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Treasuries

US treasuries still bullishFED continues QE and purchasings of the FED remain unchanged, meanwhile inflation is slighty below the expected targets and the economy is doing very well, while not being yet there where it should be, according to recent FED statements, so QE can be expected to be continued and interest rates remain unchanged until somewhat in 2022. Money supply remains gigantic and annual inflation is being expected around 4 %, no one wants to hold cash (e.g. dollar) in this environment
CBOT:ZB1!Long
by MrKrft
TLT Breaks Out of Descending Wedge to seek new All-Time Highs?Using the same fractal analysis method I used to forecast the BTC dump & dead-cat bounce, I began watching US Treasuries as TLT was set to break out of a descending wedge. Now that it is has, I'm publishing the idea for others to weigh in on. If the pattern plays out we could see new all time highs; which suggests we could be entering another period of recession much like the financial crisis of '08. I do not currently have a position & this is not financial advice. Just sharing observations as they occur. If you wanted to play the pattern, TMF(long) & TMV(short) are leveraged ETFs you can use.
NASDAQ:TLTLong
by jsgiardino
1
5 Year T-Note Futures Heading Lower Towards 123Disclaimer The views expressed are mine and do not represent the views of my employers and business partners. Persons acting on these recommendations are doing so at their own risk. These recommendations are not a solicitation to buy or to sell but are for purely discussion purposes. At the time publishing, I have a position in 5-Year T-Note Futures (ZF1!) . Trend Analysis The main view of this trade idea is on the 2-Hour chart. zf1! has been channeling lower after making a high of 124’08 on July 8th. First low was observed on July 13th around the 123’18”5 price level and a lower high is seen around 124 on July 15th. ZF1! Is expected to make a lower low at 123’14”5 in the short term. Technical Indicators ZF1! is currently below its short (25-SMA), medium (75-SMA) and fractal moving averages and its RSI is trading below 50. Moreover, the KST recently had a negative crossover. Recommendation The recommendation will be to go short at market. At the time of publishing ZF1!is trading around 123’25”2. The medium-term target price is observed around the 123’14”5 price level. A stop loss is set at 124. This produces a risk reward ratio of 1.54.
CBOT:ZF1!Short
by Ceddy86
Gold Sell UpdateGood day guys! This is just an update in regards to the position that my team and I are currently holding. In my previous chart, I highlighted how the technicals would be looking to create a rising wedge before continuing to the downside. As of today, the markets are revealing just that. With over 1200 pips and counting, we are still looking for the markets to continue to sell off, because the US government needs the value of gold to be lower for the dollar to strengthen. I mentioned this in my latter post as well, I believe this is going to be the final push to the down side before gold takes off to unprecedented levels before bottoming out. Understand this, Jay Powell and the Fed has come out this previous week to try to calm the markets, but verbally stating, "this is unsustainable." He was referring to the money machines going rapid and inflation moving to higher levels. I believe a top is looking to form in the stock market. This is not financial advice, for I am not a financial advisor registered with he SEC. I do believe in transparency. Therefore, I have began shifting my portfolio to the emerging markets, gold miners, commodities, etc. However, I have learned not to bet against the fed, for they can print whatever and the markets loves debt. We do appreciate you for checking out our post and remember, we will see you on the other side. Rodrick (CEO) Third Eye Traders
OANDA:XAUUSDShort
by ThirdEyeTraders
2
Bonds are Ground Zero for Market's Battle with Fed and TreasuryThe bond market is the primary capital-raising marketplace. Market participants issue new debt or buy and sell debt securities in the secondary market. Bonds, notes, and bills are tools for public and private expenditures. Since the US is the world’s leading economy, the market for US government bonds is massive. The long-bond or 30-Year Treasury is a barometer for US interest rates. The long bond has been trending lower since August 2020- The latest CPI data confirms the trend Last August, the Fed made a subtle but significant shift Monetary and fiscal policy remains accommodative Conflicting signals for the bond market cause a bounce Jackson hole could bring another shift While the US central bank, the Federal Reserve, sets short-term interest rates via the Fed Funds rate, buyers and sellers establish rates further out along the yield curve. Following the 2008 global financial crisis and the 2020 worldwide pandemic, the Fed initiated a quantitative easing or QE program. QE is a tool to stimulate the economy via debt purchases that put a cap on rates further out along the yield curve. Over the past year, the central bank has purchased $120 billion in government debt securities each month. The bond market has been dropping over the past year, despite the Fed purchases. Imagine where the long bond futures would be if the Fed were not buying each month. The bond market is taking on the Fed as it signals inflationary pressures are rising. The Fed may call inflation “transitory,” but this week, the latest consumer price index data from May was a warning sign that the bond market is correct, and the Fed is wrong. The long bond has been trending lower since August 2020- The latest CPI data confirms the trend The US 30-Year Treasury bond futures recently rolled from the June to the September contract. The weekly chart of the long bond futures highlights the drop from 183-06 during the week of August 3, 2020, to the low of 153-29 in late March, early April 2021. While the nearby contract recovered over April, May, and early June, at the 161 