Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Bond Market, Gold, Yield Curve and the Changes to Come

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Bond Market, Gold, Yield Curve and the Changes to Come

While it is far from the only important indicator for the markets, the Treasury bond yield curve (10yr-2yr) is very important because it takes what is probably the most important market for macro signaling (the bond market) and gives us a view into the dynamics between short and long-term yields. In the bond market, duration means a lot.

For one example, long-term bonds are much more vulnerable to inflation’s negative effects than short-term bonds. Short-term bonds also act as a liquidity haven during deflationary market crises. Long-term bonds can work quite well during disinflationary times and pay out better income than short-term bonds, but in a full out deflation scare when the very system (and its exponential debt load) comes into question insofar as you want bonds, you want short-term (in my experience 1-3 year Treasury, T-bills and Treasury Money Market). In other words, relative safety.

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The CPI Effect on Stocks

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Here is a chart I put together of the SPY with a vertical line denoting each monthly CPI report. This is all thanks to our spiffy Event Markers feature! The green tint indicates reports that led to a generally bullish month, the magenta for bearish, and grey for neither. As you can see, the last two reports simply egged on the bulls. Let’s see what Thursday morning holds, with the market presently at lifetime highs.