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Treasuries

A "surge" in yieldsWord on the street is that real rates are surging. SURGING, I tell you!! The financial press gets caught up in the moment, swept along in the excitement, elation, and fear of any directional market move. During such times, it is especially valuable to step back, look at the bigger picture, and ascertain if the long-term prevailing trend is at risk of a breakout or reversal. Take the US 10-year yield: Looking at a monthly chart, we see 40 years of a very clear downward trend. That "surge"? Well, look for yourself. Barring something as extreme as China throwing a firesale on US paper, I expect this trend to continue for quite a while longer. There is a lower bound to yields, but that bound is continually being pushed lower as rates are cut, other central banks foray into negative rates, and investors/funds begin seeking the 'least-worst' store of value. This demand shift pushing the lower bound lower is what has formed the lower bound of the downward trend channel on the chart. I'm dubious about this 'reflation trade' story: The search for yield, and even simply 'least-worst' store of value is the prevailing force in this market. US treasury yields can only outperform so far in the broader market of debt instruments before they attract more buyers. Negative rates in other nations have intensified this effect. This behavior forms the upper bound of our downward trend channel. Perhaps we'll see by the end of December if this "surge" is an actual SURGE. For myself, I will be respecting the strength of this 40 year trend, and expecting any strong upward move in yields to only tag the upper bound of the channel, (if even that far), before reversing to the downside.
TVC:US10Y
by iamroot
3
Investors are bullish on US TreasuriesThe tide in the $20 trillion Treasury market appears to be turning in favor of the bulls for now, with expectations growing that the Fed will boost purchases of longer-maturity debt as soon as next month after Mnuchin requested the FED to return the money set aside for lending programs in the US. This implies we could see a weak US Dollar moving forward. However the pandemic situation could keep investors uneasy for now. A September 2020 pivot Low stands between the currency's next level of major support zone at 88.2xx. I'll take this play from a Commodities and Emerging Markets currencies perspective. Silver is an interesting precious metal that could see this year's pivot high breached to the upside with a $34.xx being a possible target 🎯 for 2021. The USDSGD is in play to breach a storng level of support that held the price twice in both January 2019 and January 2020. If the monthly candle closes below this area, it's next support 🎯 will be around the 1.30xx - 1.31xx supply area.
NASDAQ:TLTLong
by GrizzlyBearBee
Bond Yields point to recession....or this time it's different?The 10y-2y bond yields are important because it is the long-short of market expectations; that is, how people view the near-term market vs. their perceived evolution of the market (that also anticipates the FOMC's likely reaction. It's several signals in one). The 10y2ys (blue) is the 10 year Treasury constant maturity (now at 0.96%) Minus the 2-Year Treasury constant maturity (now at 0.19%). The higher the number (and greater the difference), the more people value long-term certainty over the short-term unknown. Currently, the 10y-2y is at 0.8 and rising which last happened in December 2007, April 2001, December 1990, July 1986, October 1971... you get it. It's a reliable indicator, and in the past, a negative 10-2 spread has predicted every recession from 1955 to 2018 (SOURCE) , but has occurred 6-24 months before the recession occurring. The last time it went negative was in August 2019. THE ANALYSIS Notice that we're approaching a golden cross (yellow 50ema crossing the white 200ema). The last time this happened was January 2008, and May 2001. I've overlaid the S&P- you can see it's crashed. So is this a new paradigm of monetary policy? Or does nothing change? Is this time really different? Here's the historical US Yield Curve source. MORE ABOUT THE YIELD CURVE Bond prices and yields move inversely of each other. When bond prices go up yields go down, and vice versa. The reason that lower yields in the long term are a indicator for the economy is because longer term bonds are seen as safe investments meant for preserving wealth; while