level, it remains a lot closer to the low than last August’s peak level. Bonds seem to have found a floor at just below the 154 level. Weekly price momentum and relative strength indicators have been trending higher since reaching oversold conditions in late March. Open interest, the total number of open long and short positions in the long-bond futures, moved from 1.106 million contracts when the bonds last August to the 1.207 level at the end of last week. Increasing open interest when the price declines is typically a technical validation of a bearish trend in a futures market. Weekly historical volatility at the 4.37% level as of June 11 was close to the lowest level in years. While the long bond recovered from the lows, last week’s CPI data was bearish for the debt market. The 5% increase and 3.8% rise in core inflation was the highest level in nearly three decades. The Fed continues to call inflationary pressures “transitory” and has concentrated on its “fell employment mandate.” The trend in the bond market, raw material prices, the stock market, real estate, and most other asset classes points to rising inflation. Employment data could be the transitory outlier as low-wage earners continue to benefit from government stimulus and expanded benefits, which results in higher earnings from staying at home rather than returning to work. The latest CPI data confirms rising inflationary pressures. Last August, the Fed made a subtle but significant shift Last August, the US central bank told markets it adjusted its 2% inflation target to an average of 2%. The Fed has been encouraging inflation with low interest rates and quantitative easing. It is unclear what period the Fed is calculating the average rate, which makes a substantial difference. Inflation had been well below the target rate for years before it began to rise in recent months. Economics is a social science. The models and formulas that the Fed watches and depends on are only as good as the variables, which are the inputs for the decision-making process. Individuals and companies are experiencing dramatic price increases and asset inflation. The Fed is taking a wait-and-see approach as it continues on the current course. The central bank was hoping inflation would rise last August. As the old saying goes, be careful what you wish for, lest it comes true. Monetary and fiscal policy remains accommodative The tidal wave of central bank liquidity created by low short-term interest rates is unprecedented. Quantitative easing to the tune of $120 billion per month in debt security purchases is an attempt to keep interest rates further out along the yield curve at low levels to stimulate borrowing and spending and inhibit saving. With the long-bond futures slipping from over 180 to the 161 level at the end of last week, QE may have only softened the inflationary blow over the past months. The Fed has a partner in crime, the US Treasury, and the Washington establishment. If central bank liquidity is at an all-time high, fiscal stimulus is off the hook. Stimulus in the trillions has only exacerbated rising inflation. The price tag for the monetary and fiscal accommodation since the pandemic began is growing by leaps and bounds as it eats away at money’s purchasing power, the classic definition of inflation. COVID-19 may be fading into the rearview mirror, but its legacy will remain an inflationary danger for many years to come. Conflicting signals for the bond market cause a bounce The Fed will meet this week for its June FOMC meeting. So far, the only thing the central bank has said is that it is “not thinking about thinking about” tapering the QE program or increasing the Fed Funds rate to address rising inflationary pressures. The unemployment rate at 5.8% and core inflation at the highest level in decades are conflicting data for the central bank. Meanwhile, the administration and Congress keep spending with some politicians demanding even more stimulus and programs. The bond market found a bottom in late March and has been recovering. The pattern in the September long-bond futures contract illustrates a series of higher lows and higher highs since it traded at 152-16 on March 18, 2021. The latest high came last week at 159-29. The bond market did not sell off after the latest CPI data, but it did rally on the weak employment numbers. The bond market may have gotten ahead of itself in March when it fell to the lows. Speculative shorts pushing the long bond futures lower appear to have run out of patience and covered risk positions. However, if the Fed remains on its same accommodative path with help from the government’s tsunami of fiscal stimulus, the rally in bonds is likely to run out of steam sooner rather than later. Jackson hole could bring another shift The Fed Governors, economists, and others gather in Jackson Hole, Wyoming, each August. Over the past years, policy shifts have often created fanfare during the event. We could see the Fed begin to guide that QE tapering is on the horizon later this year or early 2022. Economic conditions and rising asset inflation make a shift towards tightening monetary policy logical as vaccines have created herd immunity to the virus, and conditions have not only improved but are robust. However, if the central bank decides that it needs to keep the accommodative policy in place because of the unemployment rate, it will only pour more fuel on an already burning inflationary fire. Expect lots of volatility in the bond market over the coming weeks and months. Increased price variance creates a nightmare for passive investors, but it is a paradise for nimble traders with their fingers on the pulse of moving markets. The bond market could be the Garden of Eden for traders over the second half of 2021 and beyond. The bond market is ground zero for the free market’s battle with the Fed and Treasury. Since August 2020, the bond market has been fighting the Fed and winning. Sign up for the free Monday Night Strategy Call using the link below! Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
CBOT:ZB1!
