From the desk of Steve Strazza @Sstrazza 

We held our December Monthly Strategy Session last night. Premium Members can click here to review the recording and the accompanying slides.

Non-members can get a quick recap of the call simply by reading this post each month. 

By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends. This is a valuable exercise, as it forces us to put aside the day-to-day noise and simply examine markets from a “big picture” point of view.

With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.

This is the video recording of our December 1, 2021 Monthly Charts Live Strategy Session

From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley

Treasury yield spreads are contracting.

Inflation has been the talk of the town in recent weeks. But, now that the Federal Reserve has finally joined the chorus, the market seems to be headed in a different direction. At least over the near term.

Short rates are holding up just fine, but the longer end of the curve has been under serious pressure.

We’ve been closely monitoring long-duration rates for signs of further weakness. As we write, the 30-year is violating its summer lows, and the 10-year is testing a critical level of interest around 1.40%.

The bulls really need these levels to hold. If they don't, we’d better get used to the recent volatility--because it’s likely to get worse.

Let’s take a deeper look!

This is a weekly chart of the US 10-year yield:

It's Saturday Morning Chartoons time. 

This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.

You can find the whole list of trades here.

Below you'll find the full PDF of this week's charts:

From the desk of Steve Strazza @sstrazza 

Welcome to our latest RPP Report, where we publish return tables for various asset classes and categories, along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.

We consider this our state of the union address, as we break down and reiterate both our tactical and structural outlook on various asset classes. Our ultimate goal is to discuss the most important themes and developments that are currently playing out in markets around the world.

There's been plenty of action these past few weeks. Let's kick things off with stocks and try to make sense of what we're seeing.

Here's our US equities table:

From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley

You already know how we feel about the US Bond Market. 

We like the short side when it comes to treasuries.

Lately, we’ve been keeping a close eye on the long end of the curve since it hasn’t kept pace with shorter-term yields. Though this is still the case, the 30-year yield has found support in recent weeks as rates continue to rise across the curve. 

This should keep the bulls happy for now as an environment where long rates are making new lows is not supportive of higher prices for risk assets. 

But that’s not what’s happening. We remain in a rising-rate environment and don’t see signs of that changing anytime soon. As long as this remains the case, we want to be selling bonds and betting on higher prices for risk assets.

It's Saturday Morning Chartoons time. 

This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.

You can find the whole list of trades here.

Below you'll find the full PDF of this week's charts:

From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley

TIPS versus Treasuries is one of the most important charts we’re watching right now, as it's hitting its highest level since early 2013. Relative strength from TIPS hints that investors are positioning themselves for a sustained surge in inflation.

This makes sense given both the five- and 10-year breakeven inflation rates have reached their highest levels in more than a decade. 

As investors react to signs of impending inflation, many cyclical stocks that benefit from higher rates are catching a bid. A great example of this is the Metals and Mining ETF $XME.

Let's take a look!

Below is a chart of XME overlaid with the TIPS versus Treasuries ratio and correlation study in the lower pane:

This is the video recording of the November 2021 Mid-month Conference Call.

From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley

Last week, we touched on the weakness that’s been developing further out on the yield curve.

The long end simply hasn’t kept pace with shorter-term yields. This is understandable given the magnitude of the move in the 30-year since summer 2020. At some point, the shorter end of the curve needs to play catch up. And it’s done just that these past couple months.

Now it’s time to focus on longer-term rates, as further downside pressure will eventually put the current economic recovery into question.

Let’s put the recent action in rates into perspective as we head into year’s end.

Below is a chart of the US 30-year yield:

The weekend is a great time to take a step back and think about things.

Thinking is underrated.

I'm also bullish on breathing.

If I could buy a leveraged ETF on breathing I would.

Writing helps me do both of these things.

So today I'm just going to point out a few things that are on my mind, and maybe they'll help you understand how I approach the world.

From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley

We’ve been pounding the table about rising rates for over a month now.

It’s hard not to when they're rising across the curve in both the US and abroad. Cyclical and value-oriented assets have increased in tandem, as energy and financials have become leadership groups.

We continue to see countries with heavy exposure to financials emerging from multi-decade bases. Just last month, the Euro Stoxx 600 made new all-time closing highs, while Italian equities reached their highest levels in 13 years.

But when we look further out on the curve, the long end hasn’t been keeping pace with shorter duration yields in recent weeks. 

Taking a look at the 30-year beside the 10- and 5-year yields tells this story best.