Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Risk Tells in the Currency and Bond Markets Pointing to Further Short-Term Downside


Expect a downtrend from now until October and then a rally into the end of the year.

MINYANVILLE ORIGINAL My go-to tells in the currency and bond markets are either starting to roll over or simply have much more downside to worth through before the short-term moves are over. The euro, the Aussie dollar, the US high-yield market, and emerging market debt are all showing signs that this pullback in risk assets will be more than just a few days in duration.


The 10-Year Treasury Note Yield didn't get to test resistance (yet) before the current down move began.

I was calling for a move up to at least the 1.978% level on the 10-year US Treasury Note yield before I saw another down move beginning. As we all know, it's tough sometimes to get the markets to do just as you predict. There still may be a little upside move in yields heading into the end of the month/quarter. However, at this point, nothing is a certainty. The macro picture in yields still tells me that the low yields from July will be tested – it's just a question of whether that happens during this move or after one more shot to the upside.

The implication of lower yields – assuming recent relationships hold up – is that risk assets should remain under pressure. So, my call was for a rally in risk into month's end (corresponding with higher yields), which would then be followed by the "risk off" trade taking back over in October (corresponding with yields falling to test the July lows). It's the first part of that prediction that is in question. The second half of the prediction seems to me to be almost a certainty at this point.

Click to enlarge
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos