TBL Weekly #174: Dollar, Yields, & TBL's New MCP Server
A short analysis using nothing but our new TBL MCP Server
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Dear Readers,
This past week was packed with information and progress. Some drama in tracking our TBL Liquidity Indicator, a brutal FOMC meeting (from a market’s perspective), a liquidation event in STRC, and the internal launch of our new TBL MCP Server (available to all of you soon).
As we adopt AI more and more here at TBL, an important next step (and one that many of you have been asking for) is more access to data from TBL Pulse. A dashboard is great for quick market overviews, but deep analysis requires software or external tools to manipulate and study data…or at least it used to require this in the pre-AI world.
Even with AI chats, when you ask them to search for some data on the web and bring back results, they either bring back stale/limited data, or accurate data that takes lots of tokens to not only gather each time but also analyze on top of that (“bye bye” daily limits and “hello” extra usage).
Now imagine a world where you have a warehouse of data available to you already, alongside the tools to analyze it all…in comes TBL’s MCP Server (check out the video below):
Get access to our data, and run your own analysis straight from any AI client (Claude, ChatGPT, Gemini, Microsoft Copilot, etc.).
*****To show just how powerful this tool is, all the charts I use today will be from our MCP server, ran on a regular Claude chat on a Sonnet model.*****
A Flash Analysis on US Treasuries
US 2-year yields have been extending their lead versus the fed funds rate since March 11th of this year:
With the exact pivot taking place at the start of the Iran war:
The market has been positioning itself rather hawkishly since then, given inflation expectations, and the FOMC followed suit this week (which Nik covered extensively here). Let’s now compare the move between 2-year yields and 10-year yields since the start of the war:
A clear bear flattener, with most of the separation between the two taking place since mid-May, exactly when the 10-year yield reached its highest level of the year:
A bear flattener is interesting. On the one hand, it tells you inflation (or growth) is running hot in the short run, leading the market to expect the Fed to raise short-term rates to avoid an overheating economy.
On the other hand, from an investor’s perspective, it tells you that the market is locking in 10s above 4.70% because they do not expect to see those yields again. In fact, the market rallies every time 10s get close to this level:
And why would investors take advantage of 4.7% 10s? One of two reasons: inflation expectations are low over the next 10 years (perhaps because of higher productivity), or slow growth (which doesn’t seem to be the likely scenario given the current state of AI investment).
To close off, given our most recent TBL Liquidity Indicator movements, one thing we’ve been watching closely as of late is DXY. Specifically, its correlation with bitcoin and the stock market:
With bitcoin and the S&P 500 both tagging -65% and -86%, respectively, on a 30-day rolling basis at the start of June, the TBL Liquidity Indicator framework has been truly dominant this year: a stronger dollar is correlated with weaker risk assets (and vice-versa). We cannot say one directly caused the other, given all geopolitical issues this year, but in isolation, our framework is linearly correct.
Substack This Week
Nik’s letter went out on Tuesday;
Unconfirmed Green Dot letter went our on Wednesday;
Johan’s weekly letter went out on Wednesday; and,
Nik’s Global Macro Update video went our on Thursday.
YouTube This Week
Nik’s conversation with Tanvi Ratna about the Iran conflict:
Nik’s conversation with Tony Yazbek, co-founder of The Bitcoin Way, about bitcoin self-custody:
For Podcast Listeners
Here are the links to our latest episode:
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Disclaimer
The TBL Model Portfolio, TBL Liquidity Indicator, and all TBL research outputs reflect Nik Bhatia and team’s analytical positioning for the macro and bitcoin environment. They are published for educational purposes only and are not investment advice, not a solicitation to buy or sell securities, and not a recommendation tailored to any individual’s porfolio. The Bitcoin Layer is not a registered investment advisor and does not manage client money. Please consult a professional financial advisor and conduct independent due diligence before making investment decisions.
Great work! Is the MCP server already available by now?
Just amazing how fast you guys are shipping. Thank you.