10/30 yield rallied on Friday, big deflation day

[Anonymous No.51009853]

Can somebody tell me why yields rallied? A textbook deflationary day like Friday should have crushed yields.

It can’t because of rate hike expectations because otherwise the 2 yield would have led the way.

It can’t be growth because we’re seeing the worst economic prints since the COVID lockdowns.

It can’t be inflation because everybody says it has peaked?

My thesis is that the market is seeing the energy shitshow in Europe and pricing in higher inflation from energy in the US. The dollar was up 2% this week and oil closed up. Or in other words, there is a possibility we get an even higher CPI in the future.

Thoughts?

[Anonymous No.51009897]

>>51009853
Who is buying bonds?

[Anonymous No.51009911]

>>51009853
>My thesis is
And what exactly is this thesis based on? What historical comparisons have you done? What models have you run?
Oh, none?
You just read algo-generated dopamine drip Skinner box social media feeds all day?
"Thesis" disregarded.

[Anonymous No.51009932]

>>51009853
Europeans are so fucking pathetic, can’t even take a hot shower? All politicians deserve a terrible fate. Not only can you not afford a shower but your financial situation is so superb you’ll bring in the entire MENA region for immigration, nice!

[Anonymous No.51010060]

>>51009897

bonds vastly outperform equities during growth slowdown periods

>>51009911

are you 18?

Nothing I posted is incorrect, it is all empirical fact. Bond yields are influenced by growth and inflation expectations. Another fact. So, when bond yields go down when we see growth skid to a halt (another observable fact, and historically inverse to the relation the two have had for decades) the risk market isn't pricing something in that the bond market is sniffing out.

Gasoline is up over 10% from its recent lows. Natural gas is pushing ATHs, oil refuses to stay below 90 with supposedly "hard recession" economic data points (see: NY state fed manufacturing), all while the dollar is threatening to take out its 20 year high. Yeah, this thread has served its purpose, I'm right. The market must now price in a tail event of the August CPI being greater than July's, or the extinction of the "Fed pivot" narrative.

Go back to managing your 11k crypto portfolio

[Anonymous No.51010161]

>>51010060
1. CPI has peaked. It will not pass 10% this cycle 2. Fed has stated over and over they do NOT follow CPI, they have their own preferred metrics. 3. Oil is going to shit for the rest of the year and beyond. We're running face first into a deflationary crunch at the start of next year.
4. Bond traders are lazy retards, 2022 has shown them up to be the larpers they always were.
Thanks for making this thread, it's good to see what midwits are betting on.

[Anonymous No.51010174]

>>51009853
Today, I'm going to the bank in 2 hours to buy enough 4 week T-Bills to print free money every month. #cashgang

[Anonymous No.51010231]

>>51010060
Bond rates go up when people aren't buying bonds. Bonds may historically do well when equities are stressed but so has gold and the market doesn't reflect that happening either.

[Anonymous No.51010287]

>>51010161

>CPI has peaked. It will not pass 10% this cycle

based on your feelings. Bet you thought you were a real hot shot calling for a lower CPI when literally 90% of the decline was based solely on the drop of oil from 120 to 90

>Fed has stated over and over they do NOT follow CPI, they have their own preferred metrics

their metrics (core pce) are literally showing inflation broadening, worse than CPI

>Oil is going to shit for the rest of the year and beyond

based on your feelings, not the fact that production worldwide is dropping and robust remains strong during a period of growth slowdown

>it's good to see what midwits are betting on.

really ironic considering all your points are literally the shit they regurgitate on CNBC every day

[Anonymous No.51010313]

>>51010231

>Bond rates go up when people aren't buying bonds

historically, bonds are the best asset to own during deflationary periods. When the dollar has rallied 2.3% in a week, it's deflation. Simply saying "price no go up cuz no buy" doesn't cut it. People still sold them for a reason. When the fundamentals are all green lights for the long bond trade, something else is taking place that equities haven't realized yet.

>but so has gold

No. Gold goes up when the hiking cycle ends and the dollar begins its drop (Happens every cycle). We aren't there yet. Gold is not a hedge against deflation, obviously since it has an inverse relationship with the dollar.

[Anonymous No.51010423]

>>51010287
Based on every reasonable expectation. US has no energy crisis, EU is right now at the peak of theirs as they are about to meet their winter stockpiles. Any consumer facing industry eg computer hardware has massive excess inventory. Consumption dropping. Spending dropping. There are no inflationary pressures therefore inflation will begin to drop. Your entire "thesis" is that some unexpected black swan will materialize from nowhere to save your ass. Terrible strategy.
And btw being a le based CNBC countertradeooor is peak midwit. See: literally any memestock thread.

