It's Topped...Only bull traps will follow here ultimately - next one should be an easy short if it comes - Overall this is going down like a stinking bag of bonds over the mid-long term so don't get stuck in it.
US10Y trade ideas
US1OY | DXY | DECRYPTERSHi people Welcome to Team Decrypters
Bonds Yield going Down Causing Bond prices Go Down
Which causes Banks to get Liquidated
Investors Moving money from Bonds in to
BTC & Gold
We Expecting 25 BPS
Recession coming "something you didn't know"A negative 10-2 spread has predicted every recession from 1955, but has occurred 6-24 months before the recession occurring, and is thus seen as a far-leading indicator.
US10Y is on the 1W MA50. Major effect on stocks and commodities!It is only 11 days ago when we called for an immediate drop on the U.S. Government Bonds 10YR Yield (US10Y) as it was at the top of both its long-term Channel Down as well as the top of the Diverging Channel Up:
The Channel Up now broke to the downside as the US10Y not only hit our 3.550% Target but closed even below the 1D MA200 (orange trend-line), with the Channel Down remaining the only pattern still valid.
The important development is that the price is testing the 1W MA50 for the second straight day and for the first time since December 21 2021. If it closes the week below it, it not only validates the 5 month Channel Up but also confirms the way for a new long-term downtrend extension towards the 1W MA100.
Needless to say, this will have major consequences on the stock and metals (Gold in particular) markets as well.
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The SVB Collapse and Why It Matters To YouInteresting situation with the collapse of SVB (SIVB), the people have yet to realize we control the market not the central planners. and the collapse of SVB is a realization of that power. So , here is what i know from the very little articles and podcasts that I listen to and I will give you guys the why its important.
From what i know is that SVB business model was somewhat risky in the first place, and their main consumer base was startups, and tech startups. hence the name Silicon Valley portion of Silicon Valley Bank.
Now a little money education... in the world of money and currency (remember currency as current it will become important later) there is a concept called the velocity of money, basically the volatility of money. for my stock traders think the VIX. when the VIX is low there is no money to be made because money is not moving. but when the VIX is high there is plenty of money going around so why not use your dollars as napkins, right or "fun coupons"! this is the velocity of money the faster a person can make money move the more money they stand to make. the banks know this. So when you go to the bank and deposit your check your money is already out the door into something else before you're able to but your wallet in your bag or pocket. this happens because of what is called as the "fractional reserve system" and to be honest its a "F"ed up idea but has worked thus far. what this system means for every dollar you put into the bank, the bank can lend out 10$.
A bank is a business it makes its profits by lending money, and when you save your money it cost the bank money, because of your .01% interest rate. the reason for the big push for open accounts is because the more open accounts the bank has means the more money they have liquid, which means the more they can loan out, which means the more they stand to profit. now as an insurance policy the US government makes the banks keep a fraction of their total account balances on site incase of what they call a "bank run" happens (get to what a bank run is later)
Now, normally you dont notice this or even care because when you go to the bank and want to pull 100$ from your account its no big deal whats a 100$ when your dealing with 100s of thousands. you want a 100$ you get 100$ instantly.
But want to see the system become a problem for you, if you have more than lets say 25,000$ or more in an account go try to pull ALL that money out and see what type of road blocks you encounter. they will make you give ID, reasons for shutting down the account, basically your first born child and your blood type. partly is because they really want to know why you're closing the account, because thats profits walking out the door.
but the main reason is, they have to reach out to sister branches and other banks to pool that money together to be able to give it to you and this typically happens like over night. so if you think you're about to waltz into your local bank and demand a 25,000$ check right then and there you're sadly mistaken. the same exact process happens when you take out a mortgage, now your talking $200K and up so now there are more road blocks. whether you're the buyer or the seller. you sell your house for 500K and you think that check you deposited is there right when you get it... yeah its not!
back to the currency comment money is now a currency it has to keep moving to keep its value. think of it as a river, mostly you can drink water from a river and be okay because bacteria cannot grow in moving water but drink water out of a pond and you just might catch Syphilis (sarcasm intended). money is the same way, the faster you can make it move the more you stand to make and the healthier the money is, if take money out of the river and stick it in your pond as a savings account inflation will eat it alive making it very unhealthy. Even historically before all this crazy inflation started happening the savings rate in a savings account was like 0.01% and inflation was around 2 percent.
Now the importance of this lays with the SVB. When looking at their business model it seems solid... "invest in high beta companies, or higher risk endeavors, then to off set this risk we will load up on the safest paper assets money can buy... the US 10Y bond." Officially the US hasn't defaulted on loans before... i mean we will print more money before we default. I mean it sounds like counterfeiting if you ask me, but who am I just a low key, low level, low volume trader with a computer living in my moms basement :) sarcasm... or is it?!
