Treasuries: T-bills, Notes, And Bonds
The best collateral, better than dollars?
Review
Many things have happened since my last post that I said I was bearish on equities, and bullish on bonds. Now, the clear decisions are to bid bonds and bitcoin. Yes, we own both.
Treasuries: Flight To Traditional Collateral
Federal Funds Rate(Blue) Versus US 2 Year Note Yield(Orange)
30 year bond yield Daily Chart
TLT 0.00%↑ 20-30Y bond ETF Daily Chart
When crisis appears, investors look for safety. What do you buy? Dollars? Gold?Treasuries? Yen?
Well…As you have probably heard by now, bank deposits are uninsured loans to banks. They take your money, Give you an IOU, and use it. Bank runs. Period.
So we can cross of bank deposit as a place for safety.
Treasuries? A “risk-free” asset that pays the counterparty a yield. This is guaranteed by the US government. Keep in mind, these assets are what allows the US to print money. Unless someone is to think the US is going to lose control, treasuries are very safe.
Gold? Seriously…are you going to self-custody +250k worth of physical gold? Okay moving on.
Now are you risk-adverse to any counterparty? Here walks in Bitcoin. A decentralized currency ran by 1000s of computers all over the world, 100% run time since inception (never turned off before) , runs 24/7, and has tremendous volatility.
“The best players are the most volatile”
Choose your counterparty.
Bitcoin: The new monetary system ran on a blockchain? CBDC released soon?
$BTC Daily chart
The bottom was marked by the failure of FTX. Since then, it has been moving up. Recently, it was bought very hard when the bank failures began to circulate. It officially broke bearish market structure after rising above 18k. Now it is trending bullish market structure by breaking above 25k, previous resistance. Not a trend you want to fade casually. A mid-term target can be 44.5K-50K
Equities: Very Emotionally Driven
SPY 0.00%↑ Daily Chart
We have been selling lower highs and trending with lower lows since early February. There is a good chance we continue lower, but at this point, I refrain from giving my opinion since things can change on a daily basis. Following my Twitter account traderhc will allow you the most up-to-date analysis.
Conclusion:
Federal Reserve Balance Sheet, an increase of 300B
With the intervention of the banking crisis, the Federal Reserve has unwound half of its Quantitative Tightening. Is this QE? guess what? I don’t care to have a debate on the technicalities. Look at the results. Look at bitcoin.
I think there will be more problems, more intervention, and more money printing.
Remember, the next wave of inflation will hurt 99% of people.
Highlight of the past week: just look! stop and look at what is happening. No bullshit, objectively look at what is happening.
Cheers,
traderhc
Disclaimer: This newsletter is not trading or investment advice, but for general educational purposes only. This newsletter represents my personal opinions which I am sharing publicly as my personal blog. Futures, stocks, bonds trading of any kind involves risk. I guarantee no profit, You assume the entire cost and risk of any trading you choose to undertake. You are solely responsible for making your own investment decisions. Owners of this newsletter, its representatives, its principals, its moderators, and its members, are NOT registered as securities broker-dealers or investment advisors either with the U.S. Securities and Exchange Commission or with any other securities/regulatory authority. Consult with a registered investment advisor, broker-dealer, and/or financial advisor. Reading and using this newsletter or any of my publications, you are agreeing to these terms.