ZN - 10 Year Note Futures / An important ChartThe importance of ZN as an Instrument cannot be overstated.
It has been extremely technical and Reliable in assisting us in
forecasting Rate Mid Curve and provided the ROC's for TNX.
Today's MAcro Data begins with the CPI @ 8:30 AM EST using
the new Base Effect from the BLS.
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CPI is projected to be 4%.
Food prices have already increased substantially into 2022
as we indicated Mid-Q4 2021 - Pordiucer were going to begin
passing along increases at an average rate of 20-23%.
Energy continues to Rise as do Commodities, on balance, across
the Board.
M2 continues to move higher, as does the Fed's Balance Sheet.
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The reaction to the CPI this morning will provide direction for the
Indexes the balance of the week.
Pricing Power is being passed along to end-users (consumers) at
a time when the Federal Reserve is indicating they are about to begin
an aggressive reduction in Liquidity and an accelerated pace of
increases to the Fed Funds Rate.
We have seen back to back ALGO driven increases in the ES / NQ / YM
and indicated 10 Yr Yields would pullback ~ 1.81% (1.808 was close
enough).
2021/2022 measured move is now .998 to 1.808 - a near doubling of
the Mid Curve.
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The Bond "safety" Trade wasn't entirely wrong until the Curve
began to work its magic. We indicated in July Rates would begin
rising again into the end of 2021.
Where the Bond Buters lost sight of the Safety Trade was quite
simple - Convention holds only when the Yield Curve is steepening.
As YCC gave way to a FED backstop where the recycling ballooned
the Fed's Balance Sheet and Auction after failed Auctions began to
appear beginning at the long end of the Curve.
My Thesis proved 100% correct, then as now.
We anticipate a reaction to Mid Curve on today's ReCalc.
Safe Trading.
