📌 This diagram portrays the final stages in the economic cycle which I called in 2019. The position arose after Equities began extending beyond reality; all sellers needed was an intending cause.
The construct of the ingredients here are clear and simple, after Fed cleared the runway till 2022 you can see the risk coming out of bonds. Of course now it creates the "following subtle trap" where the belly of the curve begins to move towards the front end which then brings the 30Y with it.
It is worth pointing out where other countries in the world are as there is little divergence on the rates differentials now:
📍 Spain
📍 Singapore
📍 Canada
📍 UK
📍 Japan
📍 Germany
There is no reason why the US cannot see a retracement back to 0.9% / 0.8% levels ... Watch for the next dominos in Equities and Gold based on deep knowledge of the flows as we can call it. More risk to come.
I agree with this and have a trade open . However, let’s say this all pans out. What would you expect to happen next. Especially when September is usually a bad month for bonds. Do you see it’s as a catalyst for a massive rotation out or just normal seasonality. TY for the chart and info