While tech troubles are serious enough, the bond market is being rattled by Trump’s escalating attacks on Fed Chair Jay Powell. Kevin Hassett confirmed that Trump is actively seeking ways to fire Powell ahead of the end of his term in May 2026.
The 10Y is testing its 100-day moving average again, sending the 2s10s to 60 bps – a clear break out in every respect. This is a very tough scenario for equities and could easily result in lower lows.
Higher yields, in combination with a weaker US dollar, support the observation that Trump’s trade war and policies are leading investors to shun the greenback and US treasuries.
continued for members…
The divergence continues as the 2Y drops while the 10Y rises. 
The last time the 10Y broke above its channel top and SMA100, the SPX dropped to its lowest level of 4835. It has backtested the channel top twice, but has remained broken out.
Futures are clinging to recent lows, protected somewhat by ViX suppression.
Currencies are contributing to the mayhem, as the EURUSD is testing horizontal resistance at our 1.15 target and contemplating a breakout. USDJPY is nearing our 139.57 target (the previous lows.) And, DXY is approaching important support at our 97.72 target.
Note that GC has broken above very significant resistance.
All of this is against a backdrop of lower oil and gas prices.
Stay tuned.
Comments
2 responses to “Bond Market Debacle”
Hello PW, remember March 11, 2011, the earthquake and tsunami in Japan? It was a natural disaster but it did not stop the analog of stocks to play out. The disaster just served a delay. It implies the power of the chart, or whatever force behind it. The reason I bring it up, it is the Trump’s trade.
Now everything seems to depends on one person. I am wondering if all these technical analysis, fundamental analysis, forecast, still useful when solely one person determines the outcome.
Thank you!
You raise an excellent point Tommy. The fact that a Trump social media comment could instantly change the landscape and reverse the trend makes speculating very tricky – especially when betting on a market decline. Trump clearly has an eye on the markets and is very willing to use his platform to prevent unacceptable losses. The hard part is figuring out what those unacceptable losses might be to him. For instance, chart patterns were very helpful in forecasting the Apr 7 lows (support at the Jan 2022 highs.) Would he “allow” a drop lower than that? We’ll see.