Category Archives: Interest

The Current Message of Yield Curves: Inflation or Deflation?

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With the state of post-Op/Twist systemic dysfunction, there are no absolutes, but…

Generally, a rising yield curve (after years of Goldilocks and her favored declining curve) would signal changes in financial markets.  But it is not as simple as stating ‘the curve is rising… it’s bearish!’ or ‘the curve is rising… it’s bullish!’.  It is potentially both of those things and it will have different implications for different markets and asset classes.

First, here is the state of yields and the yield curve currently, on the big picture view.  Trends are down in the deflationary continuum on the biggest picture for all items, but have been neutral on the 5yr and somewhat up on the 2yr ever since Goldilocks gulped the bears’ porridge in 2013.  The yield curve is in a downtrend.

us treasury yields and yield curve

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Support Holding So Far

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I haven’t posted the full set of charts that I do every morning for a while and these are the companion charts that I use in my premarket videos for Daily Video Service subscribers at theartofchart.net. I posted that on twitter before the open today (@shjackcharts), but if you missed that you can see that here.

On ES I was saying that the outlook remains bullish as long as 2146 remains unbroken, and the LOD so far is 2147.75. If that remains the LOD then the outlook still leans bullish. ES Dec 60min chart:

161004AM ES Dec 60min

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De Nada

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The bears didn’t have a good day yesterday, with a larger than expected decline on the indices, and clear breaks at the RTH on SPX close back below the daily middle band, the 50 hour MA and the 5dma, and ES losing the key weekly pivot area at 2152.25 that I highlighted as a key close area on a tweet yesterday afternoon. With the historical stats for the last day of September leaning 75% bearish, and the indices resting on key support levels the odds of the ATH retest on SPX that Stan and I have been looking for definitely looking lower, and you can see that reflected in the tone of my comments last night on the charts below.

Overnight though the picture changed entirely, with marginal new lows and 60min buy signals fixing on ES, NQ and TF, and with a triangle confirmed on NQ and a perfect bull flag channel established on TF. On my premarket video for subscribers to the Daily Video Service at theartofchart.net today I was leaning strongly bullish, and I’ve not seen anything since then to change that view. I’m thinking 50% odds or better that SPX trends up today. The direct link to that video is here. Hopefully some of you saw that when I posted that link on twitter before the open today.

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