So, Treasury Man walks over to the White House for a quick chat with the boss…
“Tariff Man, we need to do something about these high rates…”
Tariff Man says, “Watch this…”
And, with one tweet, Tariff Man destroys rates
Bonds rip…
Just like commercial hedgers were positioned.
Of all the things commercial hedgers are buying, US Treasury bonds are at the top of the list — particularly the 5- and 10-year notes.
Everybody’s Wrong Part 39
Everybody’s wrong.
They think the Federal Reserve lowering rates means lower rates, lol.
It’s been the opposite:
Yields only started to go up when the Fed started to cut its benchmark back in September.
Yields Are in Trump’s Hands, Dude
Before Tariff Man’s tweet this week, yields were ripping all over the world.
Thirty-year Japanese government bond (JGB) yields have been the talk of the town:
So, why do we care about bond yields and the JGB?
Why does this matter?
Why is the direction of yields so important?
I mean, we’re joking about the President of the United States sending a tweet designed to bring down interest rates…
But this is serious business.
These yields are tied to a lot of things.
Most notably for our purposes, they’ll impact the direction of speculative growth stocks.
Here’s the poster child for speculative growth, the ARK Innovation ETF (ARKK):
For the speculative growth trade to keep on moving higher, bonds need to stop crashing.
A bounce in bond prices here – with a corresponding decline in bond yields – would be a tailwind here in the near term.
Wondering why President Trump is sending all these messages on social media about tariffs at these specific moments?
I think he’s playing the “bring down the rates” game.
The Fed certainly hasn’t been able to do it.
Yields haven’t stopped going up since they started cutting rates.
In fact yields ONLY started going up when the Fed started cutting rates.
But here’s Tariff Man doing what he can…
Let’s just call it a “funny, haha” joke and admit it’s not true at all that POTUS is consciously moving markets with his posts.
What is absolutely true is these speculative growth stocks need yields to stop ripping.
And I think Trump knows it.
Let’s keep an eye on these two – or three – factors: yields and speculative growth and the timing of the president’s tweets…
Stay sharp,
JC Parets, CMT
Founder, TrendLabs