stocks, forex, and derivatives are riskier and used for growing wealth. When investors have a good outlook on the economy, they will sell their long term bonds and put that money into the riskier investments listed above. This flight from longer term bonds to riskier investments causes demand for the longer term bonds to fall, causing bond prices to fall ,and yields to increase. In times of bad economic outlook, people will start moving their money from stocks into the longer term bonds as a way to protect themselves from potential future downturns. This flight from stocks to longer term bonds causes demand to increase, causing bond prices to increase, and yields to go down. The change in bond yields is based on bond price, which is based on supply and demand. HISTORICAL CONTEXT: The 10-2 spread reached a high of 2.91% in 2011, and went as low as -2.41% in 1980. During recession, central banks lower rates pushing down the i.r. curve. When the spread starts contracting, market expects a coming cut of the i.r. and a future lower curve. For this reason, real world curves (vs academic ones) are decreasing on the long terms: a kind of economic cycle is implied. You may also read the spread under a credit risk point of view: a tight spread means "if an issuer can survive 2y, it is very likely that it will survive also 10y therefore a small extra premium is required". This is very clean in distressed bond issuers: implied yields usually form a reversed term structured (decreasing like an hyperbola). See more:
TVC:US10YShort
by TMoneyBidness
2
Bond Yields point to recession....or this time it's different?The 10y-2y bond yields are important because it is the long-short of market expectations; that is, how people view the near-term market vs. their perceived evolution of the market (that also anticipates the FOMC's likely reaction. It's several signals in one). The 10y2ys (blue) is the 10 year Treasury constant maturity (now at 0.96%) Minus the 2-Year Treasury constant maturity (now at 0.19%). When the spread increases, it means there's falling demand for long-term Treasury bonds, which means investors prefer higher risk, higher reward investments. Investors think interest rates will now rise in the short term. Currently, the 10y-2y is at 0.8 and rising which last happened in December 2007, April 2001, December 1990, July 1986, October 1971... you get it. It's a reliable indicator, and in the past, a negative 10-2 spread has predicted every recession from 1955 to 2018 (SOURCE), but has occurred 6-24 months before the recession occurring. The last time it went negative was in August 2019. THE ANALYSIS Notice that we're approaching a golden cross (yellow 50ema crossing the white 200ema). The last time this happened was January 2008, and May 2001. I've overlaid the S&P- you can see it's crashed. So is this a new paradigm of monetary policy? Or does nothing change? Is this time really different? Here's the historical US Yield Curve source. MORE ABOUT THE YIELD CURVE Bond prices and yields move inversely of each other. When bond prices go up yields go down, and vice versa. The reason that lower yields in the long term are a indicator for the economy is because longer term bonds are seen as safe investments meant for preserving wealth; while stocks, forex, and derivatives are riskier and used for growing wealth. When investors have a good outlook on the economy, they will sell their long term bonds and put that money into the riskier investments listed above. This flight from longer term bonds to riskier investments causes demand for the longer term bonds to fall, causing bond prices to fall ,and yields to increase. In times of bad economic outlook, people will start moving their money from stocks into the longer term bonds as a way to protect themselves from potential future downturns. This flight from stocks to longer term bonds causes demand to increase, causing bond prices to increase, and yields to go down. The change in bond yields is based on bond price, which is based on supply and demand . HISTORICAL CONTEXT: The 10-2 spread reached a high of 2.91% in 2011, and went as low as -2.41% in 1980. During recession, central banks lower rates pushing down the i.r. curve. When the spread starts contracting, market expects a coming cut of the i.r. and a future lower curve. For this reason, real world curves (vs academic ones) are decreasing on the long terms: a kind of economic cycle is implied. You may also read the spread under a credit risk point of view: a tight spread means "if an issuer can survive 2y, it is very likely that it will survive also 10y therefore a small extra premium is required". This is very clean in distressed bond issuers: implied yields usually form a reversed term structured (decreasing like an hyperbola). See more:
