US 10 Year Yield On The Cusp of Breaking DownThe 10 Year Yield has been trying to hold this B point level as Support for the longest time but everytime it tries to bounce it gets pushed right back down and in the most recent try we saw it come up to test the moving averages while it Bearishly Diverged and began a Death Cross. If we can get a serious BAMM Breakdown from here it coulkd go down all the way to 1.4% which would likely coincide with a huge decline in the DXY and a rise in the stock market.
US10Y trade ideas
Analyzing Inflation: COVID-19, Energy, Conflict & LaborInflation, a critical financial and economic indicator, has been significantly impacted by various factors in recent years. This article delves into the influence of COVID-19, changes in work patterns, labor market shifts, energy sector decisions, and the Russia-Ukraine war on inflation, presenting a comprehensive analysis of our present financial landscape.
COVID-19 and Supply Chains: A Recipe for Inflation
The global pandemic, COVID-19, significantly disrupted supply chains worldwide. With a combination of limited supply and robust or surging demand, the result was inevitable - a price increase, a key driver of inflation. Rising costs of materials, labor, energy, and transportation, all amplified by the pandemic, made goods more expensive to manufacture and transport, further contributing to inflation.
The aftermath of these disruptions led to a ripple effect: a rise in supply chain costs. Consumers facing higher prices found themselves with reduced disposable income, which could, in theory, lower demand. However, the essential nature of many goods affected by these disruptions likely negated this potential offset, fueling inflation further.
In the long run, these disruptions could lead to persistent inflation. The pandemic has exposed the fragility of 'just-in-time' inventories and the impact of underinvestment in global commodity supply chains, adding to inflationary pressures. Consequently, inflation may become a more permanent fixture, disrupting business planning and forecasting and adding another layer of complexity to the economic environment.
Labor Market Shifts: From Crisis to Recovery
The pandemic has considerably affected the labor market, resulting in significant shifts and shortages across various sectors. The initial outbreak led to severe job losses, with the global unemployment rate peaking at 13%. However, as economies start to reopen, we're seeing an interesting trend: people voluntarily leave their roles, even as worker demand increases.
This labor shortage, induced by changing demographics, border controls, immigration limits, and the call for better pay and flexible work arrangements, presents another challenge in our economic landscape. Furthermore, the acceleration of digitalization and the gig economy could have enduring effects on labor supply and productivity. The crisis has potentially long-term implications, like automation's role in slowing the employment recovery in service occupations.
Remote Work: A Double-Edged Sword
The rise of remote work, while offering significant societal and economic benefits, also carries potential inflationary effects. Increased demand for houses/apartments, home office equipment, utilities, and other home-centric products and services has led to price hikes, accelerating inflation.
Moreover, while remote work has the potential to boost productivity and create new job opportunities, it also brings challenges. Difficulties in collaboration, communication hurdles, and blurred work-life boundaries could negatively impact productivity, painting a more complex picture of remote work's overall effect on productivity and inflation.
Energy Decisions: A Balancing Act
The decision to reduce investments in nuclear energy and fossil fuels can influence inflation and the overall energy market. A decline in energy production can lead to price increases due to supply-demand imbalances, contributing to inflation. Moreover, reduced domestic energy production may increase dependence on imported energy, which, if more expensive or if international energy prices rise, could also lead to inflation.
Transitioning to green energy without adequate investment and planning could lead to shortages and disruptions, driving up energy prices and contributing to inflation. While renewable energy technologies are advancing rapidly, they cannot fully replace the capacity provided by nuclear and fossil fuels in many countries. This could lead to energy shortages and price increases, particularly if the transition to green energy outpaces the technology's readiness.
The variability of renewable energy sources, such as wind and solar, presents another challenge. Without adequate energy storage and grid infrastructure investment to manage this variability, energy supply disruptions and price spikes could become more common.
Moreover, a rapid transition to green energy could displace existing energy jobs before adequate green energy jobs are created. This could lead to economic instability and potentially contribute to inflation. While the long-term costs of renewable energy can be lower than fossil fuels, the initial investment required to build renewable energy infrastructure can be high. Higher energy prices can pass these costs to consumers, contributing to inflation.
In conclusion, while the transition to green energy is crucial for addressing climate change, this transition must be well-planned and well-managed. Policymakers must strike a careful balance between the urgency of climate action and the need to maintain energy security and economic stability.
The Russia-Ukraine War: Geopolitical Inflation
The ongoing conflict between Russia and Ukraine has also played a role in driving inflation. The war has disrupted the supply of essential commodities such as oil, gas, metals, wheat, and corn, pushing their prices upwards. These nations are major suppliers of these commodities, and their reduced supplies have led to sharp price increases worldwide.
Furthermore, the conflict has exacerbated global supply chain disruptions, already strained by the COVID-19 pandemic. This has led to heightened inflationary expectations among businesses and consumers. Additionally, the war has significantly increased oil and gas prices, particularly in Europe, directly impacting inflation and household spending.
