Tag Archives: Us Treasury Bonds

NFTRH 286 Out Now

nftrh286Think about the year long topping process of up and down spikes on the HUI Gold Bugs index in 2011.  Now think about things that may be working on replicas of that activity (hello US stocks) and things in the mirror that may be working on the inverse of it (hello grinding and dispiriting gold sector).

Now think about how long these processes take to play out and the patience involved.  Also think about trading or defaulting to cash, because at times of change the volatility is something to behold (going both ways).

NFTRH 286 out now.

 

A Curve Ball

Guest Post by Michael Ashton

[edit] I have to claim credit as being one of the first and maybe loudest when it came to talking about yield spreads before the recent drop in the yield curve.  But Mike Ashton has professional experience dealing in the credit/debt markets as I recall.  His post is very interesting to a geek like me, and should be to all market players because the interplay between Treasury rates is key; even more so than any individual markets we may be micro managing.  So many things spring from interest rate relationships.

I saw a story on MarketWatch on Monday which declared that the “Treasurys most sensitive to rising interest rates” had been ditched by investors while those investors instead were “gobbling up longer-term securities,” causing the curve to reach its flattest level since 2009. I thought that was interesting, since an inverted yield curve is a valuable indicator of potential recession.[1]

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NFTRH 281 Out Now

I have not noticed too many gold sector experts talking about certain indicators that are no longer favorable.  Funny how that goes.  It’s short term stuff though, so maybe the idea is to go along and get along.  Don’t ruffle feathers or upset the apple cart.  NFTRH 281 ruffles a few feathers but beyond the near term has significantly higher targets for later in 2014.

There is also some crackhead stuff in here as 6 Semiconductor charts that I find constructive are presented (with targets) in the event that the SOX holds its breakout and the market goes into blow off mode.

In all 34 pages of quality reporting.  NFTRH 281, out now.

nftrh281

Junk Bonds vs T Bonds, Risk ‘ON’ or ‘OFF’?

I get it.  I continue to look silly posting bearish things as the market levitates.  Well, here is another silly bearish nugget for good measure.  Sure, the sky pilots in junk bonds are chasing yields to the heavens.  Why, just look at HYG go!

But its ratio to long-term Treasury bonds is not so stellar.  It’s just another small divergence to the bull festivities, but there it is none the less.

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I happen to think nominal T bonds have a good shot at rising soon.  If that should happen, for risk to remain ‘ON’ junk bonds had better rise even faster.

Inflation Fears? TIP-TLT Says Not Yet

The economy and the stock market depend on inflation. Get serious giddy stock bulls, they inflate, you make money.  They fail to inflate and the tide turns deflationary, your gains go poof, money heaven.  I’ll dig out some of those policy-profits-S&P 500 corollary charts again soon enough.

The relationship between TIPS (inflation protected) and TLT (regular long-term T bonds) is one indicator of inflation expectations and while it seems to have spent the last 2.5 years in bottoming mode (allowing Goldilocks to pig out on porridge) it is still going nowhere.

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TIP-TLT ratio weekly, from NFTRH 277

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Another ‘Bear Limit’, Treasury Bonds vs. SPY

Along with the indicators and parameters shown in the last few posts, the TLT-SPY ratio can be informative.  We had a good ‘risk OFF’ thing going as TLT crept out of the Falling Wedge vs. SPY.  Then we had an impulsive scare fest in the market as the VIX exploded, people got too bearish and TLT-SPY took a corrective turn down right at the 200 day moving averages.

So now, a parameter to the potential resumption of the bear case would be TLT-SPY holding the MA 50′s.  Markets are making sense again, aren’t they?  And we have not even talked about the daddy of all indicators, the gold-silver ratio.  I love this market.

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