Good evening everyone, this will be a short post here, we just wanted to share the 30Y bond yield chart here. We believe this major trend channel is on the cusp of finally breaking. We already know the shorter duration notes like the 2Y have already broken down to usher in the new rate cut regime, but the bonds are also on the verge:
This bad boy goes back to the 2020 low. We believe that we may be just beginning a long journey toward the inevitable sub 2% 30Y bond once again! Yeah we know “inflation” and “debt” but we have proven, time and time again that in today’s market economy, higher rates actually accelerate inflation. You guys know why, because we have pounded it into your brains on how the monetary mechanisms actually work and when you have a government paying out trillions in risk free interest, well that is highly inflationary! That needs to end and it will end once the FOMC begins their rate cut regime once again next week!
No we do not care that CPI shows a 2.9% YoY rate as we have proven that fact as well that the FOMCs actually tolerance for the inflation rate over the last 3 decades has been 3% not 2% and its proven by their massive increase in their own assets, to the tune of 9.7% annualized over that time frame. We do expect the FOMC to move their way back down to low low rates and we are hopeful that they will continue to reduce their balance sheet, we can hope, but we doubt they will because every good crisis comes with an ever increasing bailout package!
In fact perhaps today’s H4 report from the Federal Reserve showed that the FOMCs assets increased by $143m a small increase but off of the low none the less. With the FOMC balance sheet low coming in at $6.65Tn perhaps today’s increase will be the start of the FOMCs journey back up to $10Trillion in assets and beyond. The same report showed their deferred asset hitting a fresh low at $241.6 Billion:
Ok we continue to see the money flow into stocks hopeful that the rate cut will bring in some fresh buying, we doubt it but the flows are steady and littered with hopeful levered players. For now the bulls are in control, 581 in the QQQ ETF is key tomorrow on the close, lets see if the buyers can maintain the buyside imbalance or if we get some profit taking here into the weekend:
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