Independence Day chart pack: rates+bitcoin
The single most important chart in financial markets.
As I strike these charts on a Thursday night for your Friday morning coffee, I can’t help but get the feeling that this is why I’m here. In my days on the trading desk, I’d come in bright and early, ready to pull down a bunch of charts, draw some squiggles, and send out a rapid fire picture+story commentary to anybody who dared to enter my invite-only “TRADES N HIP HOP” Bloomberg chat room. Guess what? It’s the same guy, same mentality, but just a different setting. My thoughts are yours now, and I’m honored to extend my research, analysis, and price study beyond the 18 often bewildered “readers” from my prior life. Let’s dive in to the latest chart pack, including what I believe to be the most important signal across all financial markets.
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US Treasury 10s are screaming…loudly
Charting is about patience, especially when your goal is to identify appropriate times to make shifts in asset allocation. Weekly candles time to tell a story, and oh-me-oh-my are we hearing one from 10-year yields:
Start your eyes at the blue line—this marks the 3.25% high in yield from late 2018. We eclipsed this yield this June, sending everybody closely and loosely following the rates market into panic. The narrative started to emerge that we were experiencing 1970s-style inflation that would require Volcker-type rate hikes. I believe the Treasury market is about to bury this narrative, and it once again comes back to bearish divergence. Glance at the two red arrows in the chart above: price moving up, while momentum (lower pane) heads down. I will come back to these arrows, zoomed in, later in the post.