Well from the looks of it it would seem SVB bought a ton of these 10Y bonds in 2021 when the economy was ripping and roaring. So, when bond yields are down their prices are way up. So in the full swing of the "roaring 20's" yields were around 1.12X or keeping it simpler 1.1XX. so that must mean the value must of been sky high. My only rational thought for this type of purchase was the risk manager must of thought he could off load the bonds in the bond market for a nice profit thinking good times were going to continue. On the surface it seems okay high risk business model with a low risk counter weight.
But "We the People" were leaving SVB, and going back to what i said about taking your 25,000$ savings out, and they were running out of reserves and their bonds were worth less than the paper they were "printed" on, so they filed a loss on their report. on the surface this was fine, because only die hards read a companies 10Q or 8A but all it takes is one... and there is always that one Guy... and not this Regular Guy either. I personally dont like the instability of the tech industry. i mean i do believe we will make a full blown terminator but i dont want to gamble on which company that is regardless of what the gain is... might as well go gamble in my opinion.
So, because there was a mass exodus of accounts they were having a hard time fill orders so file your 8A detailing you're offering more stocks to drum up some money and it falls flat. people read said 8A and see that you dont have cash so the word got out and the consumers made a bank run. Dont get it twisted either this can happen to any commercial bank JP Morgan, BofA, Chase, Citi, Credit Suisse and the like.
a bank run is when the majority of depositors want their money back now and they do it in close succession of each other forcing the bank to say "we dont have your money" so they in essence "run" to the "bank" to get their worthless paper.
Now, what i just learned is back in '08 our amazing government passed legislation basically stating they will no longer bail out banks. (honestly if you guys know the piece of legislation please post it in the comments) I agree with this legislation because when I lost 15k on a bad USDCHF trade 7-8 years ago the government didnt bail me out. that was all my money... just gone in a matter of seconds. So the US government came out and said " we will make sure all depositors will get their monies back...
How?
step in Bail-Ins
And again a bail in is something i literally just learned about... i swear at this point were just making -ish up at this point... ok so we know what a bail out is... basically the US government funnels all this cash into a failing business(s) and the tax payer picks up the tab. so what is a bail-in?... glad you asked
a bail-in is when the depositors pick up the tab...
How?
well the FDIC picks up the first $250K and anything over that 250K is now funneled into bank to help offset the loss.
so if you have $500K in the bank the first $250K is yours... uncle sam gives it back via FDIC (which that money has been long gone spent, so i dont know where theyre going to pull money from to keep this facade of the FDIC up) and the next $250K is the banks... So congratulations you have just become a unwillingly silent partner of a failing bank. -ishy news is that the current administration is trying to give more power back to the IRS and bring it back to its glory days like it was in the 80's so you wont be able to claim those losses on your taxes, if you had a business friendly administration you might actually have a fighting chance.
i have a feeling the whole world is watching what is about to happen, because the entire banking system relies on high value accounts. if the US says tough luck that might send uneasy shock waves to all the high income earners and might make them want to pull their funds out of the banking system...
there is a very interesting article on Credit Suisse that i want to read
so ciao!
US10Y : Holding the 200MABond yield had been dropping since SVB.
US10Y as well as US02Y fell until both hit the 200MA.
Lets see if it will stay where it is now or fall further.
But I think the next FOMC will decide. And watch out for OIL.
Good luck.
P/S : Do not just believe what I say. Use your common sense.
Super inversionYield curve has been very inverted for the last couple of months. This is the strongest signal for a recession compared to the fake out that happened in 2022. Strap on to your trousers there is more bear market to come most likely for pretty much everything.
Short big run ups and stocks that are highly overvalued and there will be a continued correction for many names.
ten year yield plummetsToday the 10YY has proven that the last breakout turned out to be false as Treasuries are being bought hard. I think this is a fear move because of banking issues. Usually a lower interest rate / yield would be positive for stocks but not necessarily in the face of other bad events happening.
YIELD CURVE HAS LIKELY BOTTOMED--RATE HIKES WILL ENDthe #yieldcurve 10y2y. The Weekly Chart has a picture perfect hammer candle striking EXACTLY at the 1.0 Fibonacci Extension at -1.081%. This fibonacci bounce, coupled with the banking crisis, and the huge drop in the 2y yield (BIGGEST DROP IN 2Y SINCE 1987), leads me to believe the curve has bottomed.
US10Y - SVB Smokescreen 😹Who knows maybe its a coincidence 😹 but SVB collapse happened on Friday and on the very same day the first US10Y bearish momentum candle printed pulling down and away from the long term Fibonacci cluster and the Demand Line from the lows.
Friday was the first day the yields bear took over.
The 3rd wave before the collapse grinded up the Demand Line and then printed a mini blow off top shakeout reversal pattern.
FWIW we shorted TBT to take advantage of the decay as the day MACD lines crossed on Wednesday.
But anyhow the take home point is that the news have scared everyone away now.
Everyone now knows its a terrible time to buy, especially anything classed as "risk on."
