Dynamic Trend Profile

Please take note :

After 5 yrs, US #f auction had an ask double of the offer ( 14.5 Billion USD)
At the moment the yield curve is ALMOOST COMPLETELY INVERTED ( short duration yield are higher than long duration)
This notionally allows interesting positions on spreads if either we believe in a steepen of yield or not (i.e Two over Tens)
Inverted curve normally coincide with a recession.
Please note the PA of HG and AL whose peaks normally coincide with start of recessive periods.

Practically : watch carefully the treasury set ups.
(and your equity portfolio)

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FED FUNDS 30 days are the shortest duration sovereign state debit .

Since weeks they were sliding, discounting so an always higher interest rate, around the 4.55-4.60.

Yesterday's Auction at 4.60% made it official to the whole public.

Shortly: this means that the PUBLIC BENCHMARK of Yield for an investment at NO RISK AT ALL is a gross 4.60%. Not bad .

ANY investment decision (and -boldly and totally oversimplifiyng - thereto any portfolio strategy ) is based on the NPV of the investment discounted the OPPORTUNITY COST OF CAPITAL , wich is the ZERO RISK investment in DEFAULT FREE treasury (like the USA treasuries).

In our case , means that any investment I take MUST yield MORE from day 1 to day 1+n than 4.60%(gross) or other longer duration treasury taken in consideration that the longer is the duration the higher should be the yield.

How much more? by the degree of risk incorporated into the aforesaid investment along its duration. However MORE than 4.60%

Hmm , nice puzzle for someone ...
... for the others, not for he who is wisely using DYNAMIC TREND indeed....

Ps: this explain the correction in yesterday future+cash right after recording a new physiological higher high .

fabrizio

fabrizio

fabrizio