This shows you that the market still has a rate cut priced in for next year. I'll be a lot more bullish on the market if they price this out.
Inflation is here to stay, and so are high interest rates. The market can still go up though, but as I said earlier, bonds should not be going up.
Inflation is here to stay, and so are high interest rates. The market can still go up though, but as I said earlier, bonds should not be going up.
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It's beginning to look as if the reason for this inversion is that bond traders haven't been through an inflation cycle. Too many kids working at investment firms.... you need to be older than 50 years old to remember what inflation really is.I don't think the inversion signals a recession, it's the bond traders that are wrong, not the stock market. The inversion will get fixed by longer term yields rising. The Fed has mentioned multiple times that the market is pricing in cuts that aren;t going to happen.
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3.9% yield on 30Y bonds is well below historical levels still. These kids trading bonds are gonna learn a hard lesson when they realize that the Fed can't cut rates because they can't unwind their balance sheet (underwater on all MBS they bought)Federal Reserve balance sheet:
federalreserve.gov/monetarypolicy/bst_recenttrends.htm
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I'm convinced that investment firms just hired really stupid kids to trade bonds because it was so easy to do during COVID QE.The only plausible explanation for the rate inversion
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Inversion is going away, I told you guys the bond traders were wrong....I'll be a lot more bullish once the inversion is fully priced out.
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Inversion going away and the market is going to rally, not because of future rate cuts but because there will be no recession.China PMI was up big, looks like the supply chain issue will resolve itself. Problem is that China consumption will also go up, so there will be deflation on certain goods and inflation on some commodities.
Guessing rate hike this month and May. We may see a pause in June then another hike in July. In any case, we're talking about quarter point and not .75% hikes, so don;t expect the market to tank. Just these big dips.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.