• 10 mins Morgan Stanley Turns Bullish On Gold
  • 3 hours How Climate Change Is Impacting Global Hunger
  • 6 hours Hacks, Bugs And Exploits: Growing Pains For The $4 Billion Blockchain
  • 8 hours Debunking The A.I. Productivity Myth
  • 1 day Coca-Cola Hints At Cannabis Product
  • 1 day Saudi Wealth Fund Pumps $1B Into Tesla Rival
  • 1 day Major Financial Institutions Are Planning Crypto Products
  • 1 day Is A Market Meltdown Looming?
  • 2 days Is A Four-Day Workweek Feasible?
  • 2 days This Millennial Brokerage Is Coming To Tesla’s Rescue
  • 2 days $2.7 Billion In Assets To Be Auctioned Following Anti-Corruption Crackdown
  • 2 days Capital Churn, Avocado Toast And The Gold Standard
  • 3 days The New Ultra-Wealthy Benchmark Is $50 Million
  • 4 days Mastercard’s New Global Trade Hedge
  • 5 days Turkish Central Bank Finally Moves To Contain Inflation
  • 5 days U.S. Coal Exports At Risk As Hurricane Florence Nears
  • 5 days Universal Basic Income: Is This The Crypto End Game?
  • 6 days Poll: 80% Of Consumers Bullish On Bitcoin
  • 6 days UK Unicorn Eyes Flying Taxis By 2022
  • 6 days Zuckerberg Outlines Facebook's Plan To Combat 'Fake News'
U.S.-Turkey Tensions Take A Dangerous Turn

U.S.-Turkey Tensions Take A Dangerous Turn

U.S.-Turkey tensions have reached a…

EU Weighs New Payment System With Iran To Skirt U.S. Sanctions

EU Weighs New Payment System With Iran To Skirt U.S. Sanctions

Demonstrating its eagerness to continue…

Time To Buy A Lada? Russian Auto Sales Are Booming

Time To Buy A Lada? Russian Auto Sales Are Booming

Russia’s flagship carmaker was once…

  1. Home
  2. Markets
  3. Other

Traders: Sell Stocks and Bonds - Buy Gold and Silver

With consideration to our variant methodologies for establishing a context for the downtrend in long-term yields, we believe the move has reached the dregs of the trend. Over the past year, we've posted the following 10-year yield charts ad infinitum, with the idea that long-term yields were poised to retrace a significant portion of the move that had reached a relative performance extreme at the end of 2013.

TNX 10 Year Yields shown over 50 Years
Larger Image

10 YR Yields 2009-2014 and 10 Yr Yield 1979-2984 (inverted)
Larger Image

 

10 Yr Yields 2013-2014 and 10 Yr Yields 1994-1995 (Daily)
Larger Image

Last Friday, 10-year yields closed just 2 basis points higher (1.68%) than the May 1, 2013 close - which served as the power low for the subsequent taper-tantrum. From our perspective, the risk/reward for traders long Treasuries here is no longer compelling. Moreover - and as alluded to in recent notes, the significant move by the ECB last month to begin quantitative easing should provide further incentive and traction over an intermediate timeframe away from the safe haven shores of long-term Treasuries.

Upstream, we continue to find constructive action in burgeoning reflationary trends - namely, in gold and silver, that have led what we suspect will become a broader pivot in other downtrodden hard commodities such as oil and copper. We reiterate our call that TIPS look attractive relative to nominal Treasuries, with the more aggressive reflationary trade still found in silver then gold. On the immediate horizon, gold has become vulnerable to completing a quick retracement back to ~$1230, before we see it attempting to break out above its highs from last March and challenging it's first major retracement level above $1400. In either scenario over the next week, precious metals remain one of our favorite positions and would look to increase long-term allocations, primarily relative to U.S. equities - but also now with respect to long-term Treasuries as well.

Overall, the moves from the most recent deflationary scare have continued to follow the exhaustion sequence witnessed at the end of 2008, when a much larger deflationary squall hit the markets and inflation expectations. Despite the sharp retracement in equities this week, we are looking for the SPX to resume its downtrend - with a pivot inverse to what we expect will become a cyclical low in inflation expectations.

2008/2009 Gold/Oil/TIP:TLT/ Copper (Daily)
Larger Image

 

4014/2015 Gold/Oil/TIP:TLT/Copper (Daily)
Larger Image

 

Back to homepage

Leave a comment

Leave a comment