Direction clearification on interest rates
A lot of traders are positioned on the long side in treasuries, betting on FED to reduce rates soon (extreme volumes of call options in the market) - to me a total illusion ! ! !
1. We do not have to hope in trading, because it ends up in losses, rather listening to the FED-speak carefully. They still give hawkish remarks and the financial enviroment from the FED's perspective does not favour lower rates at all.
2. Looking on below chart one can see that VIX and 20yr treasuries are moving in inverted direction in their trends. Treasuries gave, like VIX, a clear trend reversal thus confirming each other trends.
3. The inverted interest spread (short interest rate versus long interest rate) had a trend reversal as well toward the zero line. At the time of crossing the zero line, people will talk about recession in the US while now, nobody factors in that possibility any more.
Long story short: Stock market is in trouble, treasuries - especially long term treasuries - will lose value much more than anticipated, volatility will increase in bonds as well as in the S&P500.
1. We do not have to hope in trading, because it ends up in losses, rather listening to the FED-speak carefully. They still give hawkish remarks and the financial enviroment from the FED's perspective does not favour lower rates at all.
2. Looking on below chart one can see that VIX and 20yr treasuries are moving in inverted direction in their trends. Treasuries gave, like VIX, a clear trend reversal thus confirming each other trends.
3. The inverted interest spread (short interest rate versus long interest rate) had a trend reversal as well toward the zero line. At the time of crossing the zero line, people will talk about recession in the US while now, nobody factors in that possibility any more.
Long story short: Stock market is in trouble, treasuries - especially long term treasuries - will lose value much more than anticipated, volatility will increase in bonds as well as in the S&P500.
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