my buddies and I enjoy buffalo wild wings and the UFC night …. the energy is amazing, the beer is cold and the wings aren’t bad …. everyone gets fired up as Bruce Buffer does his amazing introductions and then, at the last minute bellows “IT’S TIME!” Well, folks “IT’S TIME” to see what “the Creature from Jekyll Island” has in store …not knowing a thing about the fundamental theory of economics (is the ramifications of printing trillions of dollars in ECON 101?) I ALWAYS go to the charts …
again, trying to give some background on the PATTERNS and the charts I have included the chart of short term interest rates below. If you remember, there was a time when they were RAISING INTEREST RATES … at the time I was asked to start “charting them” so I did and as we came into a very important FOMC meeting just like today I said, “nope, they are done raising interest rates.” Why? Well, to me it was a simple as our .786 retracement level ….
I actually have a chart as the interest rates hit the .786 level and I’ve spent the past half hour searching “interest rates” thru folders and can’t seem to find it …bummer. note on the chart above the divergence present and the patterns that existed. bearish divergence into a .786 retracement is “usually” a sign of resistance. Plainly there for us all to see ….
I also like to track the “30 day Fed Futures”
note, not sure if that pattern can every complete because to go above 100 would mean interest rates are (-) so … consider this pattern complete (?)
It’s time … interest rates are at zero, IMHO we have a “house of cards” recovery and the ONLY direction we can go is UP w/ regard to yield/rates. HOWEVER, in the context of an amazing 30+ year bull market in the fixed income world we have reached the “normal” and “standard” correction that has existed since the beginning of this bull market in the 80’s. We do have one more correction low that “could” happen so perhaps a little lower is in the cards. what’s really fascinating to me w/ regard to the FED FUND futures chart is it hasn’t budged. the traders of the world don’t think anything is going to happen …
Per my post a week or so ago on bonds the BUY of BONDS (sell YIELD) is the side of the market I want to be on ….
for information on the FED FUNDS futures see: www.cmegroup.com/trading/interest-rates/files/IR-143_30_Day_Fed_Funds_Futures_and_Options_Fact_Card.pdf