by Andy_Hecht
7
US Treasury Yield Curve and Inversions.This chart shows three times during the past three decades in which the yield curve inverts. An inversion is when the rate of a shorter term debt security is higher than the rate of a longer term debt security. This is identified on this chart in 2000, 2006, 2019. Treasury Debt Securities: Bill; less than one year to maturity at issue. Note; greater than one year but less than 10 years to maturity at issue. Bond; greater than 10 years to maturity at issue. In 2000 the yield of the 3 month US Treasury Bill was about 6.3% while the yields of both the 5 year Note and 30 year Bond were around 5.8%. In 2006 the yield of the 3 month US Treasury Bill was about 5.1% while the yields of both the 5 year Note and 30 year Bond were around 4.9%. In 2019 the yield of the 3 month US Treasury Bill was about 2.3% while the yield of the 2 year Note was around 1.8%.
TVC:US30YEducation
by ThrivingProject
1
The 10-year UST yield breaks its supportThe 10-year UST (nominal) yields seems to have broken on the downside, despite slightly. If this movement were to continue, then the main winners would be : - US government bonds: over the short term only. - Precious metals and stocks in this same sector, which react positively to real yield drops. Indeed, like nominal yields, real 10-year yields dropped from -0,79% to -0,84% in one day. However, the main losers of this new downside dynamic for yields would be banks, which benefit from a steeper yield curve (i.e. banks like when the difference between short-term and long-term rates increases)
TVC:US10YLong
by UnknownUnicorn12046529
2
EW Analysis: Bearish Looking Treasuries May Push USDJPY HigherHello traders! Today we will talk about treasuries (10Y US Notes) and its negative correlation with USDJPY. As you can see, 10Y US Notes turned sharply down after a corrective movement in wave 4), which means that it can be now on the way back to lows for wave 5), especially if breaks below channel support line. At the same time USDJPY may continue higher as we know they are in tight negative correlation, so be aware of more upside on USDJPY with room even up to March 2020 highs and 112 area. Trade smart! If you like what we do then please like and share our idea! Disclosure: Please be informed that information we provide is NOT a trading recommendation or investment advice. All of our work is for educational purposes only.
CBOT:ZN1!
by ew-forecast
Ten-Year US Treasury Yield in Focus as Inflation Data LoomsTreasury Yields in the Crosshairs Ahead of High-Impact Inflation Data Due Ten-year US Treasury yields have rallied 14-basis points since Friday's swing low Bonds are selling off again as investors grow weary of mounting price pressures US10Y could snap higher if monthly inflation data due for release tops estimates Taking a quick look at a daily chart of ten-year US Treasury yields ( TVC:US10Y ) highlights a change in tone of the bond market over the last three trading sessions. The ten-year Treasury yield has climbed 14-basis points since Friday's swing low printed in the aftermath of a shockingly poor reading for headline nonfarm payrolls. After having a chance to digest April's NFP report, however, markets pegged the miss to labor shortages. After all, the NFP report showed a healthy uptick in average hourly earnings, and JOLTS data released this morning showed that US job openings are at their highest on record. This has helped reignite inflation fears and the debate around Fed tapering, which in turn, is weighing negatively on the bond market. Bond prices fall as yields rise, and vice versa. That said, the sharp reversal in Treasury bond yields on Friday left behind what appears to be a bullish engulfing candlestick. Technicians may also consider how US10Y is now trading back above its 50-day simple moving average. This could open up the door to a test of technical resistance posed by the short-term descending trendline and upper Bollinger Band near 1.65%. Eclipsing this technical obstacle might bring fresh year-to-date highs into focus. Perhaps the upcoming release of monthly inflation data on Wednesday, 12 May at 12:30 GMT will provide a fundamental catalyst to spark the move. If inflation data crosses the wires below expectations, however, we could see a boost to demand for Treasuries that pushes yields back lower.
