022 + 50bps in 12/2022 for a total of 125bps to bring the FRR to 4.50% is now cut SHORT by 25bps. Instead of 4.50%, we may now expect 4.25% by end 2022, which is where it is now hovering.
If the dot plot can get superseded within a month, anything can happen.
Even the FFR Futures seems to be expecting LOWER FFR by the day.
www.investing.com
So the question that remain is ONE, which takes precedent, INFLATION or GDP?
By the way, yesterday, the 10y/03m just got inverted. It seems that a PIVOT may be near. Lets also see if US02Y will FALL below 50MA. This is also another indication a PIVOT may happen.
Yesterday's GDP =2.60% was good news for Dollar but just that it was made up of EXPORT which is clearly not sustainable/real.
Trading the EURUSD just hot harder!!!
Good luck.
P/S : As always, do not just believe what I say. Use your common sense.
2YR Bond Yield Reversal It looks like the 2YR yield is looking to do a reversal. If so that would sustain the rally in stocks. Have to see if it is confirmed on the daily. It looked like a reversal before and then blasted higher.
What happened and what will happen NEXTOK, as you can see, I got to minimize my screen size so that I can fit in the INFLATION line which is way up there ........... lol.
If you have been following the MOVE index, you can see that it was above 150 and notwithstanding the 'leak' by the Fed of 'slowing down the pace' of future rate hikes. Above 150 means the Fed had lost control, hence the need to come out with a statement to calm things down. In the words of its creator, The MOVE at 150 infers interest rate changes of about 9.5bps per day, a volatility that is unsustainable if only because human beings cannot tolerate such stress for long periods of time.
In short, THE BOND MARKET IS IN TROUBLE.
And would you believe that if the Fed were to slow down the pace of rate hikes or even cutting rates will drive down bond yield??? Do not forget there is HIGH INFLATION. If inflation stays high at 8%, who would want to buy FIXED INCOME INVESTMENT aka BONDS. Unless of course the yield is HIGH. If the market perceive that the Fed can't bring down inflation fast enough, would they want to hold on to their bonds? I think the answer is simple.
At the moment, US02Y is sitting around 4.50%. This means the market is still anticipating 75bps and 50bps respectively in 11/2022 and 12/2022.
It was actually above 4.60% just before the news from the Fed got out. It seems that the market is actually looking beyond 4.60%. Also critical was US10Y went above 4.25%.
I would say that US02Y would now be largely driven by INFLATION rather than the FFR. If inflation can't be controlled, it will only go UP.
But I would keep an eye on it in case it falls below 4.40%. This will impact EURUSD. Taking a break from trading is wise until things get clearer.
Good luck.
P/S : As always, do not just believe what I say. Use your common sense.
WOULD WANT TO BUY THE SP500 OR SLEEP AT NIGHT I know most do not like to talk about the 800 lb Gorilla in the room > I said 8% inflation - 6 % tbill on 2 year paper = 2 % inflation . know you see why I said that see 2 yr paper 1980 1982 of what the market and the bond market did . For a clear view see professor WILE E COYOTE and the housing bubble paper
Will 2 yr Yields run to the 1.618?4.791% looks like may be the target of this impulse.
Typically when yields are bullish, Nasdaq/Tech has been bearish.
I am monitoring this level for reversal.
Good Luck
US02Y - DMI & DPO Analysis - Possible bear divergenceThis chart is shareable. This is purely a technical analysis perspective.
Seems the bulls are throttling back their buys. Worth watching.
So I'm neutral here
Use alerts on trend lines and let tradingview work for you!
No need to stare at the charts this way.
2 year yield 5% HANDLE EASYSo we have not had that moment I like to call OMG PUKE please make it stop . But I think the 5 handle would do it
Bearish Divergence on 2 year yieldsBoy do we ever need the 2 year to chill for a bit. MAYBE this is a signal that we are in for a little bit of a rest. US02Y
Where we are now and how much more to goFolks,
It has been a hectic week and I hope a profitable one for those who follow VP + Demand Supply instead of #$%^&**(())!@.
Next Thursday is going to see some BIG moves when the 09/2022 CPI is release.
Let us take a step back and have a look at the overall picture.
Just look at the inflation number and appreciate how HIGH it is. The EFFR is not even halfway there. Looks like there will still be a lot of rate hikes to go before the EFFR meet up with the CPI, probably somewhere around 5.50%. Perhaps then, can inflation be beaten. In the meantime, DJI/SPX/NDX are still clinging on to the SUPPORT zone, hoping things would turn around. But I guess they would be disappointed. There is a BIG chance the US02Y would punch through 4.40 - 4.60% next week. That would be a confirmation that rates will move higher.
Have a wonderful weekend.
P/S : As always, do not just believe what I say. Use your common sense.
2Yr Yield Set to Break HigherUS2yr yield looks like it was just having a temporary retrace before blasting higher. Looks set to break out which will be bearish for stonks.
What happened and what will happen NEXTFolks,
It has been a busy time. It seems FEAR had taken hold and GREED had to take a back seat for the time being. Russia announcement of mobilization moments before FOMC seems to have caused great anxiety. I failed to anticipate the speed of the fall in EURUSD.
As we all know now, the 'increase' in the 09/2022 dot plot is 'smaller' at 1.00%. Market is anticipating another 75bps in 11/2022 and a final 50bps in 12/2022. Probably another 25bps early in 2023. As you can see, we are actually there NOW, near 4.40%. Whatever it is, it seems the US02Y movement UP is taking a breather now. At least some sanity remains. We are now at the crossroad. Now all eyes is on whether it moves UP beyond 4.40%. It if does, we can expect EVERYTHING ELSE to continue FALLING - Stocks, Crypto, FX, Gold etc. The only thing to rise is $$$$$.
