Massive growth in money supply could potentially lead to inflationary pressures. But the velocity of money is near record lows. As things stand, inflation expectations are perking up near term but remain suppressed further out. Chart 1 is forcing investors … Continued
Two months into the year, January and February have traded similarly – early strength followed by weakness in the dying sessions. Equity bulls’ inability to hold on to gains comes amidst a spike in long rates. Short rates are behaving, … Continued
Following futures positions of non-commercials are as of February 23, 2021. 10-year note: Currently net long 2.8k, down 100.6k. Bond vigilantes and central banks look ready for a duel. The former fired the opening salvo, with long rates rising meaningfully … Continued
Last March, the Fed essentially urged investors to take on risk and go up the risk curve. They have obliged. Leverage is high in the system. This works as long as the prevailing upward momentum is in place. When a … Continued
Following futures positions of non-commercials are as of February 16, 2021. 10-year note: Currently net long 103.4k, up 23.9k. The 10-year treasury yield had a mini breakout this week at 1.2 percent. This was preceded by a breakout six weeks … Continued
The 10-year continues to perk up, eyeing 1.4 percent. The strength is seen even though the Fed continues to aggressively buy these securities, although foreigners have been cutting exposure. In a leveraged economy, higher rates will translate to higher interest … Continued
Following futures positions of non-commercials are as of February 9, 2021. 10-year note: Currently net long 79.5k, up 20.9k. Minutes for the January 26-27 FOMC meeting – the first of eight scheduled meetings this year – will be out Wednesday. … Continued
The Russell 2000 continues to diverge with small-business profit trend. Having rallied the index 138 percent from the low of last March, bulls are salivating over this year’s consensus profit estimates. In the meantime, on the back foot for nearly … Continued
Reversing the prior week’s weakness, major US equity indices put up strong performance last week. The S&P 500, for instance, defended a rising trend line from last March. VIX collapsed, landing on low-20s, a breach of which opens the door … Continued
Following futures positions of non-commercials are as of February 2, 2021. 10-year note: Currently net long 58.7k, up 21.8k. So far so good from bond bears’ perspective (from price point of view). After having failed just under one percent for … Continued