Inverted hammer at the top of the 10Y channelIf the inverted hammer on 10/10 is a reliable indicator, then today may mark a local peak in long yields as we bounce off the top of the channel.
US10Y trade ideas
US 10Y Yields - Low Resistance Liquidity Run4 consecutive days of bullish price action with the potential to draw further up inside of the Feb 24 new week opening gap.
Short-term retracement is expected during conditions similar to now and would like to gee the NWOG for this week (still in a premium) filled with the last point of no return being a daily candle body closure below 3.946%
10yr possible false breakoutPossible false breakout US 10yr yields and this is a risk for risk sensitive currencies like USDJPY and USDCHF
10Y bonds seeking support from April-July channelFrom April to July the 10 year Treasury yield was in a downward channel. It broke below that, retested the resistance-now-support for bonds, and kept moving until it recently re-entered.
The fundamentals for long bonds still seem strong, with the cutting cycle starting with an abrupt 50bp cut, but bonds seem to be seeking support. If yields break above this channel, then we may be seeing something unexpected sniffed out by the bond market. If we retest and continue the downtrend in yields, then expect a nice downtrend back to the post-2008 norm.
10Y is back in the April-July channel, testing supportFrom April to July the 10 year Treasury yield was in a downward channel. It broke below that, retested the resistance-now-support for bonds, and kept moving until it recently re-entered.
The fundamentals for long bonds still seem strong, with the cutting cycle starting with an abrupt 50bp cut, but bonds seem to be seeking support. If yields break above this channel, then we may be seeing something unexpected sniffed out by the bond market. If we retest and continue the downtrend in yields, then expect a nice downtrend back to the post-2008 norm.
US 10Y TREASURY: surprised by jobs dataThe major macro news during the previous week were posted nonfarm and unemployment figures in the US for September. The nonfarm payrolls significantly beated market expectation, by reaching the figure of 254K, while unemployment rate dropped to the level of 4,1% from 4,2% during August. The markets are now convinced that the Fed will slow down rate cuts till the end of this year to 25 bps, considering the high resilience of the US economy. Previously, markets were pricing another 50bps cuts. The US yields adjusted accordingly to new expectations. The 10Y US benchmark was moving around 3,80 during the week, but Friday's jobs data pushed the yields to the higher grounds, ending the week at level of 3,96. Yields were testing the level of 4% previously.
It could be expected that the markets will spend a week ahead by digesting the jobs data, in which sense, the 4,0% level could be tested during the week. At this moment, there is no indication that yields could move to the higher grounds. On the opposite side, there could be some relaxation, at least to the level of 3,9%.
US10Y - US03Y long term outlookIf the bull flag is valid, the future of the US economy could be under currency debasement & stagflation.
Let's see.
10Y - 02Y outlookMy recent assessments have been negated.
I am mostly skewed to the idea it will break negative again, correlating to sentiment fuel for the blow off top in the SPX (no recession sentiment short term?).
Once it flips negative again, to back test the purple bull penant, I strongly expect that to correlate to the markets topping and will potentially exit if I see further confirmation across other instruments.
Reason for exiting prior to it flipping positive again if it goes negative, is because my research has shown me when the 10-2 yield spread is truly trending upwards to break 0%, the market falls with it, as I imagine "smart money" will know what's coming and exit.
Not financial advice.
Just my prediction for now.
DRUCKENMILLER TIPS: Shorting Bonds and MoreInvestment Strategy
Stanley Druckenmiller, a renowned investor, shared his market insights at Grant's Annual Fall Conference. He revealed that he is shorting U.S. government bonds, representing 15% to 20% of his portfolio. While he is unsure when these bets will materialize, his strategy is based on the perception that inflation could return to levels similar to those of the 1970s.
Disinterest in China
Druckenmiller also expressed disinterest in investments in China under Xi Jinping's leadership. This view contrasts with the recent trend of many investors betting on the Chinese market following the People's Bank of China's economic stimulus. Rather than following this trend, Druckenmiller is skeptical about the sustainability of the rally in the Chinese market.