TVC:US10Y
by RichDvorakFX
A longer term perspective on BondsThe recent sell off in the bonds has been sharp and is having reverberations throughout the broader markets. This is a monthly chart looking at bond prices going back twenty years. I was surprised to find that although the current price action has felt extreme, the bonds are still well within a 2 standard deviation regression channel. I've drawn in some possible pathways for bond prices over the next decade. While I believe there's a fairly high probability that the bottom of the regression channel around 125'00'0 will be tested and prices will eventuate toward high value areas on the volume profile, the pathways are less of a forecast and more of an illustration of questions that I have. Specifically: will the highs around 142'00'0 during the March 2020 COVID crash be tested (and possibly taken out), or will they end up being the high for the foreseeable future? If Bond prices continue to fall, when will the FED step in and apply yield curve control? Most importantly, what effects will all of this have on the broader markets? In April 2019, the Federal Reserve released a report which stated that for every 2.5 move up in the DXY, there is a 10% decline in new C&I bank loan origination. Not only do falling bond prices lead to more challenging debt environments for businesses and consumers, they can lead to a stronger dollar thus putting deflationary pressures on an economy. Needless to say, trading bond positions on a Monthly time frame isn't really viable (or exciting) for most retail traders. However, keeping these kind of macro ideas in mind help me provide a context and framework toward my own trading.
CBOT:ZN1!
by InnerMotionTrading
Under the hood of the DXYThis chart breaks the DXY down to it's individual components and examines each currency pair individually. In addition, the DXY itself is depicted as an area line at the bottom of the chart to give a more comprehensive feel for its movement. There has been a confluence of the US treasuries selling off (pushing rates higher) while the opposite is occurring in other countries. Therefore, the widening of treasury spreads between the USD and its DXY counterparts is creating an increase in demand for the dollar.
Long
by InnerMotionTrading
Weekly $TLT Most Oversold.... EVER!We are watching a capitulation of long dated bonds in real time. Today's huge gap down of -2% breaking last week's lows is actually perfectly in line with TLT seasonality for the past 16 years. This is no coincidence as the March 2009 - March 2010 sequence in bonds is very similar to the March 2020 - March 2021 sequence. The Q1 FOMC in the 3rd week is usually a catalyst to reverse the sentiment in bonds. This extra gap down near the statistical low for the *Entire Year* is a true gift. When bonds recover, expect a huge buy cycle back into beaten down tech/growth stocks. A big clue today was Gold. It tracked 30Y bonds (ZB Futures) overnight down, but reversed hard with the Euro off supports. Normally, if TLT was down -2% at the USA open gold would be crushed, but it did the exact opposite. Something is off with long dated bonds and I feel this will be quickly resolved with the FOMC catalyst next week. Join in this great trade! TLT Seasonality for the previous 16 years - There are no coincidences!
