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US Government Bonds 10 YR Yield

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US10Y trade ideas

US10Y : Comparison with the EFFRThese last few days have seen bond yield rising. It is as a direct result of the recent 25bps rate hike. If you look at the chart above, which is the US10Y less the EFFR, it seems the difference had reached the MAXIMUM based on historical results. Which means to say, the US10Y had already reached the MAXIMUM. From now on, any rise would be in lockstep with the amount of future potential rate hike. We can also see that once the above difference reached its historical low, the next question that arise is when the Fed will start to PIVOT and cut rates. If you look at 2007, it can actually take some time. P/S : As always, do not just believe what I say. Use your common sense.
TVC:US10Y
by i_am_siew
What Makes this Yield Curve Inversion so Different?An Inverted yield curve in the context of a 2% inflation environment holds a different meaning than, an Inverted Yield Curve in a high inflation environment...... Market Expectations of Disinflation led to this Inverted Yield Curve: The Nominal Inversion of the yield curve is caused by the expectation that inflation will fall steadily. Believe it or not an Inverted Yield Curve is the best case scenario for the Fed. A Nominal Inversion during a high inflation period shows that markets have confidence/belief in the Fed's Policy to bring inflation down to 2%. Most of the inversion seen in the yield curve today is nominal.... The Nominal Yield Curve vs. the Real Yield Curve: Nominal Yield – Real Yield = Breakeven Inflation Rate. Real Yield = Nominal Yield - Breakeven Inflation Rate The Breakeven Inflation Rate represents what inflation would have to be in order for investors to “break even” when buying a bond. The general thought process is: If you believe the inflation rate will be greater than the breakeven rate buy Treasury Inflation-Protected (TIP) bonds. Notice how the Yield Curve for Nominal Yields is a lot more Inverted than the Yield Curve for Real Yields. Hence, the inversion in today's Yield Curve is mainly nominal. Below I calculate out the Real Yield for the treasuries with Breakeven TIP Data from FRB St.Louis. Nominal Break-even US02Y: 4.3% - (RealYield) = 3.0% = 1.3% RealYield for US02Y US05Y: 3.6% - (RealYield) = 2.3% = 1.3% RealYield for US05Y US07Y: 3.6% - (RealYield) = 2.4% = 1.2% RealYield for US07Y US10Y: 3.4% - (RealYield) = 2.2% = 1.2% RealYield for US10Y US10Y/US02Y Nominal Yield Curve: 3.4% - 4.3% = -0.8% (Inverted) US10Y/US02Y Real Yield Curve: 1.2% - 1.3% = -0.1% (Inverted) The bond market expects for inflation to remain above trend the next 1-2 years and decrease dramatically after that. As you can see, the nominal yield curve is very inverted even though, the real interest rate is pretty much held constant across thee curve. The Real Interest Rate remains between 1.3% and 1.2%. The Yield Curve Inversion in Nominal terms is: -0.8% and in Real Terms is: -0.1%. Partners in Crime: Unemployment and the Yield Curve: When consumers start to save more, companies start to see earnings deteriorate. In turn, they cut costs by letting workers go. The US10Y/US02Y yield curve is a proxy for Unemployment. Unemployment rises as, the market starts to expect rate cuts from the fed. It is only when the spread on the US10Y/US02Y starts trending up does unemployment start to rise. The spread of the US10Y/US02Y yield curve starts to trend upwards when the 2 year rate plummets as, markets start to price in a recession. Currently, the Yield Curve is still declining signaling that unemployment will remain low. So what does this all mean??? A recession is not as close as many people are saying. People have been calling for a recession since April. This yield curve also signifies that markets are more or less believe that the fed will engineer a soft anding and bring inflation back to the 2% target. If you don't believe the disinflationary narrative spread by the fed there is an opportunity for you to make money on what markets are mispricing. What will you do the next time a fake guru waves an inverted yield curve in your face to scare you into a subscription?