TVC:US10YLong
by TMoneyBidness
54
Treasuries Fall, Stocks Rise, Commodities Rise - US Markets WrapU.S. stocks rose by 1.1% today fueled by a 2.1% increase in small cap stocks and a 3.5% increase in energy stocks. The S&P 500 Index is currently up 0.5% year-to-date, and up 7.7% over the past 12 months. The Dow Jones Industrial Average is currently down 8.2% year-to-date, and down 2.0% over the past 12 months. Elsewhere, commodities climbed 1.6% with gold rising 1.0%, crude oil rising 4.0% and copper rising 0.7%. The yield on 10-year Treasuries is 0.85%, while the dollar strengthened by 0.1% against a basket of other currencies. Meanwhile, investment grade corporate bonds rose by 0.2%, and high yield bonds fell by 0.2%. These are the some of the main moves in markets: Stocks The S&P 500 Index rose 1.1%. The Dow Jones Industrial Average rose 1.6%. The Nasdaq Composite Index stayed level. The Nasdaq 100 Index rose 0.2%. Large cap stocks, as represented by the S&P 100 Index, rose 0.7%. Mid cap stocks, as represented by the S&P MidCap 400 Index, rose 2.0%. Small cap stocks, as represented by the S&P SmallCap 600 Index, rose 2.1%. Bonds The yield on 1-year Treasuries remained unchanged at 0.12% today. The yield on 5-year Treasuries increased by 4 basis points to 0.38% today. The yield on 10-year Treasuries increased by 6 basis points to 0.85% today. The yield on 30-year Treasuries increased by 6 basis points to 1.62% today. Credit Investment grade corporate bonds tracked by the Markit iBoxx USD Liquid Investment Grade Index rose by 0.2%. High yield bonds tracked by the Markit iBoxx USD Liquid High Yield Index fell by 0.2%. Emerging market bonds tracked by the J.P. Morgan Emerging Markets Core Index fell by 0.2%. Commodities The S&P GSCI Total Return Index, the leading measure of general commodity price movements, rose by 1.6% West Texas Intermediate crude oil rose by 4.0%. Gold rose by 1.0%. Copper rose by 0.7%. Silver rose by 1.9%. Currencies The Deutsche Bank Long US Dollar Index, which measures the greenback against a basket of other currencies, strengthened by 0.1% to $25.4 today. The Euro weakened by 0.1% to $1.16. The British pound weakened by 0.3% to $1.29. The Japanese yen strengthened by 0.1% to 104.77 per dollar. Cryptocurrencies Bitcoin rose by 0.3% to $13620 today. Ethereum rose by 0.7% to $385.97. Tether declined by 0.0% to $1.00161641180113. XRP declined by 1.4% to $0.24. This story was produced by the Kwhen Automated News Generator. For more articles like this, please visit us at finance.kwhen.com. Write to editors@kwhen.com. © 2020 Kwhen Inc.
AMEX:SPY
by kwheneditors
What Yield? 2-Year Treasury Lows May Signal It's Bitcoin Time Several stakeholders in the crypto market see a lack of yields coming from traditional markets as a sign cryptocurrency has a place in uncertain times. “We are moving into a period of stagflation – stagnant growth and inflation – which creates a steepening of yield curves in the fixed income world,” said Chris Thomas, head of digital assets for Swissquote Bank. Indeed, U.S. Treasury yields have dropped in 2020 – the two-year maturity is at its lowest yield in over 10 years. “I have a customer leaving bonds for bitcoin. I look at that as very bullish,” said Henrik Kugelberg, a Sweden-based over-the-counter crypto trader. “Bonds that are supposed to be the safest bet there is to actually make a buck on your invested money now all of a sudden seems less attractive than bitcoin.”
TVC:US02YLong
by danielcawrey
ZN1! 10Y T Note Futures ( 30MIN) probability: 65% the market will keep going down and do the pull back, please Read Carefully : The chart will keep going down and touch the Yellow Line ( You can use it as a TP manually) If the red candle cut it with Force then you can use the Green line as Your TP at the same time ( Resistance). If the candle Squeeze on the Yellow Line => Pull back and the market may keep going up. If the candle squeeze on the Green Line => pull back and we considere the Yellow Line as our First TP in our uptrend. After a Pull Back with Force the market may touch the Blue line . I will Try to Update my prediction if i have free time.
