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-   -   The Federal Reserve's mandate leads or lags? (https://www.forexfactory.com/showthread.php?t=570673)

failinforex Jun 13, 2018 5:18pm | Post# 81

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Powell's respond - The yield curve is flattening in response to the Fed tightening. You would expect that. It is not that much a concern.
But some economists stated that it is a telltale sign of recession.
What is your opinion on this Master Yoda?

COGSx86 Jun 14, 2018 9:56am | Post# 82

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{image} Powell's respond - The yield curve is flattening in response to the Fed tightening. You would expect that. It is not that much a concern. But some economists stated that it is a telltale sign of recession. What is your opinion on this Master Yoda?

Data, what does it say? Is the recession coming next week? 6 months, 5 years? No real indication of when, this chart gives. Or how large the Recession would be. Similar MACD or RSI look, hmmm.
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COGSx86 Jun 14, 2018 9:57am | Post# 83

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What we should really be looking at is where 3 month t-bills go. Once the 3 month t-bills start a decline with double tops and a increase with this 10 yr-2yr spread. Thats when it should raise concern. What do you notice when the 10 year minus 2 year starts to increase, after trending lower, hmmm?
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COGSx86 Jun 14, 2018 11:01am | Post# 84

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Who sets the tone? Each arrow represents each time we have seen the FED increase rates or FED meeting minutes. 106 here we come.
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failinforex Jun 17, 2018 8:10pm | Post# 85

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What we should really be looking at is where 3 month t-bills go. Once the 3 month t-bills start a decline with double tops and a increase with this 10 yr-2yr spread. Thats when it should raise concern. What do you notice when the 10 year minus 2 year starts to increase, after trending lower, hmmm?
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Then I'll be least concerned, free money will flow again

COGSx86 Jun 21, 2018 12:36am | Post# 86

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Action, Reaction Cause and effect,

As bond futures go down in price (yields going up) we continue to see the correlation with the Yen. What drives the market? Understanding this and you will find your success.

In the chart below, we have both the 30 year U.S Yield curve (candles) and the 30 year FUTUREs (Purple line) and the USDJPY (Blue Line). US yields and futures are inverse of each other. See the correlation?

https://www.tradingview.com/chart/wNj8Dwd6/#
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COGSx86 Jun 21, 2018 10:08am | Post# 87

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Over the past 24 hours we have seen a large shift in the US Bond market, this going to be a turning point for the USD and in history.

Trade Wars with China,
China, Japan (largest debt holders) dumping US Bonds
Russia dumping bonds, signing a GOLD trade deal with China
Trumps large deficit spending will begin

The list goes on.

The chart below is a zoomed out monthly chart of the U.s Bond market, as we see price is bouncing off the trendline and will be pushing higher.
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COGSx86 Jul 7, 2018 1:49pm | Post# 88

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Low and behold the DXY breaks some key levels this week. Short term Demand zone broken, followed by a break through on the UPTREND
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COGSx86 Sep 18, 2018 9:21am | Post# 89

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Some time since I have posted in this thread but all the same 3-month treasuries have stalled over the past few months. Allowing the USD to gain some strength but now with the trade wars heating up and Bond prices going higher, we will start to see the FED play the opposing forcing in the market to maintain stability, as they always do. 3 month t-bills today have broken above a key level of 2.15%. This is an important level with relations to the Federal Funds rate as we move forward. As we see in the chart below the 3-month t-bills have increased the spread between the FED funds rate and short term bonds. This in the past has resulted in rate hikes, which shouldn't be to far around the corner (next meeting).

With China and Japan being the largest foreign holders, they will will most likely start to reduce their exposure to the poor return of U.s Bonds and history will continue to repeat itself.
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COGSx86 Dec 4, 2018 9:59am | Post# 90

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{quote}
Bonds operate opposite to stocks. Bonds price will go up when less people are buying them. The government is trying to make the yields more appealing, by increasing the yield. When yields increase investors will be more likely to place money in bonds instead of, for example, the stock market.

Say you're starting a company and need investment capital, how would you attract investors? You would offer them a higher rate, lets say 10%. Then you start to get investors pouring in. You would then drop the rate as investors see your business as sustainable, safe and profitable. More investors come into the mix, allowing yourself to reduce the yields, you pay, so now your offering 6%.

Government operates no differently.

A drop in bond prices, means more people are buying bonds or in this case, Banks. As more banks buy bonds they then have more capital on the books (paying 1$ for 1.03$ = more money). When banks have more capital on the books, they are able to lend out more money, from forex traders, to first time home buyers. As more money is in circulation the value of that money drops.
Follow Bonds, a trader must. US10 or 30Y, the holy grail of USDJPY, this is.
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aaven Dec 4, 2018 2:08pm | Post# 91

{quote} Follow Bonds, a trader must. US10 or 30Y, the holy grail of USDJPY, this is. {image}
Thanks Master Yoda for the continuing education...

COGSx86 Dec 18, 2018 4:46pm | Post# 92

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Need to be aware, with whats going on in the markets, traders do! With current DOW, S&P, long term Bonds trending lower, but 3 month bonds continuing higher, tomorrow we will see, with very high probability, US interest rates going up.

Back in September the FED increased rates, and since then the market has not been able to recover. This shows the FED is trying to cool down the markets, which at this point has worked with the big markets. For this reason we are seeing money being pulled out of the markets into long term bonds and out of the US.

10 yr and 30 yr bonds going lower (more demand), DOW, S&P moving lower (less demand), short term bonds going higher (less demand).

Expect even more money to be pulled out of the US and find safety, aka the Yen.
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