NASDAQ:TLTLong
by mortdiggiddy
85
Is inflation coming? In short, we don't think so. In the chart above, you're seeing the 10y30y spread and the 10y yield. The 10s30s is a barometer of the inflation risk premium. And quite frankly, the market isn't buying that inflation will be sustained. Yes, the 10y yield is indicating perhaps to many that there is some kind of inflation risk, but from the Macrodesiac view, all that is being exhibited here are base effects. Take a look at the US 10 year yield (the risk free rate of return) over the last 20 years, and come to a conclusion as to whether we are in an abnormal market or not. The upper bound is likely capped at 2-2.5% at the max. This would not inspire the extent of inflation that many are warning about, and the Fed is consistent with this view as well. An excerpt taken from the Macrodesiac note yesterday... 'Back in late August last year, Powell stepped up to the podium at Jackson Hole (well, it was online), where he outlined a different policy path of Average Inflation Targeting. Here's where an understanding of that above paper comes into play. " f inflation runs below 2 percent following economic downturns but never moves above 2 percent even when the economy is strong, then, over time, inflation will average less than 2 percent. Households and businesses will come to expect this result, meaning that inflation expectations would tend to move below our inflation goal and pull realized inflation down. To prevent this outcome and the adverse dynamics that could ensue, our new statement indicates that we will seek to achieve inflation that averages 2 percent over time. Therefore, following periods when inflation has been running below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time." It's all about signalling. The central bank can't automatically push prices up. They can only provide behavioural signals to the market to either consume or save. That is it. The problem comes when there are broader issues at hand that might make the actual mechanism of achieving policy goals, defunct. The main one that I have been focusing on of late is of course demographics, and the labour market, which are intertwined.' Now, let's talk about those demographic issues. Below is the labour force participation rate for the US. What I would like to know is how inflation is to be sustained when we have 2% of the available workforce that have taken themselves out of even looking for work on a year on year basis? You can provide all the stimulus checks you like, but all that is doing is providing a push back to a prior baseline - if fewer people have incomes, there is less consumption, so one of the primary drivers of inflation is dampened. And with regards to the recent NFP figure of +376,000 new jobs being created in a month, we would have to see that figure be printed month on month until April 2023. Not so inspiring, is it? Your eyes may now switch to the savings rate as a critique of what I am suggesting. The problem here is that this is a ridiculously skewed measure too. For retirees and the highest income earners, they have captured most of this increase in savings. But for the poorer income quartiles, they have experienced a broader deterioration in their household savings rate. When you look at data on consumption broken down by income, you find that the highest marginal propensity to consume segment is the richest households with low liquid savings and high illiquid savings... But right now, they have both. The next highest (and is generally consistent through time) is the lowest and middle households. However, they do not have spare cash to spend! The pent up demand argument is failing, and I'd argue is more a bubble in financial media and commentators where they are on higher salaries, their family members are too and they (me too) have largely been shielded from the economic fallout of the past year. Now, I've also got into debates around something a little more concerning too, and that is to do with TIPS (Treasury Inflation-Protected Securities). You might not have heard of this, but it's effectively a way to protect yourself against the rise of inflation. I'll take another excerpt from the note written yesterday... 'There's a big problem with this measure. The Fed has been buying Treasury Inflation-Protected Securities! The Fed’s buying of TIPS could drive down TIPS yields and drive up the breakeven measure of inflation expectations. So what we are perhaps seeing here is the market using a key measure of inflation expectations to gauge the macro picture moving forwards, without actually realising that it's distorted. 'But breakevens are high!' is probably the reply that you might get back if you mention a number of factors that contend with the longer term inflation view. My question then would be to ask whether this would have some effect across the nominal yield curve, causing yields to spike higher and with greater speed, than they should? This paper might prove key to answering what's going on here. "Such expectations proxy a situation in which the public does not understand the full structure of the economy and, hence, cannot anticipate the implications of policymakers’ intention to make up for past deviations of inflation from its objective. By varying the number of economic agents (and, hence, components or blocks) in the FRB/US model who use VAR-based rather than model-consistent expectations, we can adjust the extent to which the public understands policymakers’ commitment to a makeup strategy and the degree to which aggregate economic variables react to news about the future." The paper concludes with... Makeup strategies work best when the public understands, believes, and reacts to policymakers’ commitment to offset misses in inflation from the 2 percent objective in the future.' What we are currently seeing in the market, from my point of view, is merely the Fed signalling that they want to make up for missed inflation goals over the past year and probably before as well. Now they have the fiscal support, it sounds to them like it might be the right time to do so. This is most notably seen through Powell's speech at Jackson Hole back in August where he introduced the Fed's new mandate of 'Average Inflation Targeting'. What I would wonder, specifically to do with TIPS, is whether traders know that the Fed has distorted the TIPS market, since 5y5y inflation swaps have followed it, and have almost gone in lockstep with the Fed's holdings of TIPS. This would be cause for concern, and if it is understood, alongside the waning macroeconomic indicators, then this would provide a strong basis for the current differentials in rates pricing, and for the inflation narrative to subside. Welcome normality.
TVC:US30Y
by FinkPro
129