10 YR StuckAll bets are off until further notice following the Fed day rout. That said, it has been and continues to be the case that any meaningful improvement in rates will require downbeat economic data and softer inflation. At this point in the year, we're waiting until early January for the next major shoes to drop (NFP and CPI, specifically).
US10Y trade ideas
10 YR Heading HigherAll bets are off until further notice following the Fed day rout. That said, it has been and continues to be the case that any meaningful improvement in rates will require downbeat economic data and softer inflation. At this point in the year, we're waiting until early January for the next major shoes to drop (NFP and CPI, specifically).
10 YR Heading HigherAll bets are off until further notice following the Fed day rout. That said, it has been and continues to be the case that any meaningful improvement in rates will require downbeat economic data and softer inflation. At this point in the year, we're waiting until early January for the next major shoes to drop (NFP and CPI, specifically).
A Turning Point for RatesAll bets are off until further notice following the Fed day rout. That said, it has been and continues to be the case that any meaningful improvement in rates will require downbeat economic data and softer inflation. At this point in the year, we're waiting until early January for the next major shoes to drop (NFP and CPI, specifically).
Comparing US10Y/DXY/US500/VIX, fundamental/technical analysisProposed technical/fundamental analysis for US10Y/DXY/US500/VIX.
Bank unrealized losses on available-for-sale and held to maturity securities was $364 billion in Q3 2024; this number will continue to increase as long-term treasure rates increase (www.fdic.gov).
US10Y yield chart looks for yield to go higher, north of 5%. If treasury rates continue to increase, there may be a bank run, as banks get more and more underwater with their unrealized losses. DXY will go up above 120, US500 will crater below October 2022 low of 3490.2, and VIX will pop towards 80.
Understanding the US10Y Crab Pattern in 2024
The US10Y refers to the 10-year Treasury bond yield, which is a key indicator of the overall health of the economy and is closely watched by investors.
"Analyzing the US10Y trend, a bearish butterfly pattern has emerged at the 1.276 and 1.618 level, indicating a potential bullish trend in 2023. This pattern suggested a reversal in the current market direction, and The US10Y bond market has been exhibiting an intriguing pattern known as the "CRAB PATTERN," with implications for the year 2024.
This pattern suggests that the market may experience a period of consolidation before potentially reversing its direction. Additionally, the presence of a parallel channel further supports the notion of a bearish trend, as this technical indicator typically indicates a downward trajectory in the market.
Traders and analysts should closely monitor these developments and consider potential strategies to navigate the market amidst this anticipated trend.
It is crucial to conduct thorough analysis and consider various factors before making any significant trading decisions in response to the observed pattern and trend.
US 10Y TREASURY: only 50 bps in 2025?The Fed spoiled the market game for one more time. Although interest rates were cut by another 25 bps as expected, still the market did not like what Powell said about projections for 2025. He noted that the Fed expects persistent inflation, hence, the current projections are drop in interest rates by only 50 bps. Inflation expectations were also corrected, so now the Fed expects the PCE indicator to end next year at 2,5%, versus 2,2% previously forecasted, while its targeted 2% is expected to reach in 2027.
The inevitable happened on the Treasury market - yields went strongly higher. The 10Y US benchmark yields were moved from 4,3% from the start of the week toward the highest weekly level at 4,58%. However, they eased at Friday's trading session, after better than expected US inflation data, ending the week at 4,52%.
Holiday season on Western markets is coming in the week ahead. During this period of time it should not expect any stronger moves or higher corrections. In this sense, the 10Y US Treasury would most probably end this year around levels of 4,5%.
100 Years of 100% ProbabilityThis Chart shows the normalized Bollinger Band Width for the US Ten Year Treasury Bond Yield.
Basis = 10 Year SMA
Upper and Lower Bollinger Bands = 3.0 Standard Deviations from Basis
Normalized BB Width = (Upper - Lower) / Basis
For the last century, 100% of the time that US Ten Year Yields extended 3 Standard Deviations above their 10 Year SMA while their normalized Bollinger Band width reached this 100 year long trend, rates experienced a sharp and meaningful correction.
*** During World War II, width reached the trend line but rates remained at the 10 year average and did not extend 3 Standard Deviations above it.
Market Alert: US 10Y YieldBack in mid-October, I mentioned keeping the US 10Y yield on your radar 📊 as it appeared to be forming a potential falling wedge pattern. This pattern, if completed, would indicate higher interest rates ahead.
Well... the time is here! 👀 Should the market close above 4.42% today, this pattern will officially complete.
🔑 Key Levels to Watch:
✅ Ideally, a second close above this zone in the New Year would confirm the breakout.
✅ This suggests not only a retest of the 2023 high of 5.02%, but also an upside measured target of 5.60%!
Stay sharp and keep this on your radar! 📈
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US10Y going lower as Fed has no choice but to continue cutting.More than 1 year ago (November 7 2023, see chart below), we made a bold (for the time being) call on the U.S. Government Bonds 10YR Yield (US10Y), as against the prevailing market sentiment we gave a sell signal, right after what turned out to be a top:
Today we revisit this pattern, following yesterday's Rate Cut by the Fed primarily because of their statements that instead of 4, they will only proceed to 2 more cuts in 2025. We believe this to be false and expect the Fed to quickly resume the previous outlook.