[Anonymous No.51010737]

>>51009932
most of our electricity is locally produced so it's not that expensive. problem is with gas (heating). either way, government said they will cover the delta so we don't riot. we'll see if that will really be the case.
t. latvia

[Anonymous No.51010772]

>>51010423

im not going to respond to your post with any more information because you literally just post feelings or "what you think"

>There are no inflationary pressures therefore inflation will begin to drop

core pce went up last report. Again, im really not going to waste time posting with a 85 IQ mouth breather who can't even comprehend what im saying. Post ANY citation or evidence backing your claims

>europe enery has peaked
>inflation has peaked
>US has no energy crisis

None of these are supported by facts, in fact, the data DISPROVE them. Thus, I will stop responding to the man whose entire portfolio is 8k all in SOXL. And no explanation for the rising long end of the curve has yet to be given by this clown

[Anonymous No.51010811]

>but I FEEL europe energy has peaked

[Anonymous No.51011105]

>>51010772
>>51010811
Europe's gas storage target is 80% by November 1st, they are currently at 76.
Enjoy your meme bond play you fucking retard.

[Anonymous No.51011205]

>>51011105

that's the one year forward contract dumb fucking monkey. Are you retarded or something? If what you said had any iota of relevance the contango for euro electricity would have fucking plummeted. Exactly how dumb as shit are you to think the energy futures market hasn't priced in literally three months in advance? Producers have to lock in these rates for the next year. If they can't? They go bankrupt or get bailed out by the government. The tail risk premium has to be priced in for an average to severe winter. US LNG cannot be counted on as their domestic supply is teetering below the 5 year min. What if Russia lowers supply from 20% to 0%? What about next spring/winter?

The futures market is hardly as retarded as your 84 IQ pea brain and realizes that "bro we have enough gas for a mild winter its cool lol" isn't an actual solution.

[Anonymous No.51011228]

YCC?

[Anonymous No.51011308]

>>51011228

maybe? My only qualm with that is that I believe that higher rates on the long end are the antithesis of what the fed wants. Rising long end with growth slowing is a repeat of what we saw last year when bonds and equities both get crushed, or essentially that the bond market is saying it does not believe inflation expectations are anchored and refuses to be paid higher yields to hold bonds. If the fed loses control of long end yields it has the potential of crashing literally the entire economy through inflated term premia, let alone financial markets, so I would consider it playing with fire.

on the other hand, the fed has been trying for weeks and weeks to crash the market by sending their goons to talk hawkish, and it hasn't been working. Perhaps the fed said fuck it and plans to raise the long end to force stocks lower in a bid to tighten financial conditions and commodities. In this scenario they would stop at the yield they thought would be the highest they could go without damaging the economy (3.2%-3.5%)

I really think the bond market just doesn't believe in powell's ability to combat inflation anymore. I mean the last CPI was driven 80-90% JUST by the drop in gasoline, and gasoline and oil have bottomed meanwhile sticky labor and shelter have kept rising... Is this going to be the 4th time "inflation has peaked" when CPI comes in next month at 9.2?

[Anonymous No.51011404]

>>51011205
Kek what the fuck are you talking about. That's physical storage, did you think 76 was a price? The state of bondies.

[Anonymous No.51011491]

>>51011404

Dude you’re literally retarded, I don’t mean figuratively. My posts are unironically too advanced for you to understand. I know this is 4chan, but my condolences

[Anonymous No.51011644]

>>51011491
Listen, you tried to larp like you know what you're talking about, it didn't work out. Just take your L and do better next time.

[Anonymous No.51011849]

>>51011644
>That's physical storage, did you think 76 was a price?
If you thought from his response, that he thought 76 was a price, you are the retard

[Anonymous No.51011872]

>>51009853
>It can’t be inflation because everybody says it has peaked?
lol

[Anonymous No.51011918]

>>51011849
What exact bit of my post do you think referred to a 1 year forward contract? Please be specific.

[Anonymous No.51012007]

>>51011918

Man the shit you posted about Germany gas storage is fucking priced in; that’s the point. Just because they’re going to reach the “minimum” for winter doesn’t mean there isn’t future demand for electricity. It’s a non-sequiter; you’re wrong. Europe energy inflation has NOT peaked or the one year forwards would have collapsed, because they price in ONE YEAR FORWARD energy prices. Not three month forward.