The war has also weakened global economic confidence, further fueling inflationary pressures. Countries already grappling with financial challenges, such as Lebanon and Zimbabwe, have been severely impacted by the inflationary effects of the Russia-Ukraine war. Overall, the conflict is estimated to add about 2% to global inflation in 2022 and 1% in 2023, compared to pre-war forecasts.
Conclusion
In conclusion, the dynamic interplay of the COVID-19 pandemic, remote work, labor market shifts, energy sector decisions, and the Russia-Ukraine war has significantly influenced inflation. Policymakers, economists, and businesses must navigate this complex landscape to develop effective strategies that mitigate inflationary pressures while promoting sustainable economic growth. As we move forward, we must continue to monitor these factors to understand their ongoing effects on inflation and the broader economy.
Key short term levels to watch on the US 10Y yieldUS GDP Q1 GDP figures were released yesterday and showed a significantly slower rate of growth that expected, printing an overall figure of 1.1% Q1 growth.
The problem facing investors is that economic data suggests that inflation could remain sticky and the central bank is widely expected to raise benchmark rates by 25 basis points at its policy meeting next week.
So we are taking a look at the US 10Y yield chart to identify the key levels that you need to watch short term.
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4-27-23 [us10y]hello,
here is one more layer of confluence,
to back up my spx case.
---
to the untrained eye, this looks like total, nonsensical chop,
but to a space explorer, it can easily be viewed as a 3-3-3.
what is a 3-3-3?
glad you ask anon:
a 3-3-3, is a very corrective structure,
designed to kill time mostly-
labeled w-x-y.
wxy = double zig-zag
these channel nicely,
as portrayed in the image above.
---
once this double zig-zag concludes into the summer time,
i predict the stock market will crash.
---
enjoy it till then, and as always ---
this is not financial advice,
i am merely an artist,
bringing to you,
art.
US10Y: Last dip before a medium term reboundThe US10Y is trading inside a Channel Down ever since its market peak on October 21st. The 1D technicals are neutral (RSI = 54.601, MACD = 0.300, ADX = 17.030) giving a mixed tone to the price action but based on the December-January Lows we can see the the Channel Down has one last dip to make before it bottoms and rebounds on the medium term. We will wait for that pullback around 3.250 and buy targeting the 0.618 Fibonacci (TP = 3.750).
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Will the US 10-year Treasury yield move towards the 3.9% level?This is my view of the next US 10-year Treasury yield movement. Of course, the Fed's decision at the early meeting next month will have a big impact on the US 10-year Treasury yield movement. But for now, I still see potential for an increase to the 3.9%-4.0% level.
INCREASE IN INTEREST REATES VERY SOONFrom my previous analysis about Bonds market that is extremely bearish. The opposite should occur in the Interest rates.
From Pure Technical Analysis, Price takes out March 23rd lows and then broke to the upside
I expect price to continue on the Bullish path from the volume Imbalance and then proper to the upside
I expect 4% interest rates soom, that is the Buyside Liquidity above the market place
US10Y - US02Y : Lesson from 2008Not long ago, it was inverted by more than 100bps. Today, the inversion is about 40bps. As we all know, once it emerges from inversion, i.e. un-inverted, that is when we start counting to the next RECESSION. On average, it is 4 months. You can see it in the above chart. FED will soon cut rates.
Once un-inversion occurs, market will again do an adjustment/re-pricing exercise to all assets.
As you may already know now, the FED says there is NO RATE CUT this year. In fact, there is a possibility that there is one more +25bps to go. But you should know the market reaction by NOW. The market is signaling that the FED is done with rate hikes. You can see it in the Fed Fund Futures. In fact, market is now expecting a rate CUT in the next FOMC!!! and with more to come.
So now we wait for the un-inversion to occur. I think it is coming soon.
Also note that DXY is much higher than compared to 2008, meaning there is a BIG possibility that there is much more to FALL???
And possibility that DXY will continue to FALL until when the market sense that the FED is done with rate hikes. Once the EFFR touches 0.00%, that is when the DXY will start rising again.
Good luck.
P/S : Do not just believe what I say. Use your common sense.
4-19-23 [us10y]good eve'
---
decided to update my primary today, to further align with the current states of the market.
my upside target remains the same, at 5.9%--6% into 2024, but i think we go slightly lower locally, into june before it pops.
summer time is historically quite bullish in the market, so a slight pause on rates to align with seasonality makes sense.
thanks JP,
your service is appreciated ♥.
---
i got you an update if the structure changes.
✌
US10Y - US03M vs SPXThe yield curve is the most inverted it's ever been!
Does this mean MEGA crash is coming? Not sure...
And when will the crash come?
I believe after a new ATH and melt up in risk assets.
Yield curve will flatten and start rising.
The market top will happen as yield curve starts going back up.
us10y 4-14-23gm,
called the top on the us10y last year as well.
(view post at the bottom of this thread).
swinging by to actually adjust my public bias, after a few recent discoveries.
---
jerome powell explicitly mentioned in a few of the recent talks that the fed is going to raise the interest rates above 5%, and keep them there for some time.
what this tells me, is they're expecting inflation to tick back up - or they're taking the extra precautions to ensure that this indeed doesn't take place.
