10 year yield V FX, Stocks, Commodities, DXY

The 10 year Treasury yield on September 3rd was 1.43, stalled September 8 -10th then resumed the uptrend to close at 1.899 on September 13. The yield rose 46 points.

Yield aside, the 10 year bond price September 3rd reached 99.00 dropped to September 13 at 97.6/ 32 as Treasuries are priced in 32nds as opposed to foreign bonds at 0.01.

To recap, 99.00 Bond price Vs 1.43 yield.

DXY September 3 – 13 dropped from 99.37 – 97.87 or 150 pips. The 10 year yield rose and DXY dropped. No such concept exists to 100 DXY. The bond price and DXY are at highest points while yields at bottoms.

Currencies Sept 3 -13

21 of 28 currencies rose and 7 currency pairs dropped as follows
EURAUD
EURGBP
USDCAD
GBPAUD
GBPNZD
EURNZD
EURCAD

Stock Markets, All risk assets rose as follows

FTSE DAX S&P, Nikkei, ASX SPTSX

The VIX was down

Bond Prices Sept 3 -13

JGB’s = Down Gilts = Down Bunds = Down Treasuries = Down

Commodities Sept 3 -13

WTI Up, yet Skitzy prices while Brent = Up. As an aside, WTI since January had a 5 Point range in every month since January. WTI lacks a serious Correlation to not only GDP but all USD financial assets.

Nat Gas UP

Gold Down deeply

Silver Down deeply

wheat UP
Copper UP

Soybeans UP

To define the 10 year Bond price

Bond price Current 97. 6/32

Maturity Aug 2029

Coupon Rate 1.62

Yield to Maturity 34.13% means price expected if held to 10 year maturity.

To understand 32nds

30 year Treasury yield is priced in 32nds and priced at $312.50 for each 32nd or $3,000 per point. One basis point on a 10 year bond is $1000.
A guide
From fraction to decimal,
1/32 = 0.0313,
3/64 = 0.0469,
1/16 = 0.0625,
5/64 = 0.0781.
At 63/64 = 0.9844 then comes 1.0 as a fully traded basis point.
From Fraction to percent,
1/32 = 3.125%
3/64 = 4.687%
1/16 = 6.25%
5/64 = 7.812
63/64 = 98.437%. Then 1.0 as a fully traded basis point.

What is safehaven and Safehaven assets and how is it defined Answer is any asset that is or follows a bond price because of the guaranteed obligation placed on bond payouts by governments. Gold and Silver past and present falls into safe assets.

DXY is safe while USD as general concept as USDJPY USDCHF USDCAD Fails definition. Yet USDCAD is a severe outlier Currency.

Yield curve maybe defined by actual yields but a true yield curve is interest rates because interest rates price yields and bonds. Actually, Yields and bonds are secondary financial instruments.

 

Brian Twomey

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EONIA Switch to ESTR

ECB will begin elimination of Eonia and replaced with $STR. on October 2
Massive change is the 3:00 a.m EST publication time from Afternoon EST in New York afternoon.
No longer will Eonia compete against FED Funds Rate released at 4:15 EST daily and published just shortly after Eonia.
Now $STR becomes its own standing Interest rate and competes against itself and other European interest rates.
This move, years in the overall ECB plan, represents the ECB full break with Fed Funds.
More importantly, the new plan represents the ECB‘s full control over EUR and all European Financial instruments as is the Methodology for all nations. European interest rates now fully decide their own price of their financial instruments to include Euro. Previous in NY afternoons, Eonia competed with Fed Funds as traders had a choice to trade USD or Eonia.
Its a smart move for the ECB.
 The 3 am publication means $STR moves ahead of the BOE  Sonia so EUR becomes King Currency as the first trade Currency over GBP.
Overall Trade lineup from FED funds 4:15 EST. As follows
3 am means americans daytrades are forced to trade as we do starting at 2:30 am or the day trade profits will be lost.
New $STR means EUR may predict 24 hours ahead accurately as is the case for all currencies. Previously, Eonia released in NY afternoons had to compete with not only Fed Funds but the next day’s Euribor release. Eonia was to involved against other interest rates to predict 24 hours ahead with perfect accuracy.
 EUR movements should be better, more sound. Forward STR will be calculated based on OIS trade rates
  The ECB’s transition to STR means no changes to overall Interest rates. The idea to go more negative interest rates forces CHF, SEK, DKK and NOK to cut their own rates lower as all interest rates from respective nations are located below Europe. Now is not the time for the ECB to act while in transition.
      Brian Twomey

FX Yearly Currency Price Cycles and Budgets

USD and yearly Currency Price cycles is explained by monthly Government budgets, predicated by Unitedstates

USD Oct

EUR Nov

GBP Feb/ March

CHF Feb

CAD March

JPY April

NZD May /June

AUD June / July

How Government budgets relates to Currency Futures is due to Futures trade based on money Supplies and explains why volume in Contract numbers are crucial to futures trading and relates directly to currency spot prices..

An overbought futures price occurs when price exceeded money Supply, while oversold or low price means a low money Supply.

Contango and Backwardation hardly explains prices fully.

Explains why volume is the first and oldest indicator coupled with its next oldest rival open Interest.

Futures contracts then and now trade as open interest is the Trade Signal while Volume is hedged.

Yet volume alone to money Supply is enough information for a trade.

Seen Normally as budget cycles is a Currency Price, Jpy for example, drops every April to allow Government to fund the budget., happened 14 times since 1995, except for weird markets years, 2019, 18, 2013, 2010, 2008, 2007, 2003, 1998, 1997. Yet up months contained small moves.

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Brian Twomey