The U.S. Government Bonds 2 YR Yield (US02Y) is testing its 1W MA50 (blue trend-line) for the first time since May 31 2021. The 1W RSI is on the very same Lower Highs trend-line rejection that it was during the December 17 2018 1W MA50 test!
Needless to say this shows that the price is on a critical point as when it broke in Dec 2018, a downtrend followed that was at the bottom of the U.S. - China trade war and sent stocks (black trend-line = S&P500) on a 1 year mega-rally (until the COVID crash).
The only way that trend-line breaks is if the Fed, indeed, pivots as everyone expects.
So much news about "bail-outs" and "pivots", when the SVB depositor loss would not have exceeded 10% - and there is no bailout for those that lost on the securities.
For the Fed to pivot now, with inflation at 6% and Core inflation rising (the number they really care about) as well as unemployment/JOLTS remaining around 50-year lows, they'd basically be guaranteeing another round of high inflation that would propel us well into double-digits.
This doesn't even include the threat of China exporting their inflation. The chinese people have savings rate at highs after 3 years of lockdown, and their claimed inflation rate is well under 2% - they have been in a disinflationary spiral for years. If China wants, they could easily start their own round of QE to boost its own economy (which is also in the shitter, thanks to real-estate) and export it to the rest of the world via inflation manufacturing. This would act as a multiplier on Fed-driven pivot inflation. And you're fooling yourself if you don't think China isn't planning on this.
For the trend-line to break, the Fed would basically have to consign the dollar to extreme risks of near-hyperinflation - which could create a self-fulfilling prophecy. They're usually wrong, but not retarded.
So much news about "bail-outs" and "pivots", when the SVB depositor loss would not have exceeded 10% - and there is no bailout for those that lost on the securities.
For the Fed to pivot now, with inflation at 6% and Core inflation rising (the number they really care about) as well as unemployment/JOLTS remaining around 50-year lows, they'd basically be guaranteeing another round of high inflation that would propel us well into double-digits.
This doesn't even include the threat of China exporting their inflation. The chinese people have savings rate at highs after 3 years of lockdown, and their claimed inflation rate is well under 2% - they have been in a disinflationary spiral for years. If China wants, they could easily start their own round of QE to boost its own economy (which is also in the shitter, thanks to real-estate) and export it to the rest of the world via inflation manufacturing. This would act as a multiplier on Fed-driven pivot inflation. And you're fooling yourself if you don't think China isn't planning on this.
For the trend-line to break, the Fed would basically have to consign the dollar to extreme risks of near-hyperinflation - which could create a self-fulfilling prophecy. They're usually wrong, but not retarded.