This too shall pass. ( Inverted treasury curve)

Discussion in 'Economics' started by eurusdzn, Mar 23, 2019.

  1. eurusdzn

    eurusdzn

    Seems a case of nerves, jitters, a little to fast and furious on the stock indices in 2019.
    Clarification from fed that they are just being dovish ,appeasing , without a strong correlation to dire future expectations.
    They can always sell assets faster, en mass , to counter any yield inverting flight to safety. got the tools.
    Stock indices are just gonna have to get used to, de sensitize, acclimate to going back and forth between inverted and not inverted.
    At least no one on ET is calling a top here for 2019.......I do expect some vol and some pullback here and looking at a simple directional put buying trade on stock indices here.
     
    Last edited: Mar 23, 2019
    murray t turtle likes this.
  2. bone

    bone ET Sponsor

    For those looking for some simplistic clarification: look at the short term US Treasury Note yields and compare them to the Ten Year Note yield. Short term paper with that kind of juice usually - but not always, augers towards recession.
     
  3. I'm a dumbass and even I knew that. But thanks anyway.
     
  4. themickey

    themickey

    I am, just not shouting it from the rooftops yet as I have lots of selling to do in the morning.
     
    jl1575 likes this.
  5. sle

    sle

    The Fed does not want to raise any alarms in the asset markets, but the economic numbers paint a mixed picture. If anything, the rates market (Fed Funds futures, specifically) are predicting a rate cut in the near future.

    It's unclear what their tools are at this stage of the game. They can't really aggressively unwind the balance sheet since that would interfere with the long-term lending and the credit markets are still pretty fragile. The have some ammo in the front, so they can cut aggressively (which is probably why they have hiked in the first place).

    Yes. I'd think we might go through another short round of fear-greed before the economic numbers start to really get bad and we have a proper selloff (maybe fall of 2019?).
     
  6. kj5159

    kj5159

    I'm thinking a sideways choppy/flat type of situation. However if the Fed is dovish and bond yields dive, assuming there isn't impending doom but rather a slowdown, I'd think asset prices continue rising, no? More of the same, nowhere else to go but stocks.

    What so you guys think, recession?
     
  7. Lots of available real estate that isn't yet overpriced.
     
    murray t turtle likes this.
  8. %%
    Well SEPT is known for selloffs; not a prediction, not bank insured.:D:D.
    I enjoy reading the WSJ. NO disrespect to the bond sellers; but even in the past 52 weeks WSJ has been pushing bond articles + bond charts designed for churning/stock churning. Same way with thier goofy stock PE charts.

    But WSJ 52 week stock charts tend to be accurate; except the time they painted S&P 500 bullish/green for week because of a gap down Monday. LOL .Weekly close to close, that weekly SPY/S&P 500 was red , down a bit that week.

    Good thing about doing something 52 weeks, or 104 weeks maybe right , given enough time.............
    [IBD] Investors Business Daily noted , MAR 21, 2019; '' Time To take some Profits??'' I noted that depends where you got in. Depends on your plan also.:cool::cool:
     
  9. Depends on one's definition of aggressively:

    Federal Reserve Total Assets (for last 5 years or so, up till most recent report last week - which note was down once again. Not rolling over can have the same effect as selling without wink wink "selling":
    FEDBS.png
     
    murray t turtle likes this.
  10. Here4money

    Here4money

    What's this about the inverted yield curve always being followed by a recession? That mostly a rule that never fails?
     
    #10     Mar 30, 2019