The chart shows that the 1M RSI Lower Highs have are consistent with the previous Bearish Reversal on the US10Y price, similar to 2006 - 2007. We are expecting to hit the 0.382 Fibonacci retracement level at 2.100%, as the Fed's Cut Cycle will be accelerated in order to meet within 12-18 months their 2% inflation target and stabilize.
For better illustration we have plotted also the U.S. Interest Rate (red trend-line), where you can clearly see that the fractal we compare to today, is right before cuts started in August 2007. Also it is a natural consequence for the US10Y to fall when rate cut cycles start, evident also in June 2019, December 2000, May 1995, May 1989 September 1984, May 1981 etc.
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US10Y ELLIOTT WAVE ANALYSIS: 19 DEC, 2024©Master of Elliott Wave: Hua (Shane) Cuong, CEWA-M.
The entire ((2))-navy most recent completed as an (A)(B)(C)-orange Zigzag, and the ((3))-navy is now retracing to push higher.
It is subdividing into a (1)(2)-orange, and they have completed, since the high of 4.126%, the (3)-orange is unfolding to push lower, targeting the high of 5.163%
US 10Y TREASURY: expecting a 25 bps cutAs the Feds December meeting is approaching, so the market nervousness is increasing. During the previous week the 10Y US benchmark reverted back toward the 4,4% level, from 4,2% traded previously. Such a move was a reflection of market expectations that the Fed will cut interest rates by additional 25 bps on December 18th. Also, ahead of the FOMC meeting, November inflation data was published, showing 0,4% increase in November, higher from market expectation of 0,2%.
Increased volatility might be expected also during the first two days of the week ahead. The current 4,4% level for 10Y US Treasuries might be its highest level for the week. As per CME FedWatch Tool, there is currently 97% odds that the Fed will cut by 25 bps. In this sense, some relaxation in yields might be expected during the week ahead.
10 year - 3 month yield curve has un-invertedThe past may not predict the future, but history does tend to rhyme.
In the past, within 3-8 months of the 10-year/3-month yield curve un-inverting, the world was hit with:
*** 9/11 in 2001
*** The Great Financial Crisis, also known as the subprime mortgage meltdown, in 2008
*** COVID-19 lockdowns in 2020
It's an odd phenomenon that we live in a time when shorter-term maturity vehicles have rewarded investors with more yield than longer-term vehicles. In this case, a 3-month US Treasury Bill commitment had been paying higher interest than a 10-year US Treasury Bond. My completely liquid bank savings account was yielding 5% APY. Why would I lock my funds up for 10 to 30 years when I could be earning more from a savings account with no term?
Without getting into further details, if history continues to rhyme, we might be months away from the next major world event.
US10Y - Elliott Wave AnalysisNot sure if this will happen but if it does, what does it mean ?
1. Impact on the US Dollar
Strengthens the Dollar:
Higher yields attract foreign investors seeking better returns, increasing demand for the US Dollar.
Rising yields often coincide with expectations of tighter monetary policy by the Federal Reserve, which further boosts the dollar.
2. Impact on Gold
Negative for Gold:
Gold is a non-yielding asset, meaning it doesn’t pay interest or dividends. When bond yields rise, the opportunity cost of holding gold increases, making it less attractive.
A rising US Dollar (driven by higher yields) also makes gold more expensive in other currencies, reducing global demand.
Inflation Hedge Caveat: If rising yields are driven by inflation concerns, gold might still see some demand as a hedge, although its gains are often capped by rising yields.
3. Impact on the Stock Market
General Impact:
Rising yields increase borrowing costs for companies, reducing profits and potentially slowing down growth.
Investors may rotate out of riskier assets like equities into safer Treasuries as yields become more attractive.
Value vs. Growth:
Value Stocks (e.g., banks, industrials): These may benefit from rising yields as they’re tied to economic growth and inflation expectations.
Growth Stocks (e.g., tech companies): These tend to underperform because their valuations depend on future cash flows, which are discounted more heavily as yields rise.
4. Impact on Nasdaq (Tech Stocks)
Negative Impact:
The Nasdaq is heavily weighted toward growth and tech stocks, which are sensitive to rising yields.
Higher yields increase the discount rate used to value future earnings, making high-valuation tech stocks less appealing.
Example: Periods of sharply rising yields often coincide with sell-offs in the Nasdaq.
5. Impact on Emerging Markets
Outflows from Emerging Markets:
Rising US yields can draw capital away from emerging markets as investors seek safer and higher-yielding US assets.
This can weaken emerging market currencies and lead to tighter financial conditions in those economies.
6. Broader Market Sentiment
Inflation Expectations: Rising yields driven by inflation concerns can create volatility across all asset classes.
Fed Policy Sensitivity: Markets may react negatively if higher yields signal faster-than-expected Fed rate hikes.
Historical Context
Periods of sharply rising yields (e.g., during taper tantrums or inflation scares) have often led to stronger US dollars, weaker gold prices, and volatile stock markets, with the Nasdaq typically underperforming due to its tech-heavy composition.