My bearish-on-bonds disposition has remain unaltered all year, .and recent activity is pushing us toward what could be an important next step.
Slope of Hope Blog Posts
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Unrelated to anything else I’m about to say: the two biggest cultural influences of my life are (a) Star Trek, the original series and (b) Monty Python’s Flying Circus. I mention this because Netflix now has just about everything related to Monty Python you can imagine, including a wonderful documentary I’m watching now called Almost the Truth. If you are a MPFC fan and have Netflix, I encourage you to check it out.
On less funny subjects……..I am very pleased at how bonds are continuing to breakdown. It is precisely what I hoped would happen.
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…)
Ten-year Yield has climbed to a new post-July 2016 (1.32%) high at 3.17%, the highest yield since July 2011, over 7 years ago!
From a technical perspective, today’s surge above May-Oct 2018 resistance at 3.11% is a reaction to very strong recent data showing strong ADP Payrolls for September (230,000 vs. 185,000 expected), and impressive ISM Non-manufacturing data across the Headline data (61.6 vs. 58 expected), as well as the sub-surveys in Business Activity, Prices, Orders and Employment for September.
With 10-year Yield perched at new 7-year highs at 3.17% ahead of Friday’s BLS monthly Jobs Report, the set-up for Yield is positioned for upside continuation and acceleration. (more…)
Good morning, everyone, and greetings from the dark and quiet suburb of Palo Alto, California. My dogs are all curled near my fight, all too familiar with my morning routine and awaiting their walk. So let’s get to it. The charts, that is, not the walk.
As most of you know, I’ve been kind of interest-rate-obsessed all year, and with good reason. We live on a globe absolutely choking on debt, and rising interest rates are probably the single most constrictive thing imaginable in such a scenario. It is therefore important to maintain not just an awareness of bonds, but an awareness of the broader trends as to just how big they might move. Looking at the /ZB this morning, we continue to inch toward the next important break point, tinted in cyan:
Slowly, slowly, the wheel turns……….and I’m very pleased to see bonds still in tip-top shape. I’ve removed the price bars (shortcut for SlopeCharts users: Ctrl-P) so you can see the drawn objects and moving averages plainly and simply.
The alternative rock band Green Day once sang “Wake me up when September ends.” Now that September trading is over, let’s see where THE most important chart in the world stands.
I am admittedly talking my book here (or, more specifically, my lack of book, since I am out of my XLU puts and want to get in at a better price), but I’ve speculated below as to some idealized paths for the utility index and bonds (TLT) for the balance of the week. Tomorrow, Wednesday, is “Fed Day”, and that’s bound to thrown some shock waves around.
My bond obsession continues, and with good reason. We’ve just had our latest breach. And remember, next week is a big FOMC announcement, so that should shake things up. The important fact is that we’re now beneath a support level that has been in place for months.