The two short videos below display just how accurate Matt Demeter’s work can be. Please watch them sequentially to fully understand the power of his analysis. Then, CLICK HERE to learn more about his work and approach.
First, November 9th, 2015 exact short-term top call.
January 22nd, 2016 exact short-term bottom call.
If you have been following this blog for any length of time you know that I have been maintaining the following view. The 10-Year Note should put in at least a double bottom at around 1.5% before reversing and staging a multi decade rally in yields. For instance, 10-Year Treasury Note Screams Out “Recession Ahead”. Are You Listening?
The good news is, I am not the only one who thinks this way.
Much of the shift lower in our yield forecasts derives from the view that the ECB [European Central Bank] will continue to buy bonds in its QE [Quantitative Easing] program. The forecast for a ‘bowing-in’ of curves reflects our opinion that a long period of unconventional policy will create an unconventional outcome. Central banks did not forecast the persistently weak growth or recent decline in inflation. So data dependency does not easily justify lifting rates from the zero-bound — it might suggest the opposite.
Listen, this is rather simple. The FED will not raise interest rates anytime soon. Plus, we are on a verge of an “official” recession. In addition to the stock market being in a massive bubble. All of that suggests lower rates.
Yet, the best piece of evidence we have is as follows. 35+ year bear markets in yields do not end in a V shape fashion. We typically see double and triple bottoms. And while I often talk about this bottom, I rarely talk about what happens next.
Based on my mathematical and timing work, I expect yields to surge for at least a few decades. We will be facing an interest rate environment that started in 1949 and terminated in 1979. Most likely in a compressed form as I expect the FED to pull out all of the stops in the monetization attempts. No other outcome is possible as we now have too much debt. Debt that we will never repay in full.
I sold my large 10-Year Treasury Note position in January of this year, after a 12 months holding period. At that juncture I wasn’t yet confident about what the FED bureaucrats were about to do or how aggressive they would be. That ended up being a good move as treasuries have remained in a fairly tight trading range over the last 10 months.
With that in mind, I believe the picture has now clarified as I shift back to my original assessment. That is, we will see a double bottom in rates before this bear market of 2015-2017 in equities completes itself. And as my previous posts indicate, I believe the FED will no longer raise interest rates at this juncture. Particularly, if the stock market takes a beating, something that I very much expect, while the US Economy slides back into a recessionary environment. Something that is now becoming evident.
Generally speaking, the BOND Market is more intelligent. Yields not surging higher is indicative of what the bond market sees. What does it see? Exactly that, a significant recession and a possible bear market.
Finally, 30-Year bear markets in Bond Yields DO NOT end in a V shape fashion. Typically there is a double or a triple bottom. Plus, there is a number of large gaps in the 10-Year treasury, suggesting that the bond market will retest it’s 2012 and 2013 yield lows. Possibly taking the market as low as 1.5-1.6%.
Impossible? On the contrary, that is exactly what I expect to see over the next 12-24 months. As the FED itself suggested, the next round of QE and negative interest rates might be just around the corner.
10-Year Note: All Systems Are A Go For A Double Bottom Google
On January 1st, 2014 I started heavy buying of a 10-Year Treasury Note. With most people at the time thinking I was on a crack cocaine binge, thus far, the bet has paid off handsomely.
More importantly, the 10-Year Note broke a significant support level today at around 2.55%. I continue to maintain that the 10-Year Note is one of the better investments over the next few years or until downside targets are achieved. Here is why….
Generally speaking, the BOND Market is more intelligent. Yields breaking down is indicative of what the bond market sees. What does it see? A significant recession and a possible bear market. That view is very much in line with our overall forecast and our mathematical/timing work predicting a severe bear market/recession within the US Economy between 2014-2017.
In addition, 30-Year bear markets in Bond Yields DO NOT end in a V shape fashion. Typically there is a double or tripple bottom. Finally, there is a number of large gaps in the 10-Year treasury, suggesting that the bond market will retest it’s 2012 and 2013 yield lows. Possibly taking the market as low as 1.5-1.6% in yield.
Impossible? On the contrary and that’s exactly what my extremely accurate mathematical work shows.
As the saying goes, money talks and bullshit walks. Well, the money in the Treasury Market is talking. The only question is…… Are You Listening?