Push Comes to Shove

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With the 10Y completing an IH&S Pattern and gapping up to 1.845%, focus on the price of oil and gas. Bottom line, rates won’t decline until oil and gas do. And, if oil and gas decline sharply, the equity selloff will only accelerate. Decision time for the Fed.

Futures are down sharply. Our price targets remain unchanged.

continued for members…

As we discussed on Friday…

The small correction we’ve had so far has put a damper on higher rates. Over the last two days, the 10Y fell from a high of 1.808% to 1.706%. It’s bouncing a bit today on the growing certainty of multiple rate hikes in 2022.

But, if markets crash hard and fast enough – say, SPX crash through its SMA200 to our 4340 target on Tuesday – then I believe we’d see a significant effect on flows and yields could head back down below the neckline.

This morning’s gap higher will put additional pressure on the Fed and the administration. The red midline and/or yellow .786 line could provide overhead resistance. But, if not, then we’re easily up over 2% with the falling yellow channel top way up at 2.62%.

A measured decline in stocks won’t do the trick with rates. It will have to be scary.

With the 2s10s having bounced at our downside target, watch out for a breakdown. So far, oil and gas are easily withstanding any pressure.

Although USDJPY (initially) bounced at our 113.84 target, we still have the SMA100 and SMA200 to consider.

And, EURUSD’s headfake is unwinding rapidly…

…unwinding DXY’s breakdown. BTC’s headfake is also unwinding……and GC and SI are split. I have several conference calls this morning, will be back in a while.