TVC:US10Y
by arama-nuggetrouble
30
US10Y: Short the next spikeFamiliar pattern for the US10Y as with the support of the 4H MA200 it is repeating the mid December +13.50% rise. In perfect symmetry a new +13.50% rise tops on the Resistance provided by the first Lower High of the down leg, same as the November 13th Lower High. The 1D technicals have just come out of neutrality (RSI = 57.935, MACD = 0.009, ADX = 33.193) and an additional short trigger will be the next time the 4H RSI turns overbought above 75.00. Our short term target is right above the Support (TP = 3.340%). ## If you like our free content follow our profile to get more daily ideas. ## ## Comments and likes are greatly appreciated. ##
TVC:US10Y
by InvestingScope
5
US 10Y Government Bond Initial Weekly Analysis I think it is a great idea at this time to see how the bond market is looking with all the talk about the debt ceiling crisis. It will also give us an idea of where the US dollar can go! Currently, the price action has been rolling over to the downside. I think it best to keep that narrative until we see a conformational move that would change this higher timeframe trend. In my opinion, the most important area that I believe has many traders are focused on is the closet supply area which is also the previous higher low. Evetually, this instrument will liquidate the sellers in this market. Lets keep this one on the list and update throughout the week. Feel free to connect and chat about this instrument. :-)
TVC:US10YShort
by CandlesofKarma
3
The Good, the Bad and the Ugly YieldsI have this question... Why are high yields bad? What is bad? We are in a period of big changes. There are lot's of balances changing, one of them is money. We have just passed (?) the biggest monetary experiment ever (QE) and we are about to enter the successor to that experiment, digital money. Digital money conveniently came about just at the time when hyperinflation became an expected reality. If you talked about hyperinflation 4 years ago, you were crazy, now it is expected (and perhaps actually coming). ... Instinct tells us that the unknown is a threat, rather than an opportunity. Instinct slyly and covertly compels us away from change and progress. ... -Dr. Breen In the center of the stages is the paradigm shift in yields. After decades of consistently lower yields, now we are expecting consistently higher ones. Many (including me) have prejudged themselves into be lie ving that high yields are inherently bad. I cannot conclude into what high yields are bad at. The title suggests that they have 3 faces, good bad and ugly. I can conclude that now, like always throughout history, we are rolling in a cycle. Some things have changed in unpredictable ways. This unorthodox chart shows us that this year, we have lived through something unique. Perhaps this will be the way things move forward. From the charts above I have tried hard to conclude into something. The only thing I have learned is the following: Bonds are the new equities. In QE world, lower yields made more money. How? Money printing and borrowing needs low yields for it to be popular. Immense liquidity bubbled everything and productivity skyrocketed. QE is the fuel of globalism. Equities paid out dividends, so higher equities led to even more money. In QT world, higher yields make more money. How? Money burning and lending needs high yields for it to be profitable. Money makes more money, and every day it makes even more money. Commodity producers (GOLD*PPIACO as an example) and wealthy individuals/corporations/nations can enjoy this new era. QT is the fuel of war. Everything is precious and everyone fights for it. In a globalized world, you could make money by being an intermediate entity. Now to make money you must actually own the resources and money. Rich get richer, and poor get poorer. This is the purchasing power of the consumer dollar. Poor get poorer... Poor get poorer when rich get richer. These charts above are simple to understand and analyze. Down below I will add some of my favorite charts. These charts calculate the value of commodities compared to equities or money supply. Commodity production bull-flags against equities. Commodity production bull-flags against money supply itself. The bull flag is against yields as well. True Production Cost (PPIACO*yields) is bull-flagging (?) PPIACO is used as a historical alternative to USOIL. For some reason, we cannot perform old historical calculations using oil. They show that the commodities prove a big motive for everyone. Especially to those who seek war. Would anyone in their clear mind expect WWIII to be talked about in the 2020s? With the knowledge we have collected throughout all these years, this would be out of the question! Yet, here we are, casually talking about it. Again, changes are happening but we are stuck in a cycle. All we can do about it is to understand where we are, and not constantly deceive ourselves and others into thinking otherwise. So there is a clear benefit into just realizing where we are, it is not financial profit, it is speaking truth. Conclusion? This is a zero-sum game for consumers. Also, with bonds we are committing hubris. Bonds is a mechanism that helps money itself make more money. Have you heard about the Ancient Greeks? They talked about the fact that when money makes money, it is Hubris (something like sin, only worse). Equities gave more output than there was input, if someone includes long-term dividends. You working and making money is not Hubris (according to Ancient Greeks). Making a system which enables money to make money, then you commit Hubris. Consistently higher yields will help money make even more money. Equities are facing Nemesis (compared to bonds). Bonds have just now committed Hubris. There may be many years until they face Nemesis as well. Tread lightly, for this is hallowed ground. -Father Grigori PS. This movie "good bad ugly" was released in 1966, a period financially similar to the one we live now.
TVC:US10Y
by akikostas
2
US10Y: Something bad is about to happenUS10Y finally catching a bounce at the 200 DMA with a daily hammer and bullish continuation in tandem with a DXY pump. Additionally, there is bullish divergence on RSI. Possible double bottom here. Something bad is about to happen. Delayed reaction to Apple/Amazon/Google earnings? Debt Ceiling "Crisis"? Ukraine/Russia Update? 666th COVID Variant? Won't really take US10Y to seriously unless it gets above the long term .618 fib at 3.62%, and holds it as support.
