Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Trump Stocks and Crypto Mania 2025 Incoming as Bitcoin Breaks Above $100k - 8th Dec 24
Gold Price Multiple Confirmations - Are You Ready? - 8th Dec 24
Gold Price Monster Upleg Lives - 8th Dec 24
Stock & Crypto Markets Going into December 2024 - 2nd Dec 24
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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

Interest-Rates / US Bonds Apr 16, 2022 - 02:14 PM GMT

By: Gary_Tanashian

Interest-Rates

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.

The inflation hysteria a year ago was enough to foreshadow a contrary move in the other direction for inflation expectations (and the yield below). Larry was right; they had not seen anything yet. After a multi-month respite, now they see it (oh boy do they). They also see the Continuum (well, you and I do at least) piercing the limiters in a violent manner.

That is why this chart exists; to let us know if something that has been in place for decades (dis-inflationary backbone against which the Fed inflates the system as needed) will continue or give way to something new for the modern era but not entirely new historically, as Ludwig von Mises would advise. That would be a debt-triggered inflationary crack-up-boom or what I call Hellflation ©.

The inflation will not die easily. At whatever point inflation, its ‘expectations’ indicators and associated asset market trades make their highs we can expect a potentially dramatic pullback in the yield at some point. But if it does not pull back in the month of April (thereby flagging the monthly candle as a ‘reversal’ candle) the chances will increase that what has been for decades no longer will be.

That was a secular trend up in bonds and down in long-term yields. That was the very backbone of the inflated Keynesian economy against which policymakers have inflated boom cycles (most recently in Q1, 2020) and once again printed our way out of the inevitable bust cycles that have followed them. It’s a continuum, an ongoing game of hide the cheese (inflation). But the cheese is there in the form of all that debt that has not yet unwound.

You wonder why the Fed is flashing its Hawk eyes? A break of the secular downtrend in long-term yields (uptrend in the long bond) will change the game by which the Fed has been able to reflate the system literally at will during every economic and market bust crisis over the last couple of decades. It was a no-brainer (for dyed in the wool Keynesians at least) to manipulate and monetize bonds at every sign of trouble as long as bonds were not indicating a serious problem with the Fed’s primary tool, inflation. But if this and other indicators go on to make new secular trends ‘Houston, we have a problem’, and market participants have got to discard certain rule books.

For “best of breed” top down analysis of all major markets, subscribe to NFTRH Premium, which includes an in-depth weekly market report, detailed interim market updates and NFTRH+ dynamic updates and chart/trade setup ideas. You can also keep up to date with actionable public content at NFTRH.com by using the email form on the right sidebar. Follow via Twitter ;@NFTRHgt.

By Gary Tanashian

http://biiwii.com

© 2022 Copyright  Gary Tanashian - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Gary Tanashian Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in