Archive for Bonds

Bond Market: “When Investors Should Worry”

The cost of insuring against default has been declining – what this may suggest 

By Elliott Wave International

You may recall hearing a lot about “credit default swaps” during the 2007-2009 financial crisis.

As a reminder, a CDS is similar to an insurance contract, providing a bond investor with protection against a default.

In the past several months, the cost of that protection has fallen dramatically.

The November Elliott Wave Financial Forecast, a monthly publication which provides analysis of major U.S. financial markets, showed this chart and said:

The Markit CDX North American Investment Grade Index comprises 125 equally weighted credit default swaps on investment grade debts. It shows the cost of insuring against default on high grade bonds issued by the most liquid companies. When the index is low, as it was in January 2018 and January and February 2020, the cost of insuring against default is low, because investors view the nonpayment of debt obligations as most improbable. Ironically, this is when investors should worry. Each time the stock market fell, the Markit index surged. The index has subsequently declined toward the lower end of its historic range, indicating complacency yet again.

This complacency toward default risk is occurring just as corporate bankruptcy filings are surging. As a matter of fact, the third quarter of 2020 was the worst quarter on record for U.S. bankruptcy filings.

Take a look at this Oct. 26 news item from Bloomberg:

Bond Defaults Deliver 99% Losses in New Era of U.S. Bankruptcies

Desperate to generate higher returns during a decade of rock-bottom rates, money managers bargained away legal protections, accepted ever-widening loopholes, and turned a blind eye to questionable earning projections. Corporations took full advantage and gorged on astronomical amounts of debt that many now cannot repay or refinance.

Now, keep in mind that all these bankruptcy proceedings – where many creditors are walking away with just pennies – are occurring during a time of historically low interest rates.

Imagine what will happen should rates begin to rise. It will become increasingly difficult for corporations to borrow at low rates AND service the huge amount of outstanding debt.

Let’s return to the November Elliott Wave Financial Forecast:

Increasing bankruptcies, debt restructurings and defaults are deflationary.

Are you prepared for a historic deflation?

Learn what you need to know to keep you and your family financially safe by reading the free report, “What You Need to Know Now About Protecting Yourself from Deflation.” Here’s a quote:

Many investment advisors speak as if making money by investing is easy. It’s not. What’s easy is losing money, which is exactly what most investors do. They might make money for a while, but they lose eventually. Just keeping what you have over a lifetime of investing can be an achievement. …

Protecting your liquid wealth against a deflationary crash and depression is pretty easy once you know what to do.

Find out how to protect your wealth during a deflationary crash.

Get started by following this link: ““What You Need to Know Now About Protecting Yourself from Deflation.” – free access.

This article was syndicated by Elliott Wave International and was originally published under the headline Bond Market: “When Investors Should Worry”. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

 

How to Stay Ahead of Price Turns in the U.S. Long Bond

This method of analysis applies to any widely traded financial market

By Elliott Wave International

Back in August, the volatility index for Treasury debt was at an all-time low, indicating record commitment to the idea the markets would continue to calmly rise.

Indeed, here’s a July 27 Bloomberg headline:

Bond Investors Are Getting Fresh Reasons to Stay Record Bullish

Bloomberg mentioned U.S.-China tensions as a reason that investors would seek a safe haven in bonds, hence, pushing prices higher.

Then, a week later (Aug. 3), Reuters quoted the co-head of global bonds for an asset management group:

“I think the downward pressure on yields will continue for the foreseeable future.”

Of course, as you probably know, a “downward pressure on yields” correlates with higher bond prices. Yields and prices move inversely to each other.

But, it’s best to look beyond “fundamentals,” such as the chilly relationship between the U.S. and China, and focus on the price pattern of bonds.

That’s what Elliott Wave International’s Aug. 5 U.S. Short Term Update did (the U.S. Short Term Update is a thrice weekly publication which provides near-term analysis and forecasts for major U.S. financial markets). Here’s a chart and commentary:

Last night, [U.S. Treasury long bond futures] met the wave … high from April 21, with a rally to 183^00.0. Prices could modestly exceed this high, but the pattern does not require it.

