{"id":49819,"date":"2019-06-01T08:00:12","date_gmt":"2019-06-01T12:00:12","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=49819"},"modified":"2019-05-31T15:57:56","modified_gmt":"2019-05-31T19:57:56","slug":"the-inflated-sub-is-losing-pressure","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2019\/06\/the-inflated-sub-is-losing-pressure\/","title":{"rendered":"The Inflated Sub Is Losing Pressure"},"content":{"rendered":"

The charts are super interesting to look at. How quickly things turn, as if on a dime.<\/p>\n

\"tnx\"<\/a><\/p>\n

2018 featured a break above the Continuum\u2019s limiter and folks, you and I were not the only ones who saw that and uttered\u00a0\u201cruh roh!\u201d<\/em>; the Fed was well aware of the inflationary implication.<\/p>\n

\"tyx\"<\/a><\/p>\n

Here\u2019s the flip side of the yield (the 30yr bond) for your viewing pleasure. Where is the inflation? Not on this chart after the false breakdown and recovery.<\/p>\n

\"usb\"<\/a><\/p>\n

Many market players wondered aloud what on earth Jerome Powell was thinking as he maintained a hawkish stance despite the onset of Q4\u2019s harsh stock market correction. But as noted at the time, it was simply the bond market giving its instructions.<\/p>\n

The 2 year Treasury yield actually spiked and topped in November and hence, no lovey dovey talk from the Fed.\u00a0\u00a0Jerome \u201cDead Eye\u201d Powell<\/a>\u00a0lagged the bond market, finally becoming\u00a0Jerome \u201cDove Eye\u201d Powell<\/a>, revealing an overt dovish stance in March, again lagging the market (the Fed had actually started making dovish sounds in December and January as I recall).<\/p>\n

The stock market cheered and the disconnect between the yield and the S&P 500 became a gross distortion (as is the Fed Funds rate in the lower panel, if the futures boyz at CME Group are right on in their bets for increasing probabilities of a rate cut in 2019), per the red shaded area.<\/p>\n

\"bond<\/a><\/p>\n

We had asked a question per the chart below. Subsequent market activity says\u00a0\u201cno\u201d<\/em>. The stock market is getting in line now with the relentless decline in the 2 year yield, as it should (according to history, at least).<\/p>\n

\"bond<\/a><\/p>\n

If things remain on the current dis-inflationary course this will eventually force the Fed to get in line as well. Our trusty inflation gauges, TIP\/TLT & TIP\/IEF continue to burrow south. See last week\u2019s post\u00a0Goldilocks Threatened<\/a>.<\/p>\n

\"bond<\/a><\/p>\n

The process seems to be one of getting as many people off sides as possible. Those who believe a rate cut will extend the booming party; those who believe the precious metals sector thrives on inflation; those who think the Fed actually controls much of anything\u2026 What it actually could be is another cleaning out of wrong-headed yet firm perceptions by casino patrons. If Goldilocks is kicked out of the house a lot of players will be without a chair when the music stops.<\/p>\n

As we live a life of ease
\nEvery one of us has all we need
\nSky of blue and sea of green
\nIn our yellow submarine<\/p><\/blockquote>\n

\"\"<\/p>\n

But maybe not for too much longer.<\/p>\n

Check back to see my next post!<\/p>\n

Best,
\nGary Tanashian
\nBiiwii.com<\/a><\/p>\n

Subscribe to\u00a0NFTRH Pre<\/strong>mium<\/strong><\/a>\u00a0(monthly at USD $33.50<\/a>\u00a0or a 14% discounted\u00a0yearly at USD $345.00<\/a>) for an in-depth\u00a0weekly market report<\/strong>,\u00a0interim market updates<\/strong>\u00a0and\u00a0NFTRH+ chart and trade setup ideas<\/strong>, all archived\/posted at the site and delivered to your inbox.<\/p>\n

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The charts are super interesting to look at. How quickly things turn, as if on a dime. 2018 featured a break above the Continuum\u2019s limiter and folks, you and I were not the only ones who saw that and uttered\u00a0\u201cruh roh!\u201d; the Fed was well aware of the inflationary implication.<\/p>\n","protected":false},"author":31,"featured_media":49829,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6920],"tags":[9228,9251,9252,10738,1840,4273,9526,13156],"class_list":["post-49819","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ino-com-contributors","tag-10-year-bond-yield","tag-10-year-treasury-yield","tag-30-year-bond","tag-30-year-treasury-yield","tag-biiwiicom","tag-gary-tanashian","tag-notes-from-the-rabbit-hole-nftrh","tag-treasury-yield"],"yoast_head":"\nThe Inflated Sub Is Losing Pressure - INO.com Trader's Blog<\/title>\n<meta name=\"description\" content=\"Bond market players wondered what on earth Powell was thinking as he maintained a hawkish stance despite the onset of Q4\u2019s harsh stock market correction.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2019\/06\/the-inflated-sub-is-losing-pressure\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Inflated Sub Is Losing Pressure - 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