My bearish-on-bonds disposition has remain unaltered all year, .and recent activity is pushing us toward what could be an important next step.
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Excerpted from the Market Internals segment of this week’s Notes From the Rabbit Hole, NFTRH 522 (Oct. 21). The segment focused on the bond market and its macro signaling this week. There was more to the segment, including US and global negative divergences in play to long-term yields (positive divergences for bonds) despite the bullish technical situation, and some possible implications/downside targets for the stock market.
Treasury Bonds and the Fed
The technical signs [of a potential bond bear market/breakout in yields] are there, but…
Here is the entire article (blurb)…
President Donald Trump unleashed another attack on the Federal Reserve, calling the central bank his “biggest threat,” in an interview he gave to Fox Business Network. “My biggest threat is the Fed,” Trump said, according to excerpts released by the network ahead of an interview to air at 8 p.m. Eastern. “Because the Fed is raising rates too fast and it’s independent so I don’t speak to them but I’m not happy with what he’s doing because it’s going too fast because you looked at the last inflation numbers they are very low.” When pointed out to Trump that he nominated Jerome Powell instead of Janet Yellen, the president said he wasn’t blaming anyone. “I put him there and maybe it’s right maybe it’s wrong but I put him there.” He also referenced the other nominees to the Fed he’s made. “I put a couple of other people there I’m not so happy with too but for the most part I’m very happy with people.”
“Because the Fed is raising rates too fast…”
The 2 year note players in the bond market are and have been raising rates too fast if anybody is; and I don’t think they are. But Trump does have a point in that it appears the Fed is playing catch up on his watch after being way too slack on the previous administration’s watch (as I used to routinely bitch about). (more…)
As we crossed the finish line last week into the longest bull market in human history, a question that has been on my mind for years came bubbling to the surface again: if this is so easy, why didn’t the governments of the world do it before? In other words, since it’s been proved quite clearly that central bankers can prop up equity markets around the world, as well as public sentiment, why did it take them so long to figure it out?
Were they really that dim? Why would the governments, and all the self-interested individuals which comprise them, put themselves through the financial horrors of 2007/2008, the crash of 1987, the Internet bubble collapse of 2000, or the grinding equities-are-dead market that lasted the entire 1970s? It doesn’t make any sense. (more…)
Although I’d prefer if they learned to “Play Dead”. Here’s the week forthcoming.
Today is the “big day” of the week, and probably the month. My main concern is bonds, which I am short for the long-term (January 2019 puts). The /ZB certainly seems coiled for a potential move higher, which I’ve tinted, but as long as it is repelled by its broken trendline, as it has in the past (arrows), I’ll be OK.
See this Bloomberg article for a look at the ingredients in a policy stew that looks like it was scraped off the floor of Worst Cooks in America. Click the headline for the article.
As usual, Fed Day gave us quite a ride. The big news was that our friends at the FOMC plan to give us another 3 rate hikes this year instead of 4. Guess how many Fed meetings there are with accompanying press conferences left this year? Three. How about that.
My stomach went into a knot the moment the news came out, because everything – – EVERYTHING – – went against me big time. It didn’t last though. Just imagine how many people were short the utilities and got stopped out, all because of a stupid, multi-second Fed spike.
If I were to make a list of the things I want to write about, at the BOTTOM would be this stupid market, and at the TOP would be SlopeCharts. So – – get used to it – – you’re going to be hearing about my new favorite product a lot. At least until common sense returns.
Instead of doing a post of charts that would literally be about five feet tall, I’m going to provide you with the clean, simple URLs that will provide you ten really fascinating charts from the SWELL system. Just click any of these to see it in all its SlopeChartian glory. Enjoy!