We're about to make history y'all! But not for a good reason... We're breaking out of the interest rate bear trend we've been in for over 35 years. We used to raise interest rates to help control the debt; but after we abandoned the gold standard it didn't work so well. Going forward the economy could handle less and less rate hikes, while debt sky-rocketed....
CBOT_MINI:10Y1! CBOT_MINI:2YY1! The Federal Open Market Committee (FOMC) is scheduled to meet on July 26-27. Market widely expects a 75-basis-points (bps) Fed Funds rate increase, from current target of 1.50%-1.75% to 2.25%-2.50%. The call for a 100-point hike, while still feasible, is weakened after U.S. gasoline price dropped 70 cents per gallon in the past...
June 17 Expiry 4X - June Op-Ex = $3.2 Trillion Oops - someone's gonna be off-guard. In March the Spy ran from 414 to 444 into Quad Witch. ______________________________________________ Recession / Downturn? Depression is well underway.
Overview of the yield curve indications on potential liquidity crisis occurring in the near future and leading to downturn in equities.
this chart shows, how the moneyallocation rises while the fed highers yields. The setup in RSI and the actual chartpattern has high similarities to the copper chart 2006, when Copper broke through a resistance and made exponential returns. Now copper is again at a resistance, if it breaks through, we might see some crazy gains again.
Interest rates scale is on the left, plotted in orange. The last time we started hiking rates from zero, we saw a decent sell-off with the first hike. Then things became bullish with subsequent hikes, until it neared 2% where markets got volatile; and then at 2.5% where we see another sell-off. If history, that could put QQQ near -40% from ATHs. I'll be watching...
Aggressive rate projection for 2023 by the #FED was the main highlight from the meeting in an effort to curb #inflation expectations 2.5% is the target of it expectations for 2023 (which is unsustainable due to the high levels of debt in the system)
Simple late night doodles with some input of previous crashes from: fred.stlouisfed.org/series/FEDFUNDS and some simple trend following to suggest the increasing fragility of the effect that marginally increased rates may have on the economy. FRED:FEDFUNDS
This is what happened to the US Treasury 10 year - 2 year spread the last time the Federal Reserve embarked on a tightening cycle. My prediction: as before, as soon as the 10 year and 2 year yields touch (the spread approaches 0%), the Fed will be forced to reverse course and begin lowering rates in order to avert a yield curve inversion and the potential for a...
This chart provides a clear "prediction" on tomorrow's Federal Interest payments (on the debt) which sits at a bit more than 20% of tax revenue. This chart uses the debt and the US10Y to show where payments are going. It's obviously very accurate but the problem is, the next move up is going to detrimental to US government solvency. Higher payments come with...
Normally, when inflation is high, the Federal Reserve will increase the FEDFUNDS rate which discourages banks borrowing money in order to fund investments. This in turn discourages lending and generally increases borrowing costs across the economy - including borrowing costs for the national debt. When you subtract it from the YoY inflation numbers, you can see...
This chart shows the difference between the percent of federal tax receipts used to pay interest on the national debt (currently around 20% of tax receipts) and the FEDFUNDS rate. This difference has been growing through the years as the debt grows larger and people are less willing to buy treasuries at low interest rates. Even with historically low interest rates...
This chart attempts to show the ratio between the percent of federal tax receipts used to pay interest on the national debt (currently around 20% of tax receipts) and the FEDFUNDS rate. This ratio has been growing through the years as the debt grows larger and people are less willing to buy treasuries at low interest rates. Even with historically low interest...
Increases in the US Fed Funds rate during the FED's hiking cycles have always preceded a recession. A simple analysis of the most recent recessions, the amount of rate hikes preceding them and the downward trending channel in which FED Fund Rates have moved suggest the FED only has room for 150bp worth of hikes (or a total of 6 hikes). OANDA:SPX500USD FRED:FEDFUNDS
The bond market often has an inverse relationship with the stock market since it is considered a 'risk off' asset. Bonds generally yield more interest for longer maturities. For example, a bond investor in a healthy economy would expect a greater yield for a 10 year treasury compared to a shorter duration. However, the yield curve can 'invert' (shorter term bond...
The Business Cycle has not been the Cumulative Driver of Economic Expansion. And why the Quantitative Theory of Money is at best incomplete. ________________________________________________________________________ We are in an Extension of the Credit Cycle - an Experiment gone horrifically...
I am not a fundamental expert (nor an economist) but I found FEDFUNDS chart really interesting! I never thought that basic technical analysis tools can also be applied to such economic instruments! From a technical perspective, FEDFUNDS has been bearish for a while making lower lows and lower highs. For the momentum to be shifted from bearish to bullish, as...
Quick one here, given the world looks set to resume it's ludicrous experiment with negative rates in order to spur "growth" and encourage spending. I thought it was only reasonable to see what effect the past decade of ZIRP (Zero Interest Rate Policy) has had on the personal savings rate. Before we begin, i understand that the fed funds rate is not the explicit...