If There Is A "Rolling Tide" In The Bond Market, The Outlook For The US Dollar Will Be Worrisome.

The continued increase in the number of US Treasury bonds and the rise in yields have widened the interest rate spread between the US and other countries, which has also given rise to a bull market in the US dollar, but this cycle is now in danger of collapsing at any time due to the fact that the US debt market is far above the historical extremes.

The price of treasury bonds in the past six months has turned over for 35 years, and the bull market has probably ended. The yield of the 10 - year treasury bonds has jumped to 2.6% in the middle of December (2016), and the air force is becoming stronger and stronger. However, according to statistics, speculators have recently been on the high side of the US's 10 year treasury bond futures, that is, the expected price of treasury bonds will fall.

Analysts believe that if the bond price rebounded strongly, the short term may trigger a wave of air squeezes, resulting in a decline in yields again (yields and prices in reverse). Recently, the two armies have been fighting and the bond market is stuck. Sooner or later, one side will be seriously injured.

The fund manager J. Lyons Fund Management, Inc. partner Dana Lyons 17, wrote that the speculator's 10 year Treasury futures clearance list is now close to 400 thousand contracts, more than 100 thousand more than the previous high. In fact, speculators are all American. National debt The empty positions held by futures are all high in history, not just for the 10 year treasury bonds.

However, the problem that the empty warehouse reaches the extreme value is not that the Treasury bonds will continue to be sold, but the possibility of reversing is bigger and bigger. Speculators often stand in the wrong way at turning points and important moments. Indeed, since the global financial tsunami in 2008, the clearance of the 10 - year treasury bonds will rise to the extreme before the price of treasury bonds will rise.

Of course, how to make sure that the empty list has reached the "extreme" is still a challenge. However, we should agree that the clearance to a historical high can meet the so-called extreme definition.

Lyons said whether such a huge empty position would detonate the super empty market is still to be verified by time. The so-called rolling space will only occur when prices rise. Therefore, the price of treasury bonds must be strong enough to persuade these speculators to fill in the blank list. If the yield of the 10 - year treasury bond falls below the current position (nearly 2.33%), it may help to raise the price of treasury bonds and trigger a rolling tide.

RBC analyst Charlie McElligott recently pointed out that the United States National debt Although the price of treasury bonds has been strong in last week, leveraged fund is still a bit more impressive. As for real money, the real demand for hedge funds has been extended for a long time, resulting in the price of treasury bonds being stuck.

McElligott warned that one side would be seriously injured if the two armies fought. Federal Reserve Chairman Yellen (Janet Yellen) announced on Wednesday (January 18th) that the US economy was close to the central bank's target set for full employment and price stability, and economic data showed that US inflation was gradually heating up, giving treasury bonds a serious selling pressure, and the rate of return has also risen the biggest in weeks.

Since the fourth quarter of last year, the theme of the foreign exchange market has been driven by spreads. If there is a "rolling tide" in the bond market, it means that many bond bears will buy flat, resulting in a downward trend in US bond yields and narrowing the gap between the US and its countries, which is not conducive to the US dollar trend.

But yesterday's inflation figures and Yellen's speech gave the US debt market a two shot in the arm. (high inflation and interest rate increase are expected to help the bond market short).

Yellen's 18 day speech in the high-profile speech, in addition to claiming that the economy is close to the target set by the central bank, also indicates that by the end of last month (December 2016), she and most central bank officials expect that by the end of 2019, the federal funds rate will rise several times a year (a few times a year) until close to the target of long-term neutral interest rate (neutral rate) - 3%.

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