Meanwhile the crypto bull market has been going 2 months.
And the stock bull market is about to begin.
Its the same game at every bottom - works every time 😹.
Not advice.
US 10 Year Treasury The bond traders are the most accomplished on he street.
This chart shows the blow off from news.
It is important that we understand the if rate sink more this will but a huge pressure on all stock and upward push on gold.
Please look at this chart and understand that a interest move much lower could cause a huge reaction
Biggest Drop since 2008 - Right After our Post 🙄Good that I always TRUST my Charts:
US Government Bonds 10 YR Yield has dropped 'nicely' since my last post, which was 'against the stream' since when i posted it Powell was being extra-Hawkish and situation was different.
News:
The yield on the 2-year Treasury note fell sharply on Friday as the shutdown of Silicon Valley Bank sparked a flight to safer assets such as government bonds.
The yield shed at least 46 basis points over a two-day period, a sudden decline not seen since September 2008 , when the markets were in the throes of the global financial crisis. Perhaps by no coincidence, the flight to bond safety this week was caused by the biggest bank failure since the financial crisis.
These were supposed to be 'Good news', rates could ease and markets (and crypto) could do better but unfortunately it all happened for the wrong reasons: Some Banks going bust.
Better check my other posts today.
Everything changes FAST so watch out for the CPI tomorrow: If inflation is better the Feds are saved...if inflation persists we could ALL be in DEEP trouble.
One Love,
The always optimistic Professor
The 10 - 2 spread suddenly contracted by 20%This finally might be the beginning if the re inversion of the yield curve. When it crosses above 0% prepare for something unexpected to start the sell off. Might be a chain event from all these banking issues. This is the calm before the storm.
US10Y - Strong support around 3.60%US10Y - Strong support around 3.60% (green line - uptrend from 2020).
Multi-decade red downtrend line, already broken.
US10Y long view, target zone 3,0%-3,25%This example shows how the US10Y has been moving in a bullish trend since the beginning of 2020 (at 0.345%). From the bottom, we have a trend line as support, after which the first higher high was formed at 1.75% (resistance zone). Then follows a pullback to the lower support line and a new bullish consolidation up to the previous resistance zone. In January, we see a break above the resistance zone, and that zone now represents a support zone for us to continue the bullish trend. US10Y makes a new higher high to confirm the continuation of the bullish trend, then we retest the support zone, and a bullish impulse follows. Now our target is 3.0% psychological level and after that the previous high at 3.25% level.
Treasuries are in flat till autumn5 wave structure between Aug 2021 and Oct 2022 seems complete since the interment broke though the trend channel. Most likely the it will be forming a sideways correction flat of triangle. I see two possibilities:
scenario #1: it goes up to 4.3% and then fall towards 3.3% or
scenario #2: it goes down to 3% and then go up to 4.3% and down again to 3% level
if 4.3% gets reached first then it is opportunity to sell USD, alternatively (if 3% gets reached first) then it is a chance to buy USD.
Us 10 year yield is dropping warn signDue to big movement into markets today and banks getting sold out... we are getting into a neutral position on rates.... IF rates drop bellow 3,5% we are probably going into a recession... without way back for my perspective! No add position... total neutral now
US10Y Bearish short termThe US10Y reached the top of its Channel Up and is reversing on a Head and Shoulders formation.
Top made very close to the 0.786 Fibonacci.
Trading Plan:
1. Sell on the current market price.
Targets:
1. 3.575 (MA200 (1d) and Fibonacci 0.236).
Tips:
1. The RSI (1d) is on a Rising Support. An additional indication of when to take profit.
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10 YEAR TREASURY: POTENTIAL SETUP FOR A CRASH?The 10 Year Treasury is showing signs of weakness flashing on a 3 Week timeframe
Following our recent run to 4%, this may have been a dead cat bounce before resuming a clear downtrend
In addition, the 3 Week MACD has printed a red candle, which is the first since December of 2018 (when looking at candles flip from green to white to red)
Ironically, December of 2018 was when the Fed U Turn happened after the last hiking cycle...
If CPI comes in under expectations (which, according to Truflation, is very likely as we currently hold at 4.78%.)
Expect Yields & $DXY to drop like a stone, & the start of the next bull cycle
Nothing will stop what is transpiring in the charts, there is no 2nd wave of inflation, no debt crisis... if there was, the markets would crash, but you cannot fight the trend
US10Y - US02Y predictor for major recessionsMarket risks are increasing day by day and the following inversion ( US10Y - US02Y ) might hit markets severely leading to a massive correction.
BlackRock 2023 Global Investment Outlook is in line with the warning and they are of the opinion that we are facing recession, stubborn inflation , and a new era that won't be so kind to investors.
US BOND 10YR YIELD Chart Fibonacci Analysis 030723 1) Find a FIBO Slingshot
2) Check FIBO 61.80% level
3) Entry Point > 3.95%/61.80%
