Folks, the ‘yield’s rising to the limiters’ near-term plan has been frustrating. Not for my own investment and trading because I’ve stayed balanced with a focus on interest rate neutral sectors, but because it makes so much sense within the context of several different macro items that could one day come together to form a massive macro fundamental sell signal on the stock market.
Those components are for stocks to finish outperforming vs. gold, 10 & 30yr yields to rise to 2.9% & 3.3% (+/-), respectively and for the yield curve to make a low. Thing 2 seemed like it was engaging when the daily 10 & 30yr yield charts made bottoming patterns and Things 1 & 3 are in process but could still have quite a way to go.
A couple days ago I affixed my tin foil hat and speculated about the coming of Operation Twist by another name and method. Who knows whether or not the bond market is factoring any of that in yet but taken at face value, its implication would hinder long-term yields and while it serves to keep the macro nice and bullish with a flattening yield curve, it would at least drive the curve down toward future resolution.
Here again are the big picture components. By all views there appears a playable amount of upside left in risk ‘on’ items, especially stocks. The graphic has aged a couple weeks and the yield curve has actually dropped further, but you get the picture.
....also from NFTRH: