The State Of The Macro

As our Continuum chart predicted over a year ago, Jerome Powell was called to his higher inflationary powers when the macro markets liquidated with great violence and terror. This link shows the Continuum (30yr yield and its monthly EMA 100 limiter) as it was then, begging for inflationary action…

Oh, Jerome? Bond market calling…

Below is the Continuum today. Since the linked post last February, a lot has happened and it has been according to the plans we laid out last spring. The plan was inflationary because the Fed was going into steroidal inflation mode. The ‘Fed comfort box’ on the chart has thinned out from the original post because the red dashed limiter has declined appreciably since then.

These many months the NFTRH target has been 2.5% to 2.7% on the 30yr Treasury yield. This week that zone’s lower bound got dinged. It is coming time for a cool down at least if the macro reflation is going to get a second wind. What could provide that second wind?

A rally in long-term bonds that flies in the face of the now bearish herds, including the number #1 indicator to such a contrarian call, the BOND KING indicator, a tried and true contrary indicator right up there with the Cramer indicator and the Gartman indicator. Incidentally, the Cramer indicator worked in real-time as a short-term bull signal on March 5th, 2021 and the Gartman indicator worked successfully as a bigger picture contrary indicator as the S&P 500 began tanking by 20% two months after his 2018 prediction for an “exaggerated and stunning rally” was bull-horned by the media.

But the undisputed KING of bonds and contrary indications is Bill Gross, he of the 2011 ‘short the long bond!’ call as the Continuum had not broken the limiter that has held it in check over decades. That limiter has been the (red dotted) monthly EMA 100 and it has worked to contain the yield over decades, including the close call in late 2018 when Powell remained inexplicably hawkish despite tanking markets. We knew better because we knew that the Fed was not going to incinerate itself in an inflationary bonfire with the yield rebelling as it was around 3.3%.

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