The Continuum: Through The Limiters!

Inflation pushes the 30-year Treasury bond yield through long-term moving average trends!

Okay, let’s take a breath. I don’t like to use ‘!’ in titles or even in articles. In fact, when I see too many of them I immediately think that someone really REALLY wants me to see their point. That said, the signal shown below is pretty important.

It’s in-month with a monstrously over-bearish bond sentiment backdrop similar to when we installed a red arrow on the chart below at the height of the Q1 2011 frenzy (cue the Bond King: “short the long bond!”). Chart jockeys are probably delivering the bad news of the chart’s inverted H&S, a potential for which NFTRH began managing a year ago when the 30yr yield hit our initial target of 2.5% and then recoiled as expected after the public became very concerned about inflation.


But we were planning for the possibility that the pullback could make a right side shoulder to a bullish pattern, and so it did. Now the question is whether the Continuum continues (resumes its long journey down) or does something it has not done for decades, which is to break the limiting moving average trends. It’s an important question, states Captain Obvious. Continue reading "The Continuum: Through The Limiters!"

Yield Curve Inverts Deeper Than August Of 2019

Like the larger media, this tiny little spec within the media reports the news to you. The 10yr-2yr yield curve has inverted (ref. Yield Curve inversion upcoming). Now, what does it mean?

Well, the first thing it usually means is not to panic (especially now that High Yield credit spreads are easing), but to tune out the media hype about it because it is not the inversion that tends to signal an economic bust but instead, the steepening that follows it. Among the important questions are how long will it remain inverted and how deep will the inversion go before the next steepener?

Here is today’s post-payrolls (+431k jobs) move as the bond market demands that the Fed get off its ample behind and get with the inflation making nasty headlines as it cost-pushes across the economy while the Fed and the long end of the curve lag well behind. But the Fed is probably lagging for a reason and one major reason could be that they see the curve, they know what comes next and it’s not pretty.

yield curve

From the post linked at the top: Continue reading "Yield Curve Inverts Deeper Than August Of 2019"

Yield Curve Relentlessly Steepens

Another week, another yield curve steepener and continuation of the trend that began in August 2019.

yield curveyield curve

Flipping to the bigger picture I added in SPX, Gold, and the CRB commodity index for reference. With the levels of MMT TMM (total market manipulation) injected in the markets since Ben Bernanke cooked up the diabolical macro manipulation known as Operation Twist, I can’t pretend to quant the past to the present… Continue reading "Yield Curve Relentlessly Steepens"

Fed Rules Out Yield Curve Control (For Now)

That we are even having this conversation is proof that we are and have been in…

alice in wonderland

Wonderland for years now.

Since at least 2001, actually. Back then Alan the Wizard Greenspan (mixing classic fairy stories, I know) began pulling levers that could never be un-pulled. There were no breadcrumbs with which to find our way back. Off the charts is off the charts. Exponential is exponential. And that’s when funny munny out of thin air entered the realm of normalcy; new normalcy where the financial system is concerned.

I assume that the ‘tool’ known as yield curve control (per this article) is part of MMT (Modern Monetary Theory) TMM (Total Market Manipulation) that the eggheads promote with not an ounce of historical monetary grounding, caution or even human-like soul. They are monetary Humanoids, AKA bureaucrats, AKA economic Ph.Ds with more statistical and theoretical knowledge than common sense. They released the FOMC minutes and policy micro-managers offer their interpretations. Continue reading "Fed Rules Out Yield Curve Control (For Now)"

Why Inflation?

The simple answer is that is what they are doing, inflating.

The slightly less simple answer is that they inflated in 2001 and it worked (for gold, silver, commodities and eventually stocks, roughly in that order). It also worked in 2008-2009 (for gold, silver, commodities and eventually stocks, roughly in that order).

The more complicated answer is that we are down a rabbit hole of debt and the hole appears bottomless. What’s a few more trillion on top of un-payable trillions? As long as confidence remains intact in our monetary and fiscal authorities – and COVID-19 or no COVID-19, stock mini-crash or not, confidence to my eye is intact, speaking of my country, anyway – they will inflate, and what’s more, they will be called upon to inflate.

Confidence may be failing in other parts of the world but the average American is behind this thing they don’t even really understand, known as the Fed. The average American expects the bailout checks from the fiscally reflating government too. Angst, of which there has been plenty lately, is much different from lack of confidence.

I can’t include here all the ways and means the Fed has (frankly, I don’t know about them all) to prop the system, but if you go to the St. Louis Fed website you will find a whole slew of Keynesian egghead stuff. They are on it! Continue reading "Why Inflation?"