Dear readers,
We just finished putting together our November 2022 Master Chart Pack, complete with fundamental and technical analysis across all major global macro asset classes. It is an exhaustive process, and much of what we produce is a result of the daily research and analysis we put together for you, the paying subscriber. Here is our complete rates overview, as well as what we are monitoring with cross-asset correlations. Hint: it’s all one trade. Happy November!
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Rates
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B
C
Yields continued their ascent in October, albeit spent the last two weeks in consolidation mode. On the fundamentals side, a set of relatively persistent inflation data kept Fed speakers in full hawk mode regarding the FOMC’s plan for the remaining two meetings of 2022. We did get the first hints of language suggesting a slowdown in the pace of hikes—the market reacted positively as Treasuries caught a bid in the days after Mary Daly spoke about overtightening. In chart (A), you can see that yields went from 2.5% to 4.3% in all but a straight line. The main takeaway from (A) remains that a true resistance on yield has not been carved out. But a closer look at a daily chart does give the bulls some ground on which to stand—October 27th’s price action sent the 10-year yield below the support it has held since the current move began in August. As the month closed, we saw yields creep back to the ascending trendline. The next few days of price action will be crucial in determining the near-term path of interest rates. Last month’s assessment was a truly bearish formation in yields, while this month’s is much more tempered. We will point readers to our “Welcome Back, Bond Bulls” post from late in the month on the fundamentals behind the return of duration buyers.