meszaros

10-year forward interest rates.

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TVC:US10Y   US Government Bonds 10 YR Yield
10-year forward interest rates. This is a very important figure. The analysis is technical in nature, but I would like to draw fundamental conclusions from it. It can be seen from the chart that futures interest rate pricing on 10-year U.S. government bonds is currently rising. The main reasons for this are the rise in oil prices, which may trigger a temporary rise in inflation . But it can also be seen from the figure that we are approaching the end of a transient ascending cycle. This assumes that 10-year dollar interest rates will peak at 1.43%. Then, according to the law of the wave sequence, the pricing of 10-year interest rates (thick red line) can once again take a strong declining path. This projects a strong dollar weakening. This weakening of the dollar could be the driving force behind the rise of the U.S. stock market, cryptocurrency market and commodity market. In the event that market futures interest rate pricing goes along the thick red line (I see a good chance of that now), stock market and commodity prices will now be flying to unimaginable heights. Crypto stock markets are also facing significant increases.

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Alternatively..

+2 Reply
meszaros Captain_Walker
@Captain_Walker, Thank you for your analysis. This is also conceivable. In this case, further dollar strengthening may come. While I still expect the dollar to weaken in the longer term, a multi-week dollar strengthening cannot be ruled out in the short term.
+1 Reply
@meszaros, The Dollar is still the world's liquid Gold. With the Biden administration now in power, there could be new demand as people may believe that a new utopia of economic recover is just ahead. We've seen some of that in the mad rush for equities - even if that is pumped up by the FED.

If equities go south in your time frame, the Dollar will come under bullish pressure (but no guarantee it will go north). If the dollar continues it's slide south, then your other projections on the S&P500 heading north is likely.

There is a problem with equities which can backfire into forex. The US equity market is 200% overvalued against GDP. Yes - we know that in the Japanese situation GDP did not matter. But i don't know if that will be the same for American equities on which other markets draw strength. Then their is debt to GDP ratios which are also crazy in America at this time.

GDP could improve if vaccines work as expected. That would increase demand for the Dollar push price north. I don't really get much into 'fundamentals' because I don't have any truly good data.

What I can say is that the tensions and instabilities are rising again - even if not seen. A similar picture was present before the COVID correction of equities back in first quarter of 2020. Of course, everybody assumed that COVID cause the 'crash'. It may well have masked what was due anyway, and made it worse.

This time around, the equity markets are re-inflated. Some may not understand why I focus on equities. But it is well known that equities affect USD, AUD, JPY, CAD and GBP significantly.

Dollar strength could be good for the bond market. At least investors will feel better that they're not going to be paid, in devalued currency (due to effects of QE). So in an alternative scenario, equities go south, dollar goes north and bonds go north. I can't begin to imagine when that might happen - and I'm making no predictions here.

I'm totally open to being corrected on the above speculations, or alternative perspectives.
+3 Reply
meszaros Captain_Walker
@Captain_Walker, Thank you for this very accurate analysis. I agree with you that uncertainty is increasing. Apparently, the VIX index has also started to move up. Like you, I have done analysis on several instruments. I got the end result that the SP500 may rise, the commodities may also rise and the cryptocurrencies are also on the rise. I can explain this phenomenon by the weakening of the dollar in the long run. I also noticed another phenomenon. And this is the weakening of gold. As I expect further weakening in gold to the level of 1600 usd, I explain this by the fact that the short-term dollar movement is pointing in the direction of strengthening. We also agree that if the Biden administration raises taxes on the profits of listed companies, it could drive the dollar stronger. Because investors can make a profit on corporate stocks.
+1 Reply
@meszaros, For me, there is a time to get involved and a time to stay out, even if I miss big profits in either direction of bonds, stocks indices or forex. This is one of those times in my perception. I may take small positions for smaller profits and losses. I see markets convulsing on 5 to 15 min time frames. This is not a good time for me taking a big shot at any market (relative to my own strategies and account size).
+1 Reply
meszaros Captain_Walker
@Captain_Walker, Yes. This is true. An uncertain period may come. I'm switching instruments now. I focus on crypto markets. I still expect an increase there, as well as oil-related companies and investments. In my opinion, the biotech sector could also benefit from this uncertainty. What could be wrong with tech companies, banks, gold and silver mines.
+1 Reply
@meszaros, >>What could be wrong with tech companies, banks, gold and silver mines.<<

Double dip recession - moving into an economic depression? 😮😉
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meszaros Captain_Walker
@Captain_Walker, I don't expect a bigger collapse. I prefer to expect only side movements in these instruments.
+1 Reply
rhys2804 Captain_Walker
@Captain_Walker, the dollar is weak as a vodka at a turkish hotel cant see that improving anytime soon either especially as their printing like no tomorrow!
+1 Reply
@rhys2804, Of course. And what we can't see anytime soon, is exactly what trading is about. Caution: I'm not making a predication (not that you said so).
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