Dana Lyons Commentary – Tue 24 Apr, 2018

A new long-term cycle for interest rates?

Dana Lyons joins pinch-hitting host Chris today for a discussion of long-term interest rates. From an historical and technical perspective, Dana suggests that the low for long-term bond yields from the mid-2016 time frame is likely THE cycle low for years–even decades–to come.  Key going forward will be the 3.4 – 3.6% area on the bellwether 10-year Treasury. If we eventually get above that level it would arguably confirm a new long-term UP cycle for rates.

 

Above is a chart Dana updated at my request…it shows the two down-trending lines on the chart of the 10-year Treasury note he refers to.

 

 

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Featuring:
Dana LyonsChris Temple

Comments:
  1. On April 24, 2018 at 8:48 am,
    OOTB Jerry says:

    Since we were close to negative interest rates……..History is going to show, that we had the dumbest people alive……in 2008-2018………

  2. On April 24, 2018 at 9:13 am,
    Silverdollar says:

    On topic. I found this headline interesting. Apparently Citi analysts are watching 3.05% on a monthly basis. Could tie in to Dana’s target. https://www.zerohedge.com/news/2018-04-24/break-could-be-huuugggge-citi-real-number-matters-yields

  3. On April 24, 2018 at 9:18 am,
    Silverdollar says:

    Huge daily move on Caterpillar this morning. Pull up CAT on your charts. Amazing.

    • On April 24, 2018 at 9:34 am,
      spanky says:

      Yep, that’s one ugly candle. That being said, the mining sector (XME) is picking up steam and looks like it wants to break out of a huge cup and handle on the weekly chart. I would imagine that will create quite a tailwind for CAT at some point.

      • On April 24, 2018 at 9:42 am,
        Matthew says:

        It’s a pretty candle for those who want to own it someday. It’s not buyable for a long term hold.

    • On April 24, 2018 at 9:37 am,
      OOTB Jerry says:

      down 4.7%……..huge move down………..dividend only 2.1%

  4. On April 24, 2018 at 9:31 am,
    pardu says:

    Chris, I guess that I have never understood bonds, so am I correct in saying that if one is invested in U.S. bonds and interest rates are going up that means the value of the bonds diminish? And if interest rates go down the value of the bond goes up, as its rate is higher than new bonds?

    • On April 24, 2018 at 9:45 am,
      Matthew says:

      You are correct. The rate is set by the price (and price, of course, is set by the risks).

    • On April 24, 2018 at 10:03 am,
      Temple says:

      Right, Pardu

  5. On April 24, 2018 at 9:39 am,
    spanky says:

    $gold just wont die. Notice how the 50 dma is almost perfectly flat while the 100 and 200 dma are rising. That’s bullish price action IMO, but in the very short term they can certainly drop price lower.

  6. On April 24, 2018 at 9:49 am,
    Chartster says:

    Bonds dropping in value along with the conventional markets. Very different and interesting.

    Back in late January junk bonds got hit when the Dow was going up. At the same time the VIX was going up. I was looking for the blowoff top / trend changing gap down at the time. Since then the Dow went down and back up creating an island gap. Now it’s printing a bear flag.
    So the classic pattern with a trend change gap down followed by an island gap, then is followed by a massive “runaway gap down” which usually results in a 40% drop there after. I’m expecting a gap down in the Dow of 800 to 1500 point in the overnight within the next week. It’s the most classic chart pattern you will ever see. Slam dunk)

    But the 64 gazillion dollar question is, what is gold gonna do?!

    • On April 24, 2018 at 9:55 am,
      Matthew says:

      “Bonds dropping in value along with the conventional markets.”

      That’s what makes the outlook for gold, and especially silver and the miners, so appealing. The herd may never understand it but it will be moved to act on it nevertheless.

    • On April 24, 2018 at 9:56 am,
      OOTB Jerry says:

      Russia…….must think it is going UP>>>>>>just added to stockpile…….
      https://www.zerohedge.com/news/2018-04-24/russia-buys-300000-ounces-gold-march-nears-2000-tons-reserves

    • On April 24, 2018 at 10:16 am,
      Silverdollar says:

      If that gapping action you’re predicting happens, that should slow down the rise in rates, No? If not, then there’s only one other place for terrified funds to land as they exit both the stock and bond markets! At least that’s the theory, until it changes!

    • On April 24, 2018 at 10:16 am,
      JohnK says:

      Chartster you lost me.
      I put up the chart of JNK and the DJX and the VIX.
      $DJX and JNK moves in late January are the same and the VIX is the inverse.
      The $DJX went from 265 to a closing low below 240.
      JNK went from 36.5 to below 35.4.
      The VIX went from 11 to above 37.

      • On April 24, 2018 at 10:24 am,
        Chartster says:

        JohnK,
        Look at the VIXY chart.

        On January 30, 2018 at 1:14 pm,
        Chartster says:
        This could be the breakaway gap down that signals a trend change. If VIXY closes the week above the 18 week MA, it’s probably a trend change…
        With all the political stuff going on and anti trust violations with certain companies, it makes good sense to see a downturn.
        Meanwhile, it’s all about commodities and emerging markets. At least until PMs start looking shiny (some day..)

        • On April 24, 2018 at 10:33 am,
          JohnK says:

          Your statement that “The DOW was going up when Junk Bonds were being hit” didn’t add up.
          Junk Bonds and the Dow Jones were “hit” at the same time.