In other words, the wave pattern suggested that the next move would be down, as indicated by the red arrow at the end of the price line.

Well, the long-bond high was reached the very next day (Aug. 6), and prices have been trending downward since.

Here’s a chart from the Oct. 26 U.S. Short Term Update:

You can see that high notated on the chart and the subsequent slide. Since that slide began, prices have tumbled by about 5.5% (as of Oct. 26) — and yields, they’ve been rising.

So, the way that investors can stay ahead of turns in the bond market is by using the Elliott wave model. This method works with any widely traded financial market.

Here’s a glimpse into the Wave Principle from Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter:

The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market’s general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable.

Would you like to learn more about the Wave Principle?

If your answer is “yes,” then you may be interested in knowing that the online version of Elliott Wave Principle: Key to Market Behavioris available to you free when you become a member of Club EWI, the world’s largest Elliott wave educational community. Membership is free — and you’ll gain instant access to a wealth of valuable resources on investing and trading from an Elliott wave perspective once you join. Club EWI has about 350,000 members.

Gain instant, unlimited and free access to the Wall Street classic book by following this link: Elliott Wave Principle: Key to Market Behavior.

This article was syndicated by Elliott Wave International and was originally published under the headline How to Stay Ahead of Price Turns in the U.S. Long Bond. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

10-Year Treasury Note Speculators dropped their bullish bets for 3rd time in 4 weeks

By CountingPips.comReceive our weekly COT Reports by Email

 

10-Year Note Non-Commercial Speculator Positions:

Large bond speculators cut back on their bullish net positions in the 10-Year Note futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of 10-Year Note futures, traded by large speculators and hedge funds, totaled a net position of 16,212 contracts in the data reported through Tuesday October 27th. This was a weekly fall of -6,784 net contracts from the previous week which had a total of 22,996 net contracts.

The week’s net position was the result of the gross bullish position (longs) declining by -17,476 contracts (to a weekly total of 544,854 contracts) while the gross bearish position (shorts) decreased by a lesser amount of -10,692 contracts for the week (to a total of 528,642 contracts).

The 10-Year speculative positions slid on Tuesday and fell for the third time in the past four weeks. The net position has now fallen by -112,364 contracts over that time-frame and is currently sitting at a small bullish position of just over +16,000 contracts. The speculator sentiment has continued to hover around a small bullish now for the past twenty-one weeks after breaking a streak of 129 weeks of continuous bearish positions that dated back to December 19th of 2017.

10-Year Note Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of 13,934 contracts on the week. This was a weekly gain of 66,940 contracts from the total net of -53,006 contracts reported the previous week.

 

10-Year Note Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the 10-Year Note Futures (Front Month) closed at approximately $138.84 which was a rise of $0.14 from the previous close of $138.70, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article By CountingPips.comReceive our weekly COT Reports by Email

10-Year Note Speculators pulled back on their bullish bets this week

By CountingPips.comReceive our weekly COT Reports by Email

 

10-Year Note Non-Commercial Speculator Positions:

Large bond speculators decreased their bullish net positions in the 10-Year Note futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of 10-Year Note futures, traded by large speculators and hedge funds, totaled a net position of 22,996 contracts in the data reported through Tuesday October 20th. This was a weekly drop of -52,261 net contracts from the previous week which had a total of 75,257 net contracts.

The week’s net position was the result of the gross bullish position (longs) tumbling by -22,850 contracts (to a weekly total of 562,330 contracts) while the gross bearish position (shorts) increased by 29,411 contracts for the week (to a total of 539,334 contracts).

The 10-Year Treasury speculators sharply cut back on their bullish bets for the second time in the past three weeks. The overall position has shed a total of -105,580 contracts over these past three weeks and has brought the current bullish standing to the lowest level of the last five weeks. Despite the recent setbacks, the speculator position has remained in a small bullish position for seventeen out of the past eighteen weeks.