[Anonymous No.51012019]

>>51011918
You responded to him something about storage capacity although he posted a picture of the forward contract. He then tried explained to you that how full the storage is doesn't really matter since the storage will draw down (last year in europe it went from about 75 to about 27% IIRC (October starting, November really intensifying with draws and injections decreasing) which is why there is a contango (higher price in the future than now).

[Anonymous No.51012031]

>>51012007

And in this scenario of “minimum storage” any news or indication of a cold front is going to have European countries scrambling to bid up the prices even further. There will 100% be energy bankruptcies and bailouts from this shitshow. Either from the energy suppliers or the consumers; somebody is paying 10x higher prices.

[Anonymous No.51012048]

>>51011205
https://graphics.reuters.com/UKRAINE-CRISIS/EUROPE-GAS/zdvxozxzopx/ its current physical storage.

[Anonymous No.51012050]

>>51012007
>that’s the point
No, the point is you don't know anything about anything and are just regurgitating bond baggie talking points.
>>51012019
>You responded to him something about storage capacity
Congrats on learning to read, maybe there is hope for you yet.

[Anonymous No.51012061]

>>51012007
Well, but if they price in one year in advance, they may have priced in the lack of russian gas (20 to 0%). A collapse would be unreasonable, as there isn't an event like COVID. Even if the war ends, the West will probably not buy russian gas anymore. The prices will slowly fall.

The question is, how the fuck is it already that high although last year NG was way higher than the years before AND Russia was supplying 100% (Nordstream 1). How can we be at 5x the price (UK Gas) or 1.5x price (US gas)

[Anonymous No.51012074]

>>51012050
Maximum damage control, I'm arguing with a pidgeon.

[Anonymous No.51012122]

>>51012061

It’s not all Russia, France has also been having problems with their nuclear energy. Also, the US may not be able to supply Europe completely, the US itself is low on storage compared to the 5 year average and their injections are starting to miss. Also natural gas in the US has skyrocketed from the 2s to the 10s, you know if it keeps rising US politicians will choose to hold on to their supply rather than export to Europe, and that’s a real concern

Now you have a situation where there may be no gas from russia, US may be unreliable, and nuclear/natural energy is going through its own issues. Recipe for disaster, all this RISK PREMIUM needs to be priced in. If some of it resolves prices will come down, but in the meantime the risk premium will keep energy elevated

[Anonymous No.51012168]

>>51010287
>>51010313
seems like you're the only one capable of answering your wow. question i. this thread

[Anonymous No.51012187]

>>51012122
>US politicians will choose to hold on to their supply rather than export to Europe
Yeah, it's below the average, but still seems to have enough.

If you look at Oil, we had about 430 mil barrels in US storage which seems to be one of the strongest indicators for oil price. With that we were below the average from december to may. The price went from 62-91 without the war, 94 on rumors of war and then above. Still, if you look at the reports from 2017-2019 you will see there also was a time when SPR had about 430 mil barrels, but the price wasn't nearly as high, because that amount wasn't that far below the average. The damn average has been skewed due to COVID when oil was piling up. The absolute amount of oil is the same and we even have less demand than back in 2018 (21 mb/d in US). Oil price was heavy speculation/bubble.

[Anonymous No.51012205]

>it can't be inflation

lol

>40% more dollars from printing in 2 years, it should've taken like 10
>not even counting liquidity from housing that many people are buying
>renewables being pushed forever wasting gov money

It don't end in 2-3 years too. Once interest rates rise some money will come out of stocks, it can come out of short term bonds too if the rates don't go up enough. Where do you think it will go? To fix this shit. Invest while you can, it won't take long until you get priced out

[Anonymous No.51012229]

>>51010161
All wrong, you are literally a midwit.

[Anonymous No.51012250]

>>51012187
Same thing probably with american LNG. the "5 year average canal" is fucked due to Covid which leads to speculators buying gas and oil on masse.

>US politicians will choose to hold on to their supply rather than export to Europe
lol, went afk and forgot to answer to that. For now the exports are lucrative. And as I said, US seems to have enough LNG. Maybe Biden will try something as with Oil to bring prices down for the US.

[Anonymous No.51012302]

>>51012229
>>51009853
so what's going to happen? we get this weird scenario of the dollar rallying together with oil and energy? more hikes and equities keep going down?
always felt like just a relief rally to me - i'm out of the market and just bought a place in south america with my chump change.