          • On April 24, 2018 at 11:13 am,
            Chartster says:

            Junk bond decoupled a few weeks before the hit, but yes, they did get hit at the same time too.

  7. On April 24, 2018 at 9:52 am,
    Matthew says:

    CANE is bouncing precisely from my fork support:
    http://schrts.co/LBSTHJ

  8. On April 24, 2018 at 10:01 am,
    OOTB Jerry says:
    • On April 24, 2018 at 10:04 am,
      OOTB Jerry says:

      And while this should not come as a surprise – considering we have pointed it out on numerous occasions in the past – one look at the chart below confirms that something very troubling is taking place in San Francisco, which has either become “Vancouver South” when it comes to Chinese hot money laundering, or the second housing bubble has finally arrived on the West Coast. And while according to Case-Shiller data, home prices in San Francisco rose “only” 10.1% Y/Y, a more accurate breakdown of San Fran housing prices from Paragon Real Estate indicates a record 24% annual increase in San Francisco home prices, which increased by $110,000 in just the past quarter.

  9. On April 24, 2018 at 10:05 am,
    spanky says:

    I’m assuming based on AXU and AG’s very weak performance so far today that there is more downside in silver in the days ahead.

    • On April 24, 2018 at 10:17 am,
      Matthew says:

      It does look that way but it probably won’t be a big deal:
      http://schrts.co/GzJVFE

  10. On April 24, 2018 at 10:09 am,
    Chartster says:

    There’s a good case to be made for gold bulls and bears alike. Too hard to tell right now. What I do know is, the conventional stocks are about to get smoked. They could take metal with them? Metals could do a moonshot?
    Stay tuned, that move is soon.

  11. On April 24, 2018 at 11:14 am,
    spanky says:

    FYI Gary Savage posted a video today explaining that he thinks that gold will bottom with the Euro and that he expects 1-2 weeks more downside in the Euro with it breaking below its March low. He didn’t give a price target for gold but if it follows the Euro down it probably will at least marginally break that $1303 low.

  12. On April 24, 2018 at 12:50 pm,
    Matthew says:

    SLV:GLD turned up where I thought it would.
    Yestreday’s chart:
    http://schrts.co/vbF8X1

  13. On April 24, 2018 at 4:43 pm,
    Jason says:

    The $ rally is a headfake…

  14. On April 24, 2018 at 5:34 pm,
    Wolfster says:

    Excelsior has appeared to breakout on big volume after a Monday tour of the property…..

  15. On April 24, 2018 at 6:51 pm,
    Ozibatla says:

    With interest rates around the world being so low for so long, the masses have become used to such conditions and adjusted their lives accordingly – Living beyond their means all the while knowing their debt obligations are of no big concern in the current economic climate of cheap money. Well, with signs indicating we are on the cusp of sustained interest rate increases, the hen is coming home to roost! It is becoming increasingly likely that the brown stuff will hit the fan sometime in the forseeable future.

    Here in Aus, even our own Reserve bank Chairman has warned that most households wont be able to deal with a 1-2% interest rate increase. This is a big issue. Those who determine monetary policy (central banks) are subtly admitting the financial balls up we have accepted with open arms. Whilst those who determine fiscal policy (governments) continue their blatant ignorance by further expanding their budget deficits along with their debt levels. We view these people as our leaders, and therefore tend to follow suit.

    The question is: When this way of life can no longer sustain itself and unravels (and it will for certain), who will be left to pick up the pieces? If history is anything to go by, the buck will stop with the tax payer… Ahh capitalism at its best.

    Mortgage = death pledge, credit = fictitious money, loan= debt, tax= compulsory levy. This is what we face and unfortunately many have become entrenched with a mindset of “Live to work” instead of “Work to live” as a consequence.

    Rising interest rates may well just make things more strenuous for many but we have certainly contributed to this looming hardship.

    • On April 24, 2018 at 9:17 pm,
      Matthew says:

      Capitalism has nothing to do with the problems you see. Central banking is a very important foundation of Marxism and capitalism is the opposite of Marxism/cronyism/lawlessness.
      It’s no accident that most people have it backwards. The central planners/programmers have been hard at work for a long time.

      • On April 24, 2018 at 11:07 pm,
        Skeeta says:

        Agreed Mathew,
        Its not Capitalism that is to blame
        But that is where the uneducated or misinformed will point the finger.
        Australia’s Real Estate scenario is in many parts due to rampant speculation of the investment masses.
        Its hilarious to watch first hand.
        But credit is tightening, as many of these speculators holding multiple properties find that their Interest Only period loans will not be refinanced & they are now up for Principle & Interest then it will cause havoc in many areas.
        There is a whole generation here in Australia that have never lived/worked through a recessionary period & probably don’t even know the meaning of the word nor the subsequent ramifications?
        But they are going to find out…even if it takes a few years yet.

        • On April 25, 2018 at 12:25 am,
          Ozibatla says:

          Yeh the interest only loan repayment was a popular option, particularly for investors. Regarding capitalism, isnt an outcome of capitalism an economy where there is private ownership (common amongst corporations)? Also, capitalism doesnt promote equality amongst society. Im merely conversing here, not being argumentative. All the while, treating this forum as a good source of furthering ones knowledge.

  16. On April 25, 2018 at 5:10 am,
    Ozibatla says:

    Meanwhile, gold and silver are on the slippery slide again! Damage control needed if we are going to set up for another crack at resistance

  17. On April 25, 2018 at 7:40 am,
    spanky says:

    You’ve got to admit the daily chart for $tnx is a thing of beauty.


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