Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Cross Asset Strategy

<a target="_blank">Markets across the board appear to be returning to a reflationary stance, especially now that we have finally seen some decent activity in US Treasuries.</a>Considering Oil is making new trend highs and the worse-than-expected data in the US already likely to be behind us, it does appear that the catalysts for a turn in Bonds are in place. US 10Y yield looks likely to make it to 1.70% while 30Y yield to at least 2.26% if not 2.40%+ again.Longer-term charts that look at the US yield curve and estimate how steep it can go. These charts suggest that we could be on verge of a very significant uptrend in yields that takes us far beyond the highs posted earlier this year.

Markets across the board appear to be returning to a reflationary stance, especially now that we have finally seen some decent activity in US Treasuries.Considering Oil is making new trend highs and the worse-than-expected data in the US already likely to be behind us, it does appear that the catalysts for a turn in Bonds are in place. US 10Y yield looks likely to make it to 1.70% while 30Y yield to at least 2.26% if not 2.40%+ again.Longer-term charts that look at the US yield curve and estimate how steep it can go. These charts suggest that we could be on verge of a very significant uptrend in yields that takes us far beyond the highs posted earlier this year. 

The rally in bonds has met its targets and seems to have run its course. Now as we are at very low levels of yield again, it seems unlikely that there is much juice left in this recent trend. Instead of reversing though we believe there is a risk of continued low nominal and real yields which should provide opportunities elsewhere.

The rally in bonds has met its targets and seems to have run its course. Now as we are at very low levels of yield again, it seems unlikely that there is much juice left in this recent trend. Instead of reversing though we believe there is a risk of continued low nominal and real yields which should provide opportunities elsewhere.

US Bonds & Asset Markets: Time for Another Rotation

Technical Analysis

Chicago Board Options Exchange Volatility Index / Technical Analysis

Chicago Board Options Exchange Volatility Index

Regular readers will know that a useful comparison has been made about the rally in the Dow Jones since last years low with the rally seen from March 2009 to May 2010.A similar comparison has been made between the S&amp;P 500 / Bonds Ratio over the same periods - see <a href="https://www.smartkarma.com/insights/us-equities-time-to-get-defensive" target="_blank" data-smartkarma-citation="insights:51332" rel="noopener">US Equities: Time to Get Defensive</a>These comparisons have so far given good guidance about turning defensive on equities over the past month and bullish on Bonds.In a similar fashion, the chart below compares the trends in the VIX Index with the aftermath of the last crisis 11-12 years ago.The similarities in the levels at work are striking and warn of possible complacency in the market place that could lead to much higher levels of volatility than seems to be generally expected.

Regular readers will know that a useful comparison has been made about the rally in the Dow Jones since last years low with the rally seen from March 2009 to May 2010.A similar comparison has been made between the S&amp;P 500 / Bonds Ratio over the same periods - see US Equities: Time to Get DefensiveThese comparisons have so far given good guidance about turning defensive on equities over the past month and bullish on Bonds.In a similar fashion, the chart below compares the trends in the VIX Index with the aftermath of the last crisis 11-12 years ago.The similarities in the levels at work are striking and warn of possible complacency in the market place that could lead to much higher levels of volatility than seems to be generally expected.

In a note titled <a href="https://www.smartkarma.com/insights/bonds-all-charts-lead-to-me" target="_blank" data-smartkarma-citation="insights:52482" rel="noopener">Bonds: All Charts Lead to Me</a> on 3 June 2021, it was suggested that US 30 year yield would make it to 1.90%-1.92% area.That target has now been met. However, fresh developments must be taken into account while trying to determine what happens next.

In a note titled Bonds: All Charts Lead to Me on 3 June 2021, it was suggested that US 30 year yield would make it to 1.90%-1.92% area.That target has now been met. However, fresh developments must be taken into account while trying to determine what happens next.

It became increasingly clear at the end of last week that every market is reacting to the relative hawkishness of the Federal Reserve.First off the blocks were the USD and Fixed Income markets. Soon after metals reacted poorly, and Oil could not continue higher. Now we see important concerns in US Equity Indices. The Dow broke key levels and the S&amp;P 500 is now in focus below. In summary nearly all of the recent moves we saw towards the end of the week are likely to continue especially lower metals, lower long end yields, and lower equities.

It became increasingly clear at the end of last week that every market is reacting to the relative hawkishness of the Federal Reserve.First off the blocks were the USD and Fixed Income markets. Soon after metals reacted poorly, and Oil could not continue higher. Now we see important concerns in US Equity Indices. The Dow broke key levels and the S&amp;P 500 is now in focus below. In summary nearly all of the recent moves we saw towards the end of the week are likely to continue especially lower metals, lower long end yields, and lower equities.

United States

Legacy Government (Sovereign) Generic Index-key ticker

US 30Y (USGG30YR INDEX)

The Major Turn in Bonds

US Yields are on the rise again and this time we see indications that a significant trend is on the horizon that could take us beyond the highs in...

Shyam Devani

US Bonds & Asset Markets: Time for Another Rotation

The fall in yields has met all targets both in terms of individual nominal yields and across the curves. There now seems little value in bonds but...

Shyam Devani

VIX Index: How Concerned Should We Be?

The signs on the VIX Index not only show a historical similarity to the aftermath of the last crisis but also complement the bearish signs seen on...

Shyam Devani

US 30 Year Yield: Target Met, What Next?

The 1.92% target on US 30 year yield has been met. However in the context of recent market developments, there still appears to be the danger of...

Shyam Devani

S&P 500 Shows Further Warning Signs

Along with every other major market, the S&P 500 has also reacted to the Fed. Last week's bearish reversal as well as the stocks/bonds ratio are...

Shyam Devani