10-Year Note Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -53,006 contracts on the week. This was a weekly gain of 46,513 contracts from the total net of -99,519 contracts reported the previous week.

 

10-Year Note Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the 10-Year Note Futures (Front Month) closed at approximately $138.703125 which was a decline of $-0.5 from the previous close of $139.203125, according to unofficial market data.

 

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article By CountingPips.comReceive our weekly COT Reports by Email

10-Year Treasury Note Speculators edged their bullish bets higher, up for 5th time in 6 weeks

By CountingPips.comReceive our weekly COT Reports by Email

 

10-Year Note Non-Commercial Speculator Positions:

Large bond speculators increased their bullish net positions in the 10-Year Note futures markets again this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of 10-Year Note futures, traded by large speculators and hedge funds, totaled a net position of 75,257 contracts in the data reported through Tuesday October 13th. This was a weekly gain of 5,744 net contracts from the previous week which had a total of 69,513 net contracts.

The week’s net position was the result of the gross bullish position (longs) decreasing by -43,266 contracts (to a weekly total of 585,180 contracts) while the gross bearish position (shorts) dropped by a larger amount of -49,010 contracts for the week (to a total of 509,923 contracts).

The 10-Year speculators slightly added to their net bullish bets this week and raised their wagers for the fifth time in the past six weeks. The rise in bullish positions follows a sharp decline last week when spec sentiment fell by -59,063 contracts. The overall standing has now been in bullish territory for six straight weeks (after a dip on Sept. 1st) and has been bullish in sixteen out of the past seventeen weeks.

10-Year Note Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -99,519 contracts on the week. This was a weekly decrease of -7,820 contracts from the total net of -91,699 contracts reported the previous week.

 

10-Year Note Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the 10-Year Note Futures (Front Month) closed at approximately $139.20 which was an advance of $0.16 from the previous close of $139.04, according to unofficial market data.

 

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article By CountingPips.comReceive our weekly COT Reports by Email

10-Year Note Speculators dropped their bullish bets for 1st time in 5 weeks

By CountingPips.comReceive our weekly COT Reports by Email

 

10-Year Note Non-Commercial Speculator Positions:

Large bond speculators decreased their bullish net positions in the 10-Year Note futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of 10-Year Note futures, traded by large speculators and hedge funds, totaled a net position of 69,513 contracts in the data reported through Tuesday October 6th. This was a weekly decrease of -59,063 net contracts from the previous week which had a total of 128,576 net contracts.

The week’s net position was the result of the gross bullish position (longs) sinking by -39,892 contracts (to a weekly total of 628,446 contracts) while the gross bearish position (shorts) increased by 19,171 contracts for the week (to a total of 558,933 contracts).

The 10-Year speculators cut back on their bullish bets this week following four straight weeks of rising bullish bets that had pushed the overall net position to its highest level in 155 weeks, dating back to October of 2017. This week’s decline brings the net position back to a small bullish level and marks the fifteenth time out of the past sixteen weeks that speculators have maintained a bullish bias.

10-Year Note Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -91,699 contracts on the week. This was a weekly advance of 92,564 contracts from the total net of -184,263 contracts reported the previous week.

10-Year Note Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the 10-Year Note Futures (Front Month) closed at approximately $139.04 which was a fall of $-0.73 from the previous close of $139.78, according to unofficial market data.

 

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

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Will Bonds Continue To Be a Safe Haven In The Near Future?

By TheTechnicalTraders

Chris speaks with Jim Goddard about gold, silver, bonds, interest rates, and whether we should expect a market correction or market crash. Bonds and the US $ are under pressure and there is talk in the Street of negative interest rates in the US for 2021! Precious metals, and gold in particular, are the best option for those that want a safe asset for the near future.

CLICK HERE TO LISTEN TO THE PODCAST

GET CHRIS’ ETF TRADE AND INVESTING SIGNALS TODAY – CLICK HERE