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What’s your timeframe? And what will Trump do?

Long-Dated Bond Yield Moves

• Since March 3, the 30-year long bond yield is up 41 basis points
• Since May 21, the 30-year long bond yield is down 22 basis points
• Since March 3, the 10-year treasury yield is up 19 basis points
• Since May 21, the 10-year treasury yield is down 23 basis points

Two-Year Treasury Yield Moves

• Since March 3, the 2-year treasury yield is down 8 basis points
• Since May 21, the 2-year treasury yield is down 12 basis points
• Between March 3 and April 30, the 2-year treasury yield declined 36 basis points. The 30-year and 10-year yields rose in that timeframe.

If you pick your timeframe and duration, you can make a case for up, down or nowhere.

3-Month T-Bill and Fed Funds Rate

The 3-month T-Bill yield is up 7 basis points from March 3 and 6 basis points from May 30.

The Effective Fed Funds Rate has been 4.33 percent since December 21, 2024.

If anything, the 3-month T-Bill seems unconvinced the next Fed move is a cut.

Looking ahead, CME Fedwatch has a 66.2 percent chance of a rate cut at the September 17 meeting.

As we approach that date, 3-month T-Bill yields should be inching lower, perhaps by as much as 25 basis points.

10-Year-Treasury Yield Monthly Chart

10-year Treasury Yield chart courtesy of StockCharts, annotations by Mish

The above chart shows an symmetrical triangle formation. It’s formed by two converging trendlines drawn through a series of lower highs and higher lows.

While considered a neutral pattern, symmetrical triangles often act as continuation patterns, meaning the breakout direction tends to follow the preceding trend.

30-Year-Treasury Yield Monthly Chart

30-year Treasury Yield chart courtesy of StockCharts, annotations by Mish

The above chart shows an ascending triangle formation. It’s formed by a horizontal resistance line (flat top) and an upward-sloping support line (rising lows).

The pattern is a bullish continuation pattern in technical analysis, typically indicating a likely upward price breakout.

Technically Speaking Synopsis

Technically, the charts are ominous. The expected direction is up.

However, I am ambivalent.

The misunderstood aspect of TA is that is does not predict anything. Its primary purpose is to provide entry and exit points for trades with stop losses close by.

The current 30-year yield is slightly above the long-term resistance zone that dates to 2007. But it’s below the top of that resistance zone.

If the trend breaks higher, we can easily see the long bond yield at 6.0 percent for no other reason than technical players and algos playing the breakout.

Fundamentally Speaking

Fundamentally speaking, I am also ambivalent.

We still do not know what Trump will do with tariffs or how that impacts the markets and jobs.

The Unknowns

• Will tariffs cause a jump in inflation? Lasting?
• Will tariffs destroy so many small business jobs that demand collapses?
• Neither?
• Both?

Point 4, both, is the stagflation scenario. It’s crazy to rule it out.

In addition, we have inflationary aspects of the one big beautiful boondoggle act that Trump just signed.

Fed Chair Jerome Powell is in wait-and-see mode because he does not have the answers to the above questions. And nobody else does either.

This is why all the clamoring for rate cuts is idiotic.

Powell is on hold until something breaks. Is everyone ruling out a hike?

Trump Begging for Inflation

Trump’s persistent hounding of Powell to cut rates is seriously misguided. Trump does not understand trade, tariffs, or the economy in general.

Trump is a real estate guy, and like all of them, wants lower rates.

Had Powell cut rates, I am certain the long bond and 10-year treasury yield would be scorching higher.

That is another thing Trump does not understand.

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Gold Soars to Another New High, What’s the Message?

On May 6, I asked Gold Soars to Another New High, What’s the Message?

1. Gold does not believe the Fed is under control
2. Gold does not believe Congress is under control
3. Gold does not believe Trump is under control

And neither do I.

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