Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Is Yield Emerging Out Of A 38-Year Bear Market?

Interest-Rates / US Bonds Nov 14, 2019 - 12:56 PM GMT

By: Mike_Paulenoff

Interest-Rates

Yield has been in a bear market for 38 years. Is that about to end?

The 10-Year Treasury Yield has backed up from the Sep-Oct lows at 1.43% and 1.51% to a high at 1.97% last week. Is this a mere recovery "rally" in a still dominant 38-year bear market? Or is it a secondary low -- i.e., double-bottom -- 3+ years after the July 2016 historic low at 1.32%?


The answer is very important to investors in all asset classes -- because if yield merely is engaged in a recovery rally in a still dominant bear market, then we should expect longer-term rates to roll over again for another loop down into the mid-to-low 1% zone.

On the other hand, if yield is establishing a major July 2016 and Sep 2019 double-bottom, then after 38 years a secular bull market in yield is in its infancy -- and the investment world as we know it will become a VERY different place.

Who knows what the path will be, but from my macro and technical market perspective the markets are way overdue for a yield bull market, even if the fundamentals underpinning such a conclusion are at best difficult to imagine.

Here are some of the questions that come to mind:

-- Do any of us think the US and global economies are about to accelerate well above trend in the upcoming quarters to support higher rates -- even if the best of all US-China deals is consummated (including the removal of all tariffs)?

-- Does anyone think there is an inflationary shock coming?

-- Or does anyone think the US Dollar will roll over hard, or will be "managed lower" by this Administration, which could trigger a rise in inflationary expectations, driving rates higher?

-- In that 2020 is an election year, can we imagine higher rates heading into Oct-Nov of next year?

Then again, suppose a very progressive candidate emerges as the Democratic nominee (Warren, Sanders?) or even someone who is less progressive but who is all about redressing income inequality via fiscal policy prescriptions. Anticipating a close presidential contest in any case, the mere nomination of a Democratic candidate who pounds the idea of redressing income inequality in and of itself could drive interest rates higher.

Add to that, potential impeachment hurdles to President Trump's runway to 2020, and just maybe we have a strange brew that causes bond investors angst, which drives rates higher.

And then there is the 3rd rail issue of debt and deficit spending that no politician wants to go near. Why? Haven’t you heard, deficits don’t matter anymore, or so says the MMT aficionados (proponents of Modern Monetary Theory, Helicopter Money, Universal Basic Healthcare, et al), who advocate running the printing presses 24/7 to redress income inequality. Does anyone think rates will remain quiescent under such circumstances, or in anticipation of a 2020 outcome that will adopt such fiscal polity prescriptions?

It is much more natural to consider the recent back up in Yield as a bounce in a bear market prior to another roll over in Yield, as the 10 year post-Financial Crisis economic "expansion" runs out of gas, Employment softens a bit, and Unemployment upticks, which negatively impacts consumer confidence, subduing retail sales despite a Fed that continues to pump an ocean of liquidity into the banking system.

After consideration of the factors mentioned above -- among perhaps countless others that I don't mention -- if I proceed on the basis of my technical work ONLY, I would have to err on the side of higher rates, meaning that the formation of a 2016-2019 major Double Bottom in 10-Year Yield is the determining consideration in taking a directional position LONG TBT's in the hours or days directly ahead.

See charts illustrating the technical patterns on Yield and the TBT.

Mike Paulenoff is a veteran technical strategist and financial author, and host of MPTrader.com, a live trading room of his market analysis and stock trading alerts.

Sign Up for a Free 15-Day Trial to Mike's Live Trading Room!

© 2002-2018 MPTrader.com, an AdviceTrade publication.  All rights reserved. Any publication, distribution, retransmission or reproduction of information or data contained on this Web site without written consent from MPTrader is prohibited. See our disclaimer.

Mike Paulenoff Archive

© 2005-2019 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