There is a REAL risk of a GLOBAL RECESSION coming. Dollar would do well until the Fed Pivot. So we continue to look at US02Y to see if it dips below 50MA.
Good Luck.
P/S : As always, do not just believe what I say. Use your common sense.
The yield curve has inverted, how to overcome this?Content:
• Difference between interest rate and yield?
• Why it is important to note of yield curve inversion?
• How to tell when Yields are inverted?
• What is the long-term trend for interest rates and yields
• How to manage a rising yield?
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.
1. Difference between interest rate and yield?
i. Interest rates are a benchmark for borrowers and
ii. Yields are for lenders. For eg. investors to the U.S. government
iii. Both interest rates and yields move in tandem together
3. Why is it important to note yield inversion?
i. For eg. - when the return on a 30-years yield is lower than the 2-year yield, that indicates a
ii. For lenders or investors – a pessimistic outlook, a reluctance to commit their money to the longer-term bond, they prefer short-term deposits as the market is unclear in the long-term.
iii. For borrowers – most individuals or companies have shorter-term borrowing, for eg a 2 years fixed rate or a bridging loan. When the yields are inverted, suddenly they find them paying more on interest rates repayment.
Since interest rates and yields move in tandem, expect the shorter-term lending rates to go higher. This will hurt companies and individuals who have higher leverage items on their books.
If you are into shorter-term trading, do look into the market with live feed data.
I am starting an inflation series, in the next video tutorial, we will discuss why inflation is happening not just in U.S. but all around the world.
Micro 10 Years Yield Futures
0.001 = US$1
3.488 = 3488 x US$1 = US$3,488
3188 to 3488 = 300 x US$1 = US$300
Peak in Interest-Rates this Week for a while?after tomorrows rate-hike of FED, ... won't there be any further hikes this year? (Midterms)
2Y into resistanceNote old monthly support is around this level. Will it glide right through or bounce around and even pull back?
2y into resistanceExpecting some turbulence or even a pullback here as the 2y pushes up into old monthly support.
US02Y at crucial level TVC:US10Y is currently at strong resistance line after it broke the 35 years old downward channel.
Breaking the resistance line may be taken as indicator of accelerated sell off in stocks.
2 Year Treasury Bond Yield vs FED Funds RateThis post is intended to show the current gap between the market for the 2 year US treasury yield on bonds and the official funds rate, and why the market is forcing central banks hands into raising interest rates when the market is in such a fragile state in ability to support and maintain debt at heighten interest rate levels.
Simply put, bond market are crashing (i.e. no one wants to hold onto treasure bonds at present because they are yielding very little / people are losing faith in governments ability to uphold their debt obligations / competition in the market for credit is rising etc. etc). All these factors play into buying selling behavior and is repriced in the market.
As a bond or lone has a fixed bond or repayment structure ($amount), if the capital price the bond changes hand in the secondary market is lowered, the effective yield from the bond goes up. For example if a bond is made for $10,000 and requires a 10% interest rate (i.e. $1,000) per specified period, then if this loan / contract / bond (same thinking) is changed hands in the secondary market and sold for $5,000, the new own still receivers the conditions of the prior arrangement. Hence $1000 per period. As the price was $5,000, then the interest or Yield on that bond is now 20% (i.e. $1000 / $5000 x100 = 20%).
As new credit is competing against the secondary market (i.e. you could loan your money out to a new loan or you could buy an existing loan (Bond) on the secondary market), this is how the bond market drives interest rates.
Complicated but hope this makes sense.
in summary, falling bond prices cases rising yields or interest rates. Raising bond prices causes lower interest rates.
Central Banks play in this market as a market participant with an unlimited check book (this is how new base currency or M1 enters the market ( QE - Quantitative Easing) or is removed from the currency supply (QT - Quantitative Tightening ).
If Central Banks want interest rates to rise, they flood the market with bonds, dropping the market prices with excess supply and causing yields to rise. If they want interest rates to drop, they soak up supply in the market of bonds, causing prices to rice and yields (interest rates to drop).
This process is called 'Open Market Manipulation'. AKA planned market manipulation at it's best.
www.federalreserve.gov
The 'official funds rate' is just a forecast which shows how the Central Bank plans to manipulate the bond market until it's next meeting.
Interest rates on loans / bonds etc should be viewed as a measure of risk of default. High interest rates reflect the reward on offer for lending your currency out and the risk you will not get it back.
In short, Market conditions (such as inflation ) changes investors view on risk. When Central Bank manipulation of the bond market goes our of whack with the risk to lending in the market, we see large gaps between the yield curves on bonds between the official funds rates issued by the Central Bank .
This gap is clearly shown this chart, comparing the 2 year yield against the Official FED Funds rate (the interest rate you hear about on the TV).
History shows the 2 year is a good leading indicator on what Central Banks will do with interest rates.
Make no mistake, the market and inflation is forcing Central Banks to raise interest rates.
I very much question the robustness of 'the economy' to handle higher interest rates at present.
US02Y has the same trend as 2007-08 EraI don't like on what I am seeing the US10Y and US02Y right now. on a daily range, it seems like the bond going up non-stop and the way they moves just the same like during 07-08 era.
US 02 Year Bond Yield Blasts higher on 100bp hike talkUS02Y Well now. Just when you thought the 2 year was overcooked and looking for a retracement.....