CBOT:ZN1!
by AliOmaRayan
Top Is In? Ugly GDP Print and 10 Year Treasury Yields Break DownI've been waiting for today to arrive as the Q2 GDP print is in and was ugly as expected. The awful number reported (a -32.9% collapse) was expected but I'm looking for some "trigger" that might change the market mood and I've suspected the GDP number could be it. Seeing the worst GDP decline on record, even worse than during The Great Depression, might be a wake up call for the majority of people that never look at economic data, despite the fact it was "expected." In support of that suspicion is the 2nd major event I was waiting for: a breakdown in treasury yields. The last few months 10 year treasury yields have NOT rallied with stocks creating this huge disconnect between a euphoric equity market and a glum bond market--and again this is something the average Joe doesn't watch. Today the yields on the 10 year treasury broke down from the support we've seen holding for months (shown on the chart in blue). It even broke below the spike down that happened on April 21. Yields are breaking lows, bond values are rallying, and this is exactly the opposite of what should happen if the stock market rally were on solid footing. Unless yields reverse and go back up, I'm calling this an early indicator that the stock euphoria has been wrong and the top could be in.
TShort
by MystryBox
6
US dollar - US Treasuries Divergence The US dollar correlates positively to US Treasuries. Market participants needs US dollar when buying US Treasuries as investments or as collateral. Now we see a pretty sharp diverence and break of that correlation. One would anticiapte a return to mean of this relationship. My base-case is that the dollar will follow bonds and get bid up. In short, my reasoning is as follows: If liquidity continues to be tight, as low interest rates and central banks going crazy are signaling, the dollar will catch a bid as it's still the world reserve currency. Regardless of my bias: when macro correlations diverge, its time to pay attention.
NASDAQ:SHY
by eirikb007
1
10-YEAR US BOND YIELDS BREAKING DOWN - BEARISH for SPXUS 10-year Bonds have broken out of 2 triangles now and breaking down. I count 5 waves in this massive triangle that formed between March 8th and June 24th with the final wave "e" itself being a triangle with 5 subways. Remember - triangles - per Elliot rules - are found either as wave 4's, wave B's (middle of a correction) OR as wave E's as the final "wave" of another bigger triangle. Since the breakdown out of these 2 triangles, the lower trendline of the larger triangle was tested at least 4 or 5 times from the underside, and each time was rejected - confirming the significance of this lower trendline and the subsequent breakdown in yields. I anticipate this yield breakdown will accelerate to the downside with strong bearish implications for the SPX, Dow, etc. An interesting observation is that the 10-year rose after making its low on March 8th - while the SPX made its low on March 23rd - 15 days later. Bonds yields are not confirming the rise in the SPX since the 10-year broke down on June 24th and now we are 28 days later so the divergence is past due for the SPX to now play catchup to the 10-year and move down. Cheers! Cyrus
TVC:US10YShort
by cyrusgr8
5
US 10 Year yield looks to be heading lower soonThe 10 year treasury yield looks ready to resolve its multi-month consolidation triangle to the downside. There's room for another run up to the .70% area over the next couple weeks, but I ultimately believe we are heading for lower yields. Note the fairly swift rejection from the rally above the 50MA at the end of May / start of June. I'm not making any plays directly on treasuries, but watching closely because a definitive break lower in yields would signal that stock markets may be heading for a major risk-off move.
TVC:US10Y
by ZChartDoc
TLT Bull Flag - Heading to 170 and BeyondWhen looking at the iShares 20+ Year Treasury Bond (TLT) exchange traded fund (ETF), it is important to consider whether or not interest rates are likely to rise or remain low. Here, the relationship between Treasury yield bonds and interest rates is key to understand. Generally speaking, if you predict interest rates to rise in the future, it is best to avoid long-term bonds (such as the TFT, which is a 20-year Treasury bond) that could lock in a lower interest rate. However, if you believe interest rates will fall, then it makes sense to invest in an ETF like the TFT. Long-dated U.S. Treasuries remain the best non-derivative hedge for Canadian investors. Now there will be a time when we won’t want to touch US Treasuries with a 10 foot pole but for now, Treasuries and the U.S. dollar are still seen as safe haven assets and should provide us protection if/when stocks falter.
NASDAQ:TLTLong
by TMoneyBidness