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sdholloway56
Senior Advisor

Key to everything

10 yr yield broke through a trendline today. Which it should if the consensus about the economic trajectory is correct.

Either the Fed ups yield curve suppression or it will run a ways and the dollar will rally and a lot of risk will come off.

But it is humans, not markets who will make the call.

I wouldn't, but that is me.

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8 Replies
k-289
Senior Advisor

Re: Key to everything

It's  the  only  marketing  rally  left  on  the  table ,  although  a  Certificate  Of  Deposit  yields  O.33 %  -  -  - ?  

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sdholloway56
Senior Advisor

Re: Key to everything

Lol.

I badly underestimated the amount of money that was around back in the day.

Older farmers started buying up cheap farms when they were disappointed as their 15% 5 yr CDs matured and would only bring 6.

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sdholloway56
Senior Advisor

Re: Key to everything

Ten Year T-Note (Globex) Daily Commodity Futures Price Chart: March 2021 : CBOT (tradingcharts.com)

A correction.

On the daily chart, really just went to the bottom of a downtrending channel (inverse of rates).

Sorta poked at it this morning and (guessing) either the Fed bought some or the playas did, frontrunning them.

But at some point- if there really is a strong recovery forthcoming- a "mere" $150B a month will prove insufficient to manipulate the market.

 

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sdholloway56
Senior Advisor

Re: Key to everything

Stock index futures sold off a bit after a very good Retail Sales number.

Up until now, there was so much liquidity in the system that bad news was good news and good news ws better.

At some point, good news won't be.

But the Fed can delay that day by cramming the long end harder.

Even if you dind't get in at the top, it would be hard to argue against locking in long term debt. There's a lot more room between here and infinity than there is to 0.

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sdholloway56
Senior Advisor

Re: Key to everything

Feelin' risk off-y to me.

Bad weekly claims, and long rates still creeping higher.

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sdholloway56
Senior Advisor

Re: Key to everything

Got a two day bounce off the trendline in the 10 yr. but we're right back on top of it today.

Be careful.

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sdholloway56
Senior Advisor

Re: Key to everything

10 yr chart looks like it just bounced up for a retest of the lower downtrending channel line and is now pulling back down and away.

BTW, there is an enormous, monumental open interest in March stock call options. With the time curve now heading into it's terminal phase, there will be natural, daily selling of the underlying stock just as a function of the math.

May have to up the stimulus payments if folks just keep blowing it in their Robinhood accounts. You buy a stock without margin and it goes down, at least you still own it and it might go up someday. If you buy short dated, OTM calls they just go poof.

Anyway, I think in both cases the Risk On financial sweet spot is ebbing. Fundamentally, a strong recovery and economy may be priced in. Which might be the best case scenario.

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sdholloway56
Senior Advisor

Re: Key to everything

"The market" played nice while Jerry and the Senators* jibber jabbered for a couple days and is now getting down to business. If the consensus economic outlook is anywhere near correct, it is going to take more than a measly $150B a month to keep long rates capped.

*best band name ever- the short lived Dow Jones and the Industrials.

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