Macro Picture From Currencies and Bonds Remains Bearish
My overall message is to "sell the rips" in risk assets for all but the most nimble of traders.
Treasury yields have fallen – as one would expect – this week, but should be set to bounce soon.
The yield on the 10-year US Treasury Note ($TNX.X) has come down this week – as one would expect given the weakness we've seen in stocks and other risk assets. Based on the chart and my current wave count (wave "iii" just completed?), it looks like yields may be at or near a short-term low. I'm not calling for a major bull move in rates, just a wave "iv" correction to the upside. Based on the Fibonacci lines in the chart, I wouldn't expect much more than 1.858% on the upside from any bounce we see. Make no mistake about it: I am bearish on bond yields overall, but bounces do occur in bear markets.
The macro trends in most of the charts we follow seem to be singing a bearish tune in unison. Even the relatively strong chart of the Aussie dollar could be spelling short-term weakness. So, it is my opinion that while traders can take advantage of sell-offs to add short-term trading longs, those not as nimble should be using rallies to sell into for the time being.
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