[Anonymous No.51012322]

>>51012187

Yeah, I can’t accept the “oil is going to 50” narrative under current conditions

>lowest growth since COVID lockdowns expressed through PMIs, ISMs, productivity, sentiment, and GDP
>dollar is at its 30 year high, should be crushing commodities
>Biden dumped millions of barrels on the spot market to tank oil

AND WE ARE STILL AT 90. There is a serious tightness in the global oil market and it’s just not going to keep going down. So if energy doesn’t go down, shelter doesn’t go down, and labor doesn’t go down, what is supposedly supposed to bring CPI down? The energy sector is absolutely the best place to put your money, I personally paid long energy with short high beta tech dog shit

[Anonymous No.51012328]

>>51012229
Post your position.

[Anonymous No.51012333]

baltic man here
a 10 minutes shower is now 500$
this it totally true, believe me

[Anonymous No.51012351]

>>51012302

Could be what we saw earlier this year where energy ends up going up 25% while dogshit tech goes down 50%.

This all assumes the fed doesn’t decide enough is enough and intentionally crashes the market to tighten financial conditions. If the VIX goes above 27 all equity bets are off for me

[Anonymous No.51012410]

Bullcels are fucking retards if you haven’t noticed. The energy crisis in Europe right now is without precedent, likewise the idea that inflation just goes up really quickly and then comes back down really quickly is also without precedent and is basically the “transitory” model the fed was using last year lmfao.

Go look at any of the inflationary periods in the US, multiple peaks and multiple troughs spanning close to a decade or more each time. The idea that this ends quickly is totally asinine, especially now that we’re starting to see rent prices to skyrocket. Once inflation gets embedded into the public psyche, especially wage and shelter inflation, that shit does not just disappear.

[Anonymous No.51012569]

>>51010313
>When the dollar has rallied 2.3% in a week, it's deflation
2.3% relative to what you braindead spastic? The dxy measures dollar to other fiat currencies. Just because the purchasing power of the dollar is falling slightly slower than that of the other fiat currencies doesn't magically mean it's deflationary.

[Anonymous No.51012653]

>>51012569

The dollar going up is deflationary, do you know why that is? Because it makes the price of literally everything else, being priced in dollars, DEFLATE. It also acts as a pseudo interest rate increase on ALL global dollar denominated debt. When the dollar rallies everything DEFLATES/CRASHES.

This board is only crypto dump and pumps, it is actually impossible to have any discussion outside of Indian pump and dump coins

[Anonymous No.51012672]

>>51012569

> The dxy measures dollar to other fiat currencies. Just because the purchasing power of the dollar is falling slightly slower than that of the other fiat

Why post dumb shit like this? Like I feel like a lot of you just give basic textbook definitions as your retort because you don’t actually know how to respond. No shit the DXY tracks a basket of currencies. Doesn’t change the fact that the dollar is at a 30 year high, the euro is going below parity again, the yen is left for dead, and the yuan is finally beginning to devalue.

[Anonymous No.51012822]

>>51012653
Ok you're right. I guess the real purchasing power of the dollar is just going to magically go to the moon because you can use it to buy more fiat from other countries than you could before.

[Anonymous No.51012993]

>>51012322
But it should be lower. In all honesty for me oil is the most valuable commodity besides food, so I wouldn't mind it being +200, but if we set it into relation with earlier prices, it is too high. You can see that in 2017-2019 the SPR 5-year average canal in the Weekly petroleum report has it's bottom line at about 350mil barrels. In 2021 onwards 400 mil is the bottom. That has raised the average/bar and thus makes it look like we are in heavy deficiency, but we really aren't in such a bad spot. Even distillates were low (same amount of about 135-150 mil barrels) in 2017-2018 and the price was way lower.

Oil should be at 80 atm. The thing that keeps it up is rate decision and uncertainty about economic slowdown. End of september it could rise again if they fail to produce more oil, going back to 100 and later further thanks to russia panic.

[Anonymous No.51013051]

>>51012993
>The thing that keeps it up is rate decision and uncertainty about economic slowdown.

What I meant is the slow hike rate is keeping it up and the still existent demand albeit high prices. I don't think demand will slow down as heavy as many say.

[Anonymous No.51013107]

Who loaded up on SQQQ for Monday here?

[Anonymous No.51013140]

>>51012410
this dude been pretty spot on

[Anonymous No.51013152]

>>51009853
asking the right questions big brain ser. i know something is up when there's confluence among the big brains

[Anonymous No.51013386]

>>51013152
>>51013140
>>51012410

found it. 5 year forward inflation expectations shot up 5% last week alone. The bond market is indeed pricing in renewed and adamant inflation. We are back to the lose-lose May 30th situation. This is a problem for Powell and there is no happy ending for equities from here. Inflation expectations keep rising with yields crushing the market, or the fed tightens more, crushing the market

[Anonymous No.51013454]

>>51009853
My showers are 45 minutes minimum… with heat provided by natural gas

[Anonymous No.51013474]

>>51013454
I kneel

[Anonymous No.51013613]

>>51013152
>Bunch of retards on biz congratulating each other on their big brains
Yep. VERY comfy being a no-bondie.

[Anonymous No.51013661]

>>51013613

I literally have no fixed income positions. I watch everything in macro including FX, commodities, fixed income, international equities, the VIX, swaps, etc etc because I don't manage an 8k portfolio like you do. When something sticks out (Like yields going up), I investigate it. You should go back to /smg/ posting cool green bull pictures because you can't wait to open up Monday to a wonderful +$253 on your all in SOXL position. Man you must be so happy seeing you made over 200 bucks in a single day!

anyway, we are reverting back to the H1 playbook. Pic is SPX, inflation expectations, and energy. Stocks really don't like when expectations get too high, and they will dump hard from here akin to may 30th. Energy likes it so I'm definitely going to be buying energy on dips. Short semiconductors, short high beta dogshit, long some dollars, no position on bonds good luck

[Anonymous No.51013758]

>>51013661
t. 9k portfolio

[Anonymous No.51013814]

>>51013661
imagine trying to be some gigabrain MUH MACRO trader when you could just own broad indices, zoom out, and spend your free time doing enjoyable things instead of trying to outsmart the market

couldn't be me.

[Anonymous No.51013865]

>>51013814

that's why you're down 28% on the year and i'm up 22%, hombre

[Anonymous No.51013935]

>>51013865
>>51013814
i too happily trade peace of mind to see number be green (unironically)

[Anonymous No.51014069]

>>51013865
cool beans bro, shame you're up 22% on a sub-7 figure portfolio making your gains irrelevant. Doubly so when you factor in the time you spend staying on top of the market and slapping a reasonable hourly rate on that

also one year doesn't mean shit. Go do that for 10, 20, 30 years and maybe it's respectable. You won't outpace the S&P over the long run. Touch grass.

[Anonymous No.51014082]

>>51013613
i lost with a small position in tlt earlier this year; cut it all. it's not how you protect yourself.
the guy in the tweet said it himself, bonds are not rallying why would anyone of us own it then. learn to read

[Anonymous No.51014697]

>>51009853
one of the main problems with the energy shitshow in europe is that traders and politicians alike think that energy inputs are interchangeable with each other so for instance the european gas shortage can be resolved with more oil
it cant as it requires logistics chains and machines that dependent on a very specific type of fuel, so in short there is no solution to the european energy problem
which also means that any attempt to combat inflation by the ecb is a joke, come this winter they will have to print more money then during covid or face a total collapse of most sectors of the economy, since people cant afford their heating bill goes to bankrupt energy companies goes to non performing loans goes to banks falling over
the wild card is just how far the fed is willing to go in their fight against inflation, for even they have a limit on their yields before things start going wrong everywhere

i am convinced the central banks of the west will give up the fight against inflation as fiscal policy can cure supply chain disruptions and a creating a greater depression is worse than inflation so the only question is when will they flip the switch

[Anonymous No.51014748]

>>51009853
The Fed Pivot has been priced in. Now we price in the final death of globalism. The crash that creates a whole new category of economic downturn.

[Anonymous No.51016739]

>>51014697
govt of bc has been planning a mega LNG project for over ten years... construction starting in 2025. will take years for excess capacity if their other sources are gone forever. this is crazy, maybe i could import a cute western european refugee wife

[Anonymous No.51017598]

>>51016739
bc?
and yes 2025 will be way too late, at that time germany already deindustrialized already, there really isnt any alternative to russian gas if anyone wants to continue living in the modern age

[Anonymous No.51018208]

>>51017598
>bc?
probably British Columbia up in canada

[Anonymous No.51018661]

>>51012672
I think you are trying to swing at anon who is a different weight class here, clearly you have no idea what you are talking about.

>>51012653
>The dollar going up is deflationary, do you know why that is? Because it makes the price of literally everything else, being priced in dollars, DEFLATE.

Basically what you said.
Donald Trump nailed it to the fucking wall when he said "we need a weaker dollar".
Everyone knows its negative for earnings, its horrible for corporations.