TVC:US10YLong
by CrashWhen
3
What is the Terminal Rate and Why Does it Matter?What is the Terminal Rate and Why Does It Matter? When looking at what’s going on in the world of interest rates, it’s pretty easy to get lost in the different terms central bankers and financial media use. Tapering, pivot , neutral rate, fed funds target range, quantitative tightening… They don’t make it easy to understand! But something that has become more and more key as we have gone through this (seriously) rapid rate hike cycle that started at the beginning of 2022 is where the peak in interest rates in the US will be. This is known as the terminal rate, and we are approaching it… Maybe. In the chart above, you can see where the market is pricing for the peak in US interest rates to be - about 5% in May with a slightly outside chance of the peak extending to 5.25% in June. And what matters most is the change in that outside chance of the extra 25 basis points for June being more and more priced in. If that were to happen based on the macro data, the market might start to feel like risk is most certainly off once again (stocks fall). This is because for the last 3-4 months, the terminal rate has changed only slightly around the 5% mark, meaning the market has gotten comfortable with this data being priced into the future path of asset prices. Any deviation, even minor, from this would be trouble, especially if the general context sours, such as if geo-political risk enters the fray (as it has over the weekend with the reports of the drone strikes in Iran). Interest rates are effectively the barometer of the opportunity cost of holding one asset vs another so if the rate of interest is expected to increase, you can bet the market thinks it’s effectively not worth holding onto riskier assets (like tech stocks). So if you hear the phrase ‘higher for longer’, what we really have to translate this to is ‘investors will think risk assets are more expensive to hold and so will buy less of them until it’s safe to resume buying again (which we will come onto in the next idea we post!)’. But what, right now, could influence whether the terminal rate stays at 5% for May or gets pushed back or higher? Enter the 3m10y chart. This shows the spread between the US 3 month treasury bill yield and the US 10 year treasury note yield. And right now, it is signifying that growth 2 years out (the 3m10y curve is also called the ‘public sector yield curve’) is looking rather glum, based on historical data on forecasted GDP growth from the curve structure. This is obviously a natural phenomenon after the Fed raised rates at the front end of the curve so rapidly in 2022, but the concerning aspect is recession tends to come when the curve reverts back towards positive territory again… and it’s currently about 35bps off the January low. What does this mean then? Well, it could be that the Fed is going to focus more on the yield curve and how it behaves over the next few months, purely because they are 100% aware of the implications of a reversion-post-inversion yield curve: recession. Whilst Powell pleased the markets with a more doveish tone in his press conference last night, the statement released by the Fed was very hawkish. The Fed maintained that “ongoing increases in the target range will be appropriate” to bring price pressures under control. If the Fed is completely adamant that inflation has to get down to 2% again then this could imply the terminal rate extends beyond 5%, even if not reflected currently in market pricing. For this to occur, there will likely have to be more strong positive prints in NFP numbers and for PCE inflation to remain elevated. It’s a tough ask, but the structural changes in the inflation backdrop and dynamic could cause this type of mess to unfold, which is naturally painful for most portfolios. The biggest risk that we can see from a situation like this, though, is the left tail of the price distribution curve comes into play. This is where liquidity gets extremely thin and we see 3 standard deviation negative moves, which tend to precede recessions, and end up breaking the normal distribution of asset price returns (they end up happening many times more than predicted by a normal distribution of values). We hope this doesn’t happen, but we must start preparing for these times where the market feels stressed, because the Fed is currently not there to support with monetary liquidity! Good luck and always remain aware!
TVC:US10YEducation
by Spreadex
US10Y - Could Be Breaking DownCharts potentially seem to be coming together in unison here and US10Y is key... Yields are a major factor in either releasing or inhibiting risk-on asset markets, especially crypto. If yields pump, stocks and crypto will dump, but if yields dump then it could be a bull market for crypto, stocks, and probably metals. And here could be the first cracks that may reveal a top, though high volatility coming in just a few hours with FOMC announcement so we will see... ... So firstly from the low of the previous wave down we now have 3 waves up. The 3 waves are shallow with the 3rd printing a slightly higher high. And so these 3 waves form an ascending wedge (bearish). And it has fallen out of the wedge and also a collapse with a bearish momentum candle (large bodied) through the 4H 50MA (4 hour, 50 moving average). If you've been paying attention you'll know that the first wave of a continuation pattern retracement is the immediate reaction to the previous dominant wave down and so often has a lot of bounce. But the third wave is commonly more limp as it is less reflective and is where the impetus of the dominant trend is regaining control for the next wave down. And so we have our Adam & Eve shapes for wave 1 and 3. Notice the lower time frame SRP shakeout reversal patterns probing through wave 1 resistance with fast liquidity tapping wicks. And the current candle we have probe upward that may now become a SRP when it closes, with large upper wick showing selling pressure coming in through the 4H 50MA landmark. This could be the beginning of something but until the low breaks it is not confirmed and the correction could continue. We look at this type of content every day 👍🏻. Not advice.
TVC:US10YShort
by dRends35
3