Imagine being one of these people who are lying to US citizens about falling interest rates?
Or worse, imagine being one of the poor victims who actually believed them?
Ouch.
The people lying to you include journalists across old media, a few economists that are somehow still employed, and even the President of the United States of America.
Or maybe the Biden didn't actually lie to you. It could have been the intern, who tells him what to say, that is the one behind the false information.
Either way, none of these people are here to help you. They're only here to help themselves. That's how this works.
So as investors, it's important for us to actually look to see what's happening, instead of blindly trusting some random source, even if that includes the President of the United States, who's been lying to you about falling interest rates all year.
Is the fact that he is up for reelection later this year further incentivizing these lies?
Commodities are outperforming stocks and bonds. Interest rates are rising worldwide, and investors are anticipating increased inflationary pressures—not multiple rate cuts—this year.
In fact, inflation expectations are reaching levels not seen since June 2022…
Check out the Treasury Inflation-Protected Securities ETF $TIP vs. the nominal US Treasury Bond ETF $IEF ratio zoomed out twenty years:
Monster base. But I don’t think of this ratio in those terms. Instead, I use it to gauge investors’ desire for inflation protection.
Perhaps the near-term rise in rates makes it difficult to grasp, but the US benchmark yield is actually chopping within a broader corrective phase.
Before we dive into the charts, I want to make two things clear:
One, I am not an Elliottician or an Elliott Wave specialist on any level. And two, if you give five Elliotticians the same chart, you’re likely to get five different wave counts.
Nevertheless, my journey to earning the CMT designation exposed me to the Elliott Theory, and I find it prudent when examining the US 10-year yield.
We held our April Monthly Strategy Session earlier this week. Premium Members can access and rewatch it here.
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 easily one of our most valuable exercises 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.
Everyone is obsessing over the Fed’s rate cut plans. Meanwhile, interest rates are climbing to their highest level since early December.
Instead of following Fed gossip and what-ifs, focus on what is: Yields continue to creep higher as inflationary assets rip.
Check out our Global Benchmark Rate Composite, an equal-weight basket of Developed Market 10-year yields (Germany, UK, Canada, France, Italy, Spain, Switzerland, Japan, Australia, and the US):
Our global composite is holding well above the lower bounds of a yearlong range, catching toward the underside of a flat 200-day moving average.
Yields on sovereign debt show no signs of an imminent collapse.
Three rate cuts remain the base case for 2024. Everyone had this scenario penciled in, including the bond market.
The US benchmark yield is holding at the same levels as last month. T-bonds are catching a modest bid. And bonds are…well, boring.
Perhaps it’s not an ideal scenario for bond bears, but stock market bulls are welcoming the muted response…
The Bond Market Volatility Index $MOVE—the credit market’s equivalent to the VIX—is registering its lowest reading since spring 2022.
The last time the MOVE hit these levels, the Fed had yet to embark on its current hiking cycle. (We all know what followed—an epic downturn for bonds and stocks.)