Loading ...US10yr Yield (Monthly)
Houston, we have liftoff. I repeat – Stage 1 liftoff commenced.
And below is another reminder that Gold is now moving IN TANDEM with the US 10y yield, whereas it previously(for years) moved INVERSELY (see chart below).
What’s my point?
I think the gold market has been slow to pick up on this. If rates continue upward(see first chart – they will), then this is a great sign for gold.
Good work NickG
as always this is a conundrum
US Rates Rise and the US Dollar Falls ?
I can’t see that the USD and 10yr yields have any sort of correlation when looking at long term charts. Correct me if I’m wrong.
By the way, not saying this is the only factor to consider, but USTs are owned largely by foreign investors/govts. Why sit and watch your principle get eaten away as rates & inflation rise? To collect a 2.0-2.4% coupon, which will be eaten by inflation? They will take some(or a lot) off the table, selling USD in the process converting into a different currency.
IMO China buys T Bills & Bonds for more than one reason.
The main reason is to manipulate or counter manipulate what the FED does. China Buys Commodities in $US and then Sells Finished Goods into the US. Manipulating the $US (ie Commodities Mini Crash when China is buying) then reverse course when they want to export finished goods into the US the $US rises (China manipulation), all from buying and selling Bonds & T Bills on the open market, or even just discussing the subject.
China also tries to purchase foreign infrastructure, Corporations, real assets and real estate in trade for US Debt instruments (Buy hard assets in trade for US debt).
Why China would telegraph the intent to reduce US debt holdings is anybodies guess but IMO it was not an accidental move. Maybe China’s economy is to the point where China doesn’t need the US consumer anymore? Was it political? Maybe to setup for the Yuan trade?
The question is how is China going to profit from rising rates in the US, that is the trade I’m trying to figure out? Are they Long or Short something maybe?
Well their central bank has been loading up on a certain barbaric yellow rock the past few years…