Category Archives: Interest

Calling the TBT Low … Where Is Yield Heading Next?

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On September 6, with the ProShares UltraShort 20+ Year Treasury (TBT) reaching a new low (33.32) in its 7-month corrective process, we noted that “Dec-Sep correction could be at or nearing a downside exhaustion.”

Our RSI and MACD indicators showed a glaring non-confirmation of the low — and sure enough after the TBT dipped to a new low of 32.99 the next day, it went on to rally over the next four sessions, and reached a high of 35.25 this past Wednesday.

On that same day, Wed Sep 20, the Federal Open Market Committee said it will keep the federal funds rate in a range of 1-1.25%, but Fed officials intimated that they may raise rates one more time by year-end, and three times during 2018, in addition to starting Quantitative Tightening in October– the slow, steady reduction of its bloated $4.5 trillion balance sheet. (more…)

Inflation Siesta

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The latest economic data came out this morning, and it indicates that, in spite of the Fed’s best efforts, inflation just is not kicking in. CPI fell for the fourth month in a row, and the US dollar has continued doing what it’s been doing the entirety of 2017, which is sink.

In turn, precious metals are getting a hearty bid (which will probably blow me right out of my DUST position at the opening bell). For gold bulls to reclaim power, they’ll need to close the gap I’ve pointed out below and push above it. Otherwise, this is just going to be another opportunity for the bears to take advantage of precious metals weakness, more or less in place for the past six years and counting. (more…)

3 Things the Charts Are Saying About the 10-Year

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Three things the technical set-up is telling us about the benchmark 10-year Treasury yield:

  1. The Momentum low of the correction after last year’s advance from 1.32% (7/06/16) to 2.64% (12/16/16) was established on 4/18/17 at 2.17%. All of the downside action in yield thereafter, into mid-late June 2017, has been unconfirmed by Yield Momentum.
  2. On 6/14/17, Yield hit its corrective low print at 2.10% off of the December 2016 high at 2.64%, which was accompanied by divergent, much higher Momentum readings. In addition, the 2.10% low represented a 38% retracement of the entire prior major upleg from 1.32% to 2.64%.
  3. The 6/26 minor pullback yield low at 2.12% followed by a sharp upmove to 2.25% on 6/28 represents a successful retest of the 6/14 low at 2.10% and a successful retest of the dominant up-trendline off of the 7/06/16 historic low yield of 1.32%. From a big picture technical perspective, benchmark 10 year Treasury Yield appears to be in very promising technical condition ahead of the initiation of a new upleg that extends its first bull leg from 1.32% to 2.64% towards a projected next target zone of 3.00%-3.15%.

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Signs of Life

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If there’s one thing that has really stood out over the last few months it has been the SPX tape’s tendency to just stop doing anything interesting for several days at a time. SPX has tested the daily middle band as resistance every day for a coma-inducing eight days, but I was saying in my premarket video to Daily Video Service subscribers at theartofchart.net an hour before the open that there was good reason to think that we would see breaks down on equity indices today, and we may well be seeing the start of that now. You can see that premarket video here. SPX daily chart:

170411 SPX Daily

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Key Level on the 10-Year

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By Mike Paulenoff, MPTrader.com

After the first day of trading of April, a relatively uneventful one for the equity markets in general, the most consequential market for me is 10-year yield, which continues to exhibit constant weakness that commenced immediately after the March 15th Fed rate hike, and currently is bearing down on a critical 5-month support level at 2.30%.

If 2.30% is violated and sustained, it will trigger potential for downside continuation that projects to 2.10% optimally, and possibly to 2.00% prior to the next upmove in the budding yield bull market off of the July 2016 historic low at 1.32%. The 10-year hit a high in mid-December, 2016 at 2.64%, and probed that level a second time into the March 15th, 2017 Fed meeting. (more…)