---
what i am implying here in my count - is an extension to 5.9% (at the bare minimum).
this could mark a top, unless we pull back in three waves (the same we did from the recent top).
👇
Rethinking Fed Intervention: Wages, Inflation, and AIIn light of the precarious global economy and numerous contributing factors, such as deglobalization, the inflationary impact of the war in Ukraine, an aging population, and an overwhelming amount of debt, the Federal Reserve's role and efficacy in the current economic climate have come into question. Drawing on Jeff Snider's work, it is increasingly evident that the Federal Reserve has not completely controlled the financial system. Despite their efforts to manipulate interest rates, external factors and market forces continuously challenge the Fed's authority. The market's current outlook suggests that the Fed may be forced to cut rates soon, indicating that its strategy of hiking rates may not have been the best approach.
The central premise that the Fed should intervene to suppress inflation by keeping wages low is fundamentally flawed. Higher wages can lead to increased productivity investments, reducing the need for labor and raising living standards over time. However, hiking interest rates can stifle investment, hindering economic growth and exacerbating inequality.
In recent months, inflation has decreased independently, without the direct influence of the Fed's actions, suggesting that the economy may be self-correcting. However, this natural deflationary pressure could be disrupted by external factors, such as the tightening of lending standards brought on by the mini-banking crisis. The ongoing threat of AI-driven job losses and an impending recession further complicates the situation for American workers.
Jeff Snider's research at Eurodollar University offers valuable insights into the complex relationship between the Fed and inflation. Snider argues that the Fed's actions may not be the primary cause of inflation, as it has limited control over the money supply. Instead, he posits that the global financial system, specifically the eurodollar market, plays a more significant role in influencing inflation rates.
As we progress into the exponential age, the rapid advancement of technology and artificial intelligence (AI) will lead to significant disruptions. However, there are potentially positive aspects to these developments. AI could revolutionize industries, streamline processes, and create new opportunities. The widespread adoption of AI can lead to increased efficiency, improved decision-making, and the automation of repetitive tasks, ultimately driving economic growth. The productivity gains associated with AI could offset some of the negative impacts of the current economic climate, such as job losses and wage stagnation.
In summary, the belief that the Fed should intervene to suppress wages to tackle inflation is fundamentally misguided. Such intervention can have numerous negative consequences, including hindering investment and stifling economic growth. In contrast, allowing wages to rise can lead to increased productivity investments and improved living standards. To effectively address inflation, it is essential to consider a more comprehensive range of factors beyond the Fed's actions and recognize the importance of encouraging sustainable economic growth through policies promoting higher wages and productivity investments. Policymakers and financial analysts must carefully consider the consequences of their actions and their impact on the broader economy and society.
Thanks to Michael Green, aka @profplum99, for inspiring me to write this analysis :) twitter.com
US 10-Yr Govt Bond Yield | Has the rate ripe for a decline?US10YR has been rising after the completion of what looks to be an expanding leading diagonal wave A and currently now may be in terminal level for the corrective wave B which could possibly reach at or below 4%.
The yield is often related to the USDJPY pair and it is noticeably mimicing the pairs growth since its last drop from 129 level to current's 134.
The precious metal Gold (XAUUSD) too was hurt because of this rising yield from 1959 last high to as low as 1818 as of this posting.
We may possibly expect a shift in this market direction once the yield starts to cool down from its rise and can therefore be use as an added conviction for the Gold's bullish reversal.
@marketpainterph
#elliottwave
#marketpainterph
#XAUUSD
#GOLD
#US10YR
Fed Fund Bond Futures CyclesChart shows the credit cycles of fed fund rates and bond futures ranging from short term expiring bonds up to 30 year bonds. S&P Nasdaq and Bitcoin are compared to historical changes in fed fund rate and bond futures. As the chart indicates when fed fund rates reach their lowest point we call this "easy street" all markets seem to steadily rise in this part of the cycle. As futures start contracting and rising off the low rates markets typically see a choppy/semi bullish price action. As the fed reaches the top of the hiking cycle markets tend to break higher highs and a melt up stage occurs. The last part of the cycle is the fed pivots rates start dropping and futures expand we have a market drop. Then we start the cycle all over again.
It seems as though markets are now in the hiking cycle with futures contracting. Although markets did not see a semi/bullish choppy stage as of yet but I think that we are entering that stage now. This would be a stock pickers market with choppy bullish price action. We should have a blow off top once rates reach their highest point and of course another drop once the fed pivots. This is the historical cycle and although history does not repeat it does tend to rhyme. Past performance of course is no indication of futures results. Take this with a grain of salt because things could shift but my belief is that we will still have the blow off top once the fed stops hiking rates. Any comments are welcome but if this holds true. It is your cheat code for future cycles. Happy and safe trading. "There are many roads to success but one must be chosen"
US Bonds (10Y, 02Y, 01Y, 06Months) all indicating lower yields!The US Federal Reserve officials, including Fed President Bullard recently spoke about the economy is still strong and the interest rates need to go higher. US Bonds (10Y, 02Y, 01Y, 06 months) are rejecting the narrative indicating lower yields going forward. Who's right? Normally, the bond prices (and hence the corresponding yields) are right!