The Bonds segment of NFTRH 491 took a turn to tin foil territory to allow the letter writer to expose newer subscribers to his ideological views and thus, bias. #491 also got pretty talky on the precious metals as it did a thorough review of the sector’s status, with silver’s symmetry to 2016 a very key item. Hint: An ill-fated bounce like so many that have come after the 2016 top is not what we are looking for with the next rally, but it ain’t gonna be easy. You can check out this article for a good piece of the picture: Silver’s Equal and Opposite Symmetry to 2016 Indicates Future Sustainable Rally. On to the Bonds segment…
Bonds, Inflation & Amigos
I’d like to put the bond segment right here after the US stock segment because bonds/yields are so important to sector selections in stocks. (more…)
The monthly CPI numbers came out, and even though prices are going higher, I guess the market was relieved. (CPI trend chart below from ZH):
This morning’s post highlighting Jim Grant’s bond market/interest rate views (by way of Heisenberg) prompts me to reproduce publicly NFTRH 490‘s short bond segment. I may be known as the guy calling yields to decline but in context I am the guy calling for caution at a potential limit area who has appropriately called for yields to rise and decline all through the bond market’s recent history. It is important not to get lost in bias or dogma.
Bonds and Related Indicators
Long-term yields lurk just below our targets of 3.3% (30yr) and 2.9% (10yr). The yields on the short end remain relatively strong as evidenced by the flattening yield curve. This remains a positive macro picture (whether manipulated or not, my job is to play it straight and convey the message of the bond market, not to wear my tin foil hat).
I try to have a lot of different ways of looking at the macro backdrop because if enough of them imply the same thing then a strong probabilities-based thesis can be made.
For instance, currently we are looking at long-term Treasury yields hit (10yr) or get very close to (30yr) upside targets. You know my stance there; I think risk is pretty high for a downward reaction in yields before too long. I’ve backed that view with portfolio balancing positions in 3-7yr and 7-10yr bonds. But even if a reaction comes about (and especially if it doesn’t), the big question is whether or not we are going into territory that has been uncharted for decades.
So are we going to eventually break the Continuum’s limiter? Here is the 30yr yield, almost to a target that few saw coming several months ago, outside of this website when we ID’d the downward consolidation as a bullish flag and used daily charts to gauge bullish patterns in the 10yr & 30yr. (more…)
Too many gold bugs are either still pimping the ‘inflation trade’ or digitally pleasuring other gold bugs with predictions based on inflation. From my favorite example of this behavior just yesterday (he of the “drop dead gorgeous bull wedge” for GDX that failed into a miserable bear market extension a few years ago). Just yesterday…
“I’ve announced a long term target for GDX of $15,000. That really isn’t very high… given the strong inflation numbers that I am projecting for America in the years ahead.”
I don’t use the guy’s name because he is not a big public figure like Dennis Gartman or Doug Casey. But he is highly visible within the gold
cult err, “community” and he uses a lot of !!!!! when trying to hammer his points home to greedy gold bugs (the only kind, I assume, who take him seriously). Exclamation points are a sign of someone who really… really, I mean REALLY wants you to get their point!! (ha ha ha). (more…)
Over and over again I’ve been making goofy headlines about the Amigos, the 3 macro riders who will reach (or abort) their respective destinations, at which point the macro is subject to change. The latest update was yesterday with a daily chart view.
Just look at them, the SPX vs. Gold Amigo, the 10yr & 30yr Yield Amigo and the Yield Curve Amigo. So happy-go-lucky while they ride. But #2, the one in the middle, looks like he’s bracing for something.
So okay, I played swami and nailed the Payrolls and Average Hourly Earnings numbers on the head in this post from yesterday. We all get lucky here in the casino. Here is the post that the estimates came from the day before the Payrolls release. (more…)
The TIP/IEF ‘inflation gauge’ is still motoring upward after breaking above the SMA 200. If this turns the 200 up along with the MA 50 it could indicate a mini hysteria about inflation.