APRIL FOOLS DAY JOKE?Inverted yield curve crossing 0.000 just 1 hour before April 1st. Could be wrong but last time crossed was before pandemic shutdowns and the housing crisis.
US02Y trade ideas
RECESSION CXLD???Just an update and observation, for each major time of sustained economic distress, the candle body has pushed past 0.618 so the recent wick could have been initial panic given current events. Even the inverted yield curve during pandemic was quickly squashed b/c money printer go brrrrr.
I will not discount a possible change but will be watching for any moves past this level.
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Thanks for reading, still evolving in this game.
US 2YR yeild consolidationThe US 2YR has paused its upside momentum giving stonks a chance to have a small rally. Most likely short covering since quad witch caused a gamma unwind. The 2YR would have to break down meaningfully for stocks to have any chance of a decent rally which I don't see happening with the Fed's current rate hike projections.
When does the Fed stop hiking rates?The Fed really just follows the bond market when it comes to their rate hikes. Based on previous history when the 2 year and the 3 month invert the Fed stops hiking rates and potentially starts QE again. At the current trajectory it looks like this could happen by July/August at the current trajectory of this yield curve.
Out The MoneynessThe 2yr yield is inverted to emphasize value rather than yield. The untethering of the DXY from the treasuries are something to watch.
There's a lot to see here. Im viewing it from the lenses of liquidity and solvency.
This is developing. The purpose of this post is to serve as a repository of notes along the way regarding this topic.
DXY shows relative strength of the dollar. But the bonds sell off seems to show it as contextually weak albeit stronger (and in this case the most liquid). I would view this more as a moment of underperforming by the least in a group of underperformers rather than outright comparative outperformance.
Notable Events since the 6/10 CPI print
Yield curve inversion along multiple points of the curve as the short end yields higher than the long end
75 bps being priced in, market wide, some stating as early as this Wednesday's announcement for June. Consensus give 95% probability for July. ~175bps being priced in with high probablility to september.
WSJ piece by Timiraos re the coming hikes.
Celsius (large cap crypto lender) becomes defacto insolvent during what looks like a bank run. Dollar withdrawals are suspended. www.washingtonpost.com
Binance briefly halts dollar withdrawals from the BTC network. One of its networks briefly down due to a "stuck transaction" twitter.com
ECB Fragmentation is popping up with increased frequency in the 10y sovereigns. Draghi's "whatever it takes" comments see the Italian 10yr sell off at a rate leading the euro area sell offs.
In the beginnings of the overnight session South Korea warns "The financial markets and economy are in critical condition." President Yoon: " The government intends to use all supply-side tools to keep inflation under control" - Yonhap
Meanwhile the BoJ amidst zero-bid scenarios on their 10y sovereigns and declares a backstop bid of 800bln yen at the next auction. The lack of liquidity in its bonds is causing havoc to the Yen. BoJ is expected to step in to defend the currency. This may have implications on its regional emerging market peers.
See Further Comments for updates.
2YR YIELD monthly candle's lagging span touched 365 MA. Will it finish this month around that MA line and retest it in July with stocks and crypto bouncing?
quite possible.
2 year minus 10 yield just inverted again .. Observation - Just caught that the 2 year yield once again paying more than the 10.
Wonder if it will hold above the yellow line this time ? Oh Icarus back to the sun eh ? ...
2 year yield breakoutMixed picture here. The US 2 year yield which is usually predictive of the Fed funds rate has pushed higher than a line of long term resistance. It is possible to look at this as a breakout from a grand supercycle falling wedge after a previous false breakout. The RSI chart has a rolling over / topping look to it which may indicate that this rally in yield will run out of gas and I will be looking for it putting in a base of support before calling this a bond market bear and predicting much higher interest rates.
Stocks Rally In DangerIf stocks are going to have a meaningful rally, this 2yr yield needs to be heading lower from here. If it breaks out it could signal further downside in stocks. Lets see.
I've decided to decrease the upside objectiveConsidering the high recession potential, I don't think US2YT can raise at a 4,75% level.
3,75% should be more realistic but still high for many
2Y Treasury yield could potentially rise to 3.8%The Treasury 2Y yield curve chart on a wider month time scale hints at a potential further increase and steepening of the yield curve to 3.8%. That of course will depend on Sovereign debt market variables and QT implementation.
