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 trade ideas
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?
Chart Analysis of 10-Year U.S. Treasury Bond Yields
Based on current chart patterns and Elliott Wave Theory, it appears we are in Wave 4 of a higher-degree cycle for the 10-year U.S. Treasury bond yields. Wave 4 is typically a corrective phase following a strong trending Wave 3, suggesting that this phase may involve consolidation or retracement.
Key Levels to Watch:
38% Retracement (Lower Orange Line) : If yields bottom near this retracement level, it may indicate a potential support zone where Wave 4 could complete its correction.
61% Retracement (Upper Orange Line) : Should the yields find support at the 38% level, they might subsequently target the 61% retracement level of Wave 3, suggesting a potential upward move.
Market Implications : If the bond yields continue to rise and reach these retracement levels, we could witness a significant bearish trend in the broader market. However, it's crucial to recognize that market conditions are dynamic and can affect these projections.
Disclaimer : This analysis is based on the current technical chart patterns and Elliott Wave Theory. Market conditions are subject to change, and unforeseen factors can impact outcomes. Therefore, it's essential to stay informed and consult with a financial advisor before making investment decisions.
Regards
US 10Y TREASURY: Fed on the moveThe US inflation data, posted during the previous week, clearly showed that the inflation in the US is slowing down. It is still above the Fed's target of 2%, but it opens the space for the Fed to cut interest rates. Markets are almost sure that the first rate cut will occur at September's FOMC meeting, which is scheduled for September 19th. The market positioned itself in accordance with expectations during the previous weeks, by decreasing yields on the US Treasury bonds. The 10Y US Treasury benchmark reached the lowest weekly level at 3,61%, still ending the week at 3,65%.
Considering that the FOMC meeting is scheduled for the week ahead, some increased volatility could be highly expected. The 10Y Treasury yields might oscillate a bit up to the levels around 3,70%, looking for an equilibrium. Fed Chair Powell’s rhetoric after the meeting would shape the investors sentiment, in which sense, some higher movements might be possible. Still, on a long-run, the interest rates and yields would certainly trade with a clear downtrend.
Yield Spread UST 10Yr and 2Yr and S&P500 CrashThey said when Spread Yield TVC:US10Y 10Yr and TVC:US02Y 2Yr return to positive area after spending some time in negative area, within 3 to 6 months, TVC:SPX will crash
30-year US10Y trend vs. 10-year Bitcoin trend divergence vs. disparity
o1-mini:
**Understanding Divergence vs. Disparity**
- **Divergence** refers to a situation where two related data sets, indicators, or trends move in opposite directions. In financial markets, divergence often signals a potential reversal or shift in the prevailing trend. For example, if the price of an asset is rising while a momentum indicator is falling, this negative divergence may indicate weakening upward momentum and a possible downturn.
- **Disparity**, on the other hand, denotes a difference or inequality between two quantities. In finance, it can refer to discrepancies in valuations, performance metrics, or other financial indicators between assets or markets. Disparity highlights the gap between two elements without necessarily implying any future convergence or reversal.
**30-Year US 10-Year Treasury Yield Trend vs. 10-Year Bitcoin Trend**
- **30-Year US 10-Year Treasury Yield (US10Y) Trend**:
- Over the past three decades, the US10Y has experienced a long-term downtrend. From the early 1990s to around 2020, yields declined from levels above 7% to historic lows below 1%, particularly during times of economic stress like the 2008 financial crisis and the COVID-19 pandemic in 2020.
- This downward trend reflects factors such as monetary policy easing, lower inflation expectations, and increased demand for safe-haven assets.
- However, starting around late 2020 and into 2023, yields began to rise again due to factors like economic recovery, rising inflation, and shifts in Federal Reserve policies.
- **10-Year Bitcoin Trend**:
- Since its inception in 2009 and especially over the past decade, Bitcoin has exhibited a remarkable uptrend, despite significant volatility.
- From being virtually worthless in its early years, Bitcoin reached all-time highs above $60,000 in 2021.
- The cryptocurrency's growth has been driven by increased adoption, institutional interest, and its perceived value as a hedge against inflation and currency devaluation.
- Volatility remains high, with notable corrections exceeding 50%, but the long-term trajectory has been upward.
**Analyzing Divergence and Disparity Between US10Y and Bitcoin Trends**
- **Divergence**:
- The inverse movements of US10Y yields and Bitcoin prices over their respective periods can be seen as a divergence in investor behavior and sentiment.
- Traditionally, declining yields on government bonds like the US10Y suggest a risk-averse market seeking safety, which lowers yields due to higher bond prices.
- Conversely, the rise of Bitcoin signifies a growing appetite for alternative investments, often perceived as riskier but offering higher potential returns.
