The Bond Yield Continuum And Gold

Have you heard the news? US Treasury bonds are skyrocketing as it turns out there is no inflation amid a global central bank NIRP-a-thon and race to the currency bottom. Going the other way, our 30yr Treasury yield Continuum is burrowing southward.

If you check out yesterday’s post you’ll see proof that the 2018 NFTRH view that people should tune out the bond experts instructing BOND BEAR MARKET!! was 100% on target.

But today the din is coming from the opposite pole. Everywhere you look on the financial websites it’s now about tanking yields, decelerating growth, trade war damage, and deflation. Here is the 30-year bond yield (TYX), which is front and center in this hysteria (click the charts below for the clearest view). That is one impulsive looking drop.

30 year bond yield

But just as we warned that the precious metals move was a “launch” (not a blow-off as some were calling it) in June because it was at the beginning rather than the end of an extended move, we note that TYX is impulsively dropping into a potential climax. Everybody is on the opposite side of the boat they were on in H2 2018. That would be the BOND BEAR MARKET!! side of the boat with experts Gross, Gundlach, and company. Now amidst the current Armageddon (the SPX is after all down a whole 4% from its all-time high, he said sarcastically) backdrop, it’s all BOND BULL MARKET!! all the time.

Wash…

Rinse…

Repeat… Continue reading "The Bond Yield Continuum And Gold"

Deflationary Straw Man

No matter the debates over inflation vs. deflation, increasing employment vs. sound monetary policy or systemic health vs. fragility (and whatever else is flying around in Jackson Hole this week), the CPI marches onward and upward.  That is the system and it is predicated on creating enough money out of thin air while inflation signals are (somehow) held at bay.

The Straw Man* in this argument lives in the idea that inflation is not always destructive, that inflation can be used for good and honed, massaged and targeted just right to achieve positive ends to defeat the curse of deflation that is surely just around the next corner.  Currently, the Straw Man is supported by the reality of the moment, which includes long-term Treasury yields remaining in their long-term secular down trend.

Indeed, right here at this very site was displayed much doubt about the promotion having to do with the “Great Rotation” out of bonds and into stocks (i.e. that the yield would break the red dotted EMA 100 this time).  We noted it right at that last red arrow on the Continuum© below.  Now, with commodity indexes right at critical support and precious metals not far from their own, the time is now if a match is going to be put to that dry old Straw Man and silver is going to out perform gold, inflation expectations barometers (TIPS vs. unprotected T bonds) are going to turn up and the Continuum is going to find support.

 

tyx

People argue over inflation’s effects and the expectations thereof but the CPI, which is the ultimate measure of inflation’s lagging effects, has never stopped to take a breather.  2008′s liquidation of the system?  Child’s play.  Inflation, which is what the Fed has been hysterically promoting since 2007, will always manifest in rising prices somewhere.  As luck would have it, this time it is manifesting in the stock market to a greater degree than the CPI.  ‘All good!’ think our policy makers if the right prices are rising. Continue reading "Deflationary Straw Man"

Chart of The Week - 30 Year Treasury Bonds

Each Week Longleaftrading.com will be providing us a chart of the week as analyzed by a member of their team. We hope that you enjoy and learn from this new feature.

This week's focus turns to the September 30 Year Treasury Bond Futures. The S&P 500 stock index has closed in the green 6 out of the past 7 trading sessions and many investors feel it may be time for stocks to partake in a minor correction. Typically, gold futures will receive a lot of the flight to safety bid in this case. Due to the recent break of consolidation in gold futures with the path of least resistance pointing down, 30 Year Treasury Bond Futures look to be the candidate to receive this bid.

On the technical side, September 30 Year Treasury Bond Futures have held a perfect bullish market structure since early April. Since the trend has been established, the market has held on every test making higher highs and higher lows. Since establishing a new high print of 138.10 last week, we have once again seen a retracement towards the original trend-line as the market looks for support. Continue reading "Chart of The Week - 30 Year Treasury Bonds"