Is the Recent Increase in Rates Sustainable?

Is the Recent Increase in Rates Sustainable?

I believe it is. As we pointed out last week in this post, the ratio of the SPX vs. TYX was suggested a large and imminent move in one of two asset classes – either the SPX or rates. Turns…...

Member only content: Login to view or Register
This Ratio Suggests an Imminently Large Move in one of Two Asset Classes

This Ratio Suggests an Imminently Large Move in one of Two Asset Classes

In the chart below I plot the ratio of the SPX vs. TYX (30 yr US rates). Historically the ratio traveled  in the channel defined by lines (1) and (2) from 1997 until 2012, when it broke above. Since that…...

Member only content: Login to view or Register
Anatomy of a Crash

Anatomy of a Crash

Look at the ramps and subsequent crash set-ups in the Dow (20s), Nikkei (80s) and Nasdaq (00s) and how remarkably similar they are. Seriously, the patterns are near identical. Look at the near uniformity of the initial declines as well…...

Member only content: Login to view or Register
Bond/Interest Rate Thesis Update

Bond/Interest Rate Thesis Update

Though U.S. bonds have fallen and rates have risen noticeably as of late, I believe both trends are set to continue, potentially in accelerated fashion. As a refresher, this thesis was first outlined in this post a month ago. In…...

Member only content: Login to view or Register
Incremental Thoughts on the "Reach for Yield" Trade

Incremental Thoughts on the “Reach for Yield” Trade

This is an update to our post last week discussing the potential risks associated with the global investment community’s “reach for yield” if/when risk-free rates began to rise. In the first chart below I plot the ratio of the Yen…...

Member only content: Login to view or Register
Thoughts on the Nikkei in Real Terms

Thoughts on the Nikkei in Real Terms

We’ve had some commentary recently about looking at the Nikkei in real terms. By real we meant taking the nominal value of the Nikkei and dividing by 10 Yr UST yields as a proxy for CPI. 10 Yr UST yields…...

Member only content: Login to view or Register
Is the "Reach for Yield" Trade in Riskier Areas Going to Get Hurt by Rising Risk-Free Rates?

Is the “Reach for Yield” Trade in Riskier Areas Going to Get Hurt by Rising Risk-Free Rates?

No matter where you turn you can read about the global “reach for yield” game that’s being played by investors, institutional and retail alike, as they attempt to generate income in riskier asset classes with “higher” yields to circumvent the…...

Member only content: Login to view or Register
Emergence of Solid Analog Framework from Which to Assess the Nikkei's Amazing Run

Emergence of Solid Analog Framework from Which to Assess the Nikkei’s Amazing Run

We’ve spent the better portion of the past few weeks focused almost entirely on the Nikkei in an attempt to better understand what’s going on with its current price action in the context of similarly positive episodes throughout the Dow’s…...

Member only content: Login to view or Register
JGB Yields Back at Decade Old Support

JGB Yields Back at Decade Old Support

In the chart below yields on the 10 year JGB reached decade-old support dating back to 2003. Those yields experienced an aggressive intra-day move higher off support. What now for JGB prices and yields?

Where Next For Interest Rates?

Where Next For Interest Rates?

First off, we plot the 10 year interest rate below. Very nice and tight consolidation pattern that’s taken place along lines (1)-(3) that looks very close to ending. A break above line (1) and rates could shoot aggressively higher over…...

Member only content: Login to view or Register