Opportunities in Japan and Argentina
Despite his caution towards China, Druckenmiller was optimistic about Japan and Argentina. He believes Japan could offer attractive opportunities for investors, given that the Japanese economy has shown signs of recovery. As for Argentina, he praised the new president, Javier Milei, describing him as a “brilliant leader,” which has sparked investor interest due to his liberalizing economic policies.
Focus on Natera
Currently, Druckenmiller has focused its attention on Natera, a genetic testing company that has experienced a remarkable increase in value, highlighting a 191% growth in the last year. This choice reflects its strategy of seeking companies with high growth potential in innovative sectors.
Fiscal and Political Perspective
Druckenmiller, famous for shorting sterling during “Black Wednesday” in 1992, maintains a cautious approach to fiscal policy in the U.S. He declines to vote for the major political candidates, Kamala Harris or Donald Trump, noting bipartisan fiscal recklessness as a key concern.
Conclusion
In summary, Druckenmiller's investment strategy is characterized by a skeptical approach to the U.S. bond market and Chinese equities. In turn, it shows interest in economies such as Japan and Argentina. As the global economic outlook becomes more uncertain, his ability to anticipate market movements and adjust his portfolio accordingly remains critical to his success as an investor.
Ion Jauregui – ActivTrades Analyst
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US 10Y TREASURY: pricing the PCE easingThe inflation measured through the Personal Consumption Expenditure Index showed signs of further decrease in August. The Index was standing at the level of 2,2% on a yearly basis, which was a bit lower from market expectations. The US Treasury yields eased after the release of data, bringing the 10Y US benchmark to the level of 3,75% as of the end of the week. During the first half of the week, the 10Y yields were exploring higher grounds, reaching the highest weekly level at 3,82%. At the same time, released final GDP Growth data for Q2 showed no changes on a quarterly level of 3% growth, which pointed to investors that the US economy was growing in a moderate pace in the environment of high interest rates, and that further drop in interest rates will be supportive for the boost of the economy in the coming period.
Current charts are pointing to a probability for further easing of the US yields in a week ahead. The non-farm payrolls are set for a release, which might bring back some modest volatility on the markets. Still, some significant moves in yields should not be expected. The levels around 3,7% might be tested in the week ahead.
US 10Y Yields - Neutral Territory Not expecting anything fancy this week but will be alert to market structure shifts.
US10Y Mortgage Rates Trackerlets see how accurate or NOT accurate this may be. create a free account and press PLAY to keep track of the prediction
US 10Y Yields - Balancing Price Ranges3.774 - 3.826 Sellside imbalance buyside inefficiency is my next draw on liquidity.
The million dollar question is.... what day will we book price action?
US10Y Look for a 1D MA50 rejection.A month ago (August 21, see chart below) we argued why the U.S. Government Bonds 10YR Yield (US10Y) would go lower with the Fed having no choice but the cut the Interest Rates:
Well the Fed did it and cut the rates not just by -0.25% but -0.50%, initiating the new cut Cycle. Now let's look at the US10Y's price action on a smaller time-frame, namely the 1D.
As you can see the pattern is a double Channel Down, with the price trading below the 1D MA50 (blue trend-line) since July 03 2024. That is the current Resistance and until it breaks (1D candle closing above it), we should be looking every time for a sell near it.
Assuming the Bearish Legs of the diverging (dotted) Channel Down are symmetrical like those of May and June, our Target is 3.450%, representing a -10.50% decline (same as August's Bearish Leg).
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Five Market Correlations You Can UseAs a trader, I've discovered key market correlations that provide valuable insights. Here are 6 you can use:
1️⃣ US Dollar Index & Commodities (DXY & Commodities ): The US Dollar Index often moves inversely to commodities like gold and oil. Monitoring this correlation helps gauge potential moves in commodity prices based on the USD's strength or weakness.
2️⃣ S&P 500 & Volatility (SPX & VIX): The S&P 500 and the VIX (CBOE Volatility Index) exhibit an inverse relationship. A rising VIX indicates higher market uncertainty, influencing my risk management decisions when trading the S&P 500.
3️⃣ Bond Yields & Currency Pairs (BondYields & Forex ): Strong correlations exist between government bond yields and currency pairs. Higher bond yields may lead to a stronger currency, and vice versa. This correlation helps in forex analysis and trade setups and we use it in our program's bias matrices.
4️⃣ Crude Oil & Transportation Stocks (CrudeOil & Transportation ): Crude oil prices and transportation stocks, like airlines and shipping companies, often move together. Understanding this correlation provides insights into both oil demand and economic trends.
5️⃣ Gold & Real Interest Rates (GOLD & InterestRates ): Gold is often influenced by real interest rates (nominal rates adjusted for inflation). When real rates are low or negative, gold tends to perform well as an inflation hedge.
6️⃣ USD/CAD & Oil Prices (USDCAD & Oil ): The Canadian dollar (CAD) is sensitive to oil prices due to Canada's significant oil exports. As oil prices rise, USD/CAD tends to fall, and vice versa. The Norwegian Krone (NOK) also exhibits a similar behavior at times.
By recognizing these correlations, I make more informed trading decisions and anticipate potential market moves based on the pre session biases. I also keep a close eye on updated correlation matrices in case any have de-coupled recently. Utilize these insights in your trading arsenal to gain a competitive edge!
US 10Y TREASURY: surprising 50 bps cutAlthough markets were divided on whether the Fed will cut interest rates by 25 bps or 50 bps at their September meeting, still, the Fed brought some sort of surprise by cutting interest rates more aggressively, by 50 bps. Considering Fed's dual mandate, to keep inflation at targeted levels and a stable jobs market, the analysts are now noting that, with the latest rate cuts, the Fed switched attention to the US jobs market. The US yield reacted to the Fed's decision in a mixed manner. Still, the 10Y US yields turned to the upside, despite Fed Chair Powell's comment that more rate cuts are coming till the end of this year.
The 10Y US yields reached the lowest weekly level at 3,6%, and soon reverted to the upside, ending the week at the level of 3,74%. While digesting Feds comments, the market is currently seeking an equilibrium level for the US yields. Based on current sentiment, there is some probability that yields might shortly revert back toward the level of 3,8%. However, on a longer time scale, the trend for 10Y US yields is on the downside.
Discounted Free Cash FlowCreate discounted free cash flow model with annual free cash flow. Perpetual rate of 2.5 discounted rate of 7.5
Recession Now Well Underway The yield curve is now fully inverted after reaching EXTREME levels. With that, we can conclude the recession has officially contaminated the financial sector.
Soon (likely before year end) we will see a significant selloff in equities.
Suggest: sell stocks & buy US Treasury Bonds.
Re-elect Mayor Goldie Wilson
10-yr yields 100 bps below target & trending lower
US Election 2 days before next FOMC
Expect October surprise?
FOMO into US10Y now & sell the election/emergency
With this sentiment, looking for clown-world short setups in fx
US10y-US02y Yield Curve Reversion - Watch StocksUS 10y and 2y yield curve has reverted (i.e. is no longer inverted) and historically this has been a bearish signal for stocks in the months ahead.
Whilst stocks have continued to gain for a few weeks to months, ultimately there seems to always have had a precipitous drop to follow.
Keep a solid cash position and potentially look to hedge longs moving into October/November and onwards.
These drops have presented FANTASTIC buying opportunities, but ultimately you can only buy if you have dry powder set aside.
Lower Rates Expected by 9/27/24Ahead of the Fed meeting Wednesday the market was pretty much 50/50 split on whether the fed funds rate would be cut by 25 or 50 basis points. After the 50bps announcement the counter intuitive move occurred, which was rates began rising, but this should have been a surprise. This was as straight forward "buy the rumor, sell the news" gets. Today however it appears the rates attempted to rally past 3.76% but failed.
3.76% happens to be the 50% fib level from the recent highs to lows and now we'll look to see the 10-yr break below 3.70 for a sustained move lower. Marking this as a "Long Investment Idea" since lower rates imply higher bond prices, don't be fooled by the rate chart.
US10Y - US02Y OutlookBacktest of bull flag intersecting .618 fib retracement then up we go
Also looks like 200 DMA will intersect
- Idea - Not financial advice
US10Y - Sluggish Downside DeliverySeptember has been a red month. With business being conducted at macro Sellside 3.666%, we are starting to see a few more bullish days leading to the potential for a short-term relief rally.
But where could we reach up into?
