The following is a brief excerpt from our Monday October 20th Keys To This Week report, one of 8 different reports that we provide for clients at various intervals throughout the month (typically 3-4 reports per week).
Keys To This Week, published on Mondays, is a bullet-pointed list of key market factors with accompanying charts that are most likely to influence US financial market direction during the next one to several weeks. It includes both strategic (looking out 1-2 quarters) and tactical (looking out over the next 30 days) investment ideas, plus our trend model‘s current bias for US stocks, market sectors, bonds, the Dollar, and economically influential commodities like crude oil and gold.
Research Report: Keys To This Week
Date: October 20, 2014
Topic: US Interest Rates
US Interest Rates & Treasuries
This week our table shifts to an equally-balanced distribution of key Near Term market factors for long dated US Treasury prices, from a Positive one during the previous 3 weeks, while retaining last week’s balanced alignment of key Intermediate Term factors. Although at first glance our table looks to be indicating a neutral reading, the types of metrics populating the Near Term Positive and Negative quadrants tell a more detailed story. This week’s Near Term Positive metrics indicate that the monthly trend in long dated US Treasury prices is still bullish amid positive ETF asset flows and an unmet key yield level at 2.07%. However, every Near Term Negative metric shows long term US Treasury prices at historic extremes, in terms of intra-market spreads, investor sentiment, and technically overbought conditions, all which previously coincided with or led every peak in these prices, and bottom in long term US interest rates, in recent history. Therefore, even though our trend model is still positive heading into this week, those managers who have been long US Treasuries all year per our 2014 analysis and forecast may consider taking some profits and/or tightening protective stops as this week’s data collectively suggest that long dated US Treasury prices are probably within weeks of an intermediate term peak.
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