- This divergence highlights a shift in how investors allocate capital between traditional safe assets and emerging alternative assets.
- **Disparity**:
- There's a disparity in the performance and volatility profiles of the US10Y and Bitcoin.
- The US10Y is a benchmark for low-risk, fixed-income investments with relatively stable returns, influenced by macroeconomic factors and monetary policy.
- Bitcoin represents a high-risk, high-reward asset class with extreme volatility and speculative investment behavior.
- The disparity extends to their roles in a portfolio: bonds are typically used for capital preservation and income, while Bitcoin is considered for growth and diversification.
**Implications for Investors**
- **Portfolio Diversification**:
- The divergence between bond yields and cryptocurrency performance suggests that including both asset classes can enhance diversification.
- Bonds may provide stability and income, while Bitcoin could offer growth potential and a hedge against certain systemic risks.
- **Risk Management**:
- Understanding the disparity in risk profiles is crucial. The low volatility of US10Y bonds contrasts sharply with Bitcoin's high volatility.
- Investors should assess their risk tolerance and investment horizon when allocating assets between these categories.
- **Market Signals**:
- Diverging trends can signal shifts in macroeconomic conditions. Rising bond yields may indicate inflation expectations and tightening monetary policy.
- Bitcoin's performance could reflect market sentiment toward digital assets and technology adoption.
**Conclusion**
The concepts of divergence and disparity help in analyzing and interpreting the differing trends of the US10Y yields and Bitcoin over their respective periods. While divergence highlights the opposite movements and potential shifts in investor behavior, disparity emphasizes the fundamental differences in their investment characteristics. Understanding both can aid investors in making informed decisions and constructing resilient portfolios amid evolving financial landscapes.
US10Y Elliott Waves: 10 SEP, 2024 | The Bearish MarketThe ((v))-navy wave is unfolding to push lower, which itself is subdividing into wave iii-grey of wave (iii)-orange.
Wave iii could continue to push lower, targeting the 3.564% low. While price must remain below 3.932% to maintain this view.
On the other hand, the 61.8% level could temporarily act as a potential resistance level that price should hold below.
US 10Y TREASURY: NFP implied yieldsFriday was the major trading day on the US financial markets, after the release of jobs data for August. The US nonfarm payrolls came weaker than market was expecting, which implied market higher volatility. The nonfarm payrolls came at the level of 142K, while the market was expecting to see 160K for the month. On the positive side was a modest decrease in the unemployment rate from 4,3% to 4,2% in August. Such weak figures were an indication to markets that the Fed might need to cut interest rates at least by 50 bps in order to support the economy, which might be potentially entering into a recession. Of course, the US economy is still holding in a relatively good shape, where relatively weaker jobs figures should be taken with a reserve.
The 10Y Treasury benchmark was pushed to the downside, reaching the lowest weekly level at 3,65% at one occasion at Friday's trading session. Still, yields are ending the week at the level of 3,71%. The week ahead will be used by investors to digest the latest jobs data and reassess their positions accordingly. In this sense some adjustments in yields are possible to the upside. The level of 3,8% might be tested for one more time.
US10Y - Imbalance Made BalancedStudying the daily timeframe, it is evident that there are inefficiencies in the market.
Which SIBI will price attack first?
US 10 Y TREASURY IDEASthis is what i think could happen short term form now til end of year and into early next year.
Direction of the 10yr yield and mortgage rates. So here is my analysis on the 10yr yield: The long-term trend is contained in a bull channel (upwards). In the short term: I believe it comes down to 3.2% percent as that was a very important level back in 2022 and 2023 so it will first act as a level of support plus it should be around the bottom of the trendline. If it can break below that level, then i do see the 10yr coming down to 2.7%. The 50,100,150,200 moving averages has almost all crossed over and are sloping down which is a bearish signal. For price action traders the chart has formed a head and shoulders top which is also why i believe it will retest the neckline. The direction of the 10yr will depend on FEDs further plans to cut rates.
10 Year & 2 Year Treasuries just uninverted10 & 2 year treasuries just uninverted after a long time being inverted. This is occurring right as unemployment looks set to increase to 4.5% and above. Expecting more market panic and this may potentially be the first clear signs of a recession. VIX quite high and market may be creating some of the first lower highs in a long time, indicating a bear market.
Tracking the yield curve disinversionRed line above green line means the disinversion has occurred. When green line above red line it means the 2yr is still paying higher interest than the 10yr
SPX on upper valuation band in a rising yield environment.The top chart shows the US 10 Year government bond yield. We are currently in a rising yield environment.
The bottom chart shows that the SPX is at the upper channel and there is a risk of a significant drop in SPX in the coming years.
The middle chart shows the ratio of Gold/SPX. Gold has been underperforming but there are 5 to 10 year periods of gold outperformance over SPX.
