Whenever a fellow parent asks what I do, I tell them I comment on interest rates.
I’m not involved in the semiconductor industry or the AI revolution. I don’t rob community banks (a personal favorite, despite mixed reactions). And I certainly do not analyze fixed-income, forex, and commodity markets (that’s a show-stopper).
The only thing people want to know these days – whether they’re navigating Wall St. or Main St. – is where rates are headed.
But no one seems to be listening to the one person who has a direct impact on the direction of US Treasury yields…
If silver doesn’t come to play, precious metals won’t win the day.
Gold’s resilience has been impressive lately, especially as its two main headwinds – the US dollar and real yields – catch higher.
But while all eyes are following gold as it coils just below all-time highs, I’m tracking silver. Because gold’s doggedness is all for naught if silver breaks down.
The FOMC stuck to its script this week, kicking the can and keeping rates steady.
Everyone was expecting the news. But the market wasn’t expecting Fed Chairman Jerome Powell (the man, the myth, the legend) to completely dash its hopes of a March cut.
Strangely enough, rates continue to fall on the news – even as markets adjust to the possibility of the initial rate cut now coming in May.
Before you run out to buy US treasury bonds, check out the overlay chart of the US 2- and 30-year yields:
There’s a big difference.
The 2-year yield is churning sideways, reflecting the market’s expectations of the FOMC’s next move – nothing in the foreseeable future.
So Santa was a no-show this season. The Nasdaq 100, the S&P 500, and Papa Dow are still managing to post positive monthly returns heading into January’s close.
That's an auspicious data point for the rest of the year.
Beneath the surface, last quarter’s laggards are also playing catch up to the leadership groups…