Watch the FED for BTFD on BitcoinWatch the FED. 👀
When they stop increasing the interest rates and 2y US Gov Bonds Yields are pivoting prepare for BTFD!
I think we will see similar behavior as in 2018.
Safe your cash until eoy 🤩
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Yes, FED will continue to raise rates its 4,75-5%So you think FED will stop to raise rates ?
No they won't.
Now they don't care about market.
They don't care about your wealth effect.
Their main idea : having again a job market fluid. Get back to work !
And destroy demand, inflation, russians and make the dollar win.
Its bull for short term rates that will go to 5%
2 Yr UST Bill75% chance of a 75bps hike for June.
The FED has no intention of chasing Inflation.
They don't need to.
Bonds will simply reprice, create chaos and
complete the needed destruction @ 3.5%.
______________________________________________
Do not take the bait.
Avoid the Hook.
US02Y-US10Y 🎯Wells Fargo Chart of the Week 🎯💰🤔Hey Fam. 😊🙏Just wanted to share this information with you all.. I found it very interesting.. This was a chart of week that Wells Fargo shared on there site. I thought it was interesting how they saw a 4 week inversion roughly 43 weeks on average in regards to our last seven Recessions before they happened (Shaded Areas on chart) Before a US recession officially started.. which is roughly about 10 months..🎯💰🤔👌🙏😊
ICARUS , known to most as 2Y-10Y Yield ~ I am nicknaming the 2-10 year yield "Icarus".
Pushing back towards to the sun with haste it would seem .
Kind of interesting how this is off the media radar today .
Oh my wings! See my two wings! How I love to fly!
-The final words between: Icarus, and his father~
Yield Curve As we know yield curves help us determine whether we could be entering a recession and as for now, things are not looking very well
Yields are on the verge of breaking-out.In log mode, we can clearly see the trend of yields dating back to the late 1970s.
Consistently lower yields on both the 2 year and the 10 year government bonds.
Representative of both the long and short duration bonds and their yields.
What we can see happening here is a breakout of this downtrend.
We are already at between 2.5-3% on the 10YR and the 2YR yield.
The Federal Reserve's planned tightening schedule combined with the inflation panic will drive both of these metrics up into the 3% range and beyond.
The only way yields could reverse here is through seeing a risk-off move from equities into bonds which would drive up bond prices and in turn, drive down yields.
Similarly, higher-yields could tempt investors into bonds at a point in which many stocks have already entered a bear market and many are set to underperform. Market breadth is set to shrink dramatically as equity bulls focus their efforts into a narrower set of large-cap stocks.
The FED has an interest rates decision next week amd therefore this quarter will be crucial in determining the direction of the markets.
Weekend Research - S&P &US House Prices VS Bond Yield Inversion Just sharing this for anyone that is interested , just personal research and I decided to do this one in light mode so that It will print better .
Just helps to look at the relationship between prior times where 2 year bond yield has paid more than the 10 year versus the S&P 500 versus the house prices in the USA . I think it would also be interesting to compare additional metrics such as volume of house sales too .
Looks like we might have more stormy weather ahead , which is why it is important to know what your strategy and risk management requires of you under what circumstances . From these charts, it would seem that it may be wise to develop a plan to profit from more downside move in the market. I am personally long bias and at this point in my journey am fairly efficient at protecting the account during bearish market periods, but, I would like to get better at generating profit during those same times.
Inverted Yield CurveThe chart shows the Inverted Yield Curve vs S&P500 both on logarithmic scale. The Yield Curve start to invert when US start to raise up interest rate, and Yield Curve start to recover when short term rate is higher than longer term rate. It's not accurate to say that Yield Curve is indicator to recession or market crash. Because there still a 1~3 year periods of market rally after Yield Curve inverted before it went bust. So to be accurate the market start to dwindle down right after the Yield Curve back to normal, not after Yield Curve start to invert. So we still have a brief period to invest in stock until after rate reach high enough to be un-investable, then we should be worry about market crash.
Crash Incoming 3?US02Y and S&P500 chart, big resistance ahead which led to big crashes. Be careful out there (see also my last 2 ideas).
