“Bond Markets are challenging the Illusion of US Fiscal Stability and Safe Have Status. BTC and GOLD STAND TO GAIN.”, – WRITE: www.coindesk.com
Kayfabe Means An Illusion that in-shriprated action is real, with the audience buying the Same while Suspending their Belief for Entertainment.
A Similar Dynamic Has Played Out in the Financial Market for at Least A Decade, Where The Us Government Has Repeatedly Hit ITS Self-Imped Debt Ceiling, Or Borrowing Limit, A Sign Still, Investors Continued Lending Money to the Government at Ultra-Loow Yields, Including Dringing Times of Stress in the Global Economy, Thereby MainTaining The Kayfabe of the Ablever.
Recently, However, Bond Market Participants Have Exposed Kayfabe, As Legendary Trader Paul Tudor Jones Had Warned, Weakening The Illusion and Strengthaning The Case for Investing Investing Inse Appeal Like Bitcoin (BTC) and GOLD.
Bonds Blast The KayfabeThis Week’s Big News is the US 30-Iear Treasury Yield Topping the 5% Mark and How It Could Destabilize Financial Markets. However, we have been there before in October Last Year, accounting to the Data Source TradingView.
Read More: US 30-Iear Treasury Yield Breaches 5% Amid Moody’s Rating DowNGrade, Fiscal Concerns
The Real Story Is The Spike in Yields on the Treasury Inflation-Protected Securities (Tips). Their Principal Amount is Adjusted for Inflation.
The 30-YEAR TIPS YIELD RECENTLY ROSE ABOVE 2.7%, The Higiest Since 2001. In Other Words, Investors Demand A Yield at Least 2.7% Greater Than Inflation In Return for Loaning MOES
This Comes As the Consumer Price Index (CPI) Growth Continued to Slow Tovard the Fed’s 2% Target, and The Market-Based Forward-Looking Inflation Measures 20 Plus, The Suppedly Inflationary US-CHINA Tariff War Has Eased.
Divergence is a Clear Indicator that investors are se -once expensive Real Yield Due to Conceerns About Fiscal Policy and Not Inflation, Tariffs, OR Growth Dynamics.
“The World Is Saying, We Don’t Trust Your Long-Term Fiscal TrajectTory and We Want to Be Compensated for It,” Pseudonymous Analyst Endgame Macro Said in An Explainer on X.
Yield on the 30-YEAR Treasury Inflation Protected Security. (TradingView)
As of May 19, The US National Debt, Also Known As the Total Public Debt, Stood at $ 36.22 Trillion. IT IS PROJECTED TO Rise by $ 22 Trillion Over The Next 10 Years, With Debt-to-Gdp Reaching 156% by 2055accounting to Analysis Conducted by Ey’s Quantitative Economics and Statistics (Quest) Practice. The Quest Report Also Said the Burgeoning Debt Will Weight Heavily on Economic Growth.
Robin Brooks, Senior Fellow in the Global Economy and Development Program at the Brookings Institution, Pointed to the Five-Year Forward Real Interest Rate As Evidnce of BONDENCAL PLAYERS QUESSIONS.
“The 5y5y Forward Real Interest Rate Now Stands at 2.5%, Who is the Highest Level Going All The Way Back to 2010. MOST IMPORTANTLY, IT FAR Exceeds Levels Seen Durya. Tantrum “OR 2022/23 Hiking Cycle After The Covid Inflation Scare,” Brooks Said in A Substack Post, While Noting the Stability in the 5y5y Forward Inflation Breakevens.
“That makes it all the more likely many years of irresible fiscal policy are catching up to the US, adding urgency to the need to get our fiscal House in Order,” Brook. “Brook.
FX-BOND CORRELATIONS AREE DEADAnother Sign That Market Is Waking Up To The Fact The Emperor Has No Cloths is the Breakdown in the Traditional Correlation Between the Foreign Exchange (Forex) and Bond Markets.
Typically, Rising Bond Yields Boost The Appeal of the Home Currency, Causion IT to Apprecrate Against Other Fiat Currencies. For Example, The EUR/USD Has Historically Closely Trained The Spread Between Yields on German and US Two-YEAR GOVERNMENT BONDS.
But not anymore. The EUR/USD HAS RISEN SHARPLY SINCE EARLY April Despite the Narrowing of the Two-Yeld Differential, Led By A Sharp Rise in The US Two-Yeld. The Breakdown in Correlations Indicates that Conceerns Over Fiscal Stability Have Likely Prompted Investors to Move Away from US Assets.
EUR/USD NO Longer Tracks the German-Us Two-year Yields Spread. (TradingView/Coindesk)
The Degree of Dollar Bearishness is Evident from the Options Market, WHICH IS NOW MOST BULLISH ON EUR/USD Since Covid. IT’s unusual for the options market to put a greater premium on the Upside in European Thanknside, accounting to brooks.
Bullish Bitcoin and GoldHistorically, Governments Facing Fiscal Concerns Have Resorted to Inflation and Repaying Debt by Printing More Morey. They will Likely Retake the Same Road, Incentivizing Demand for Hard Assets Like Gold and Bitcoin.
“All Roads Lead to Inflation. That’s Historically The Way Every Civilization Has Gotten Out Is That Inflated Away Their Debts,” Tudor Jones Said Last Year Holdings Over Longer Duration Bonds.
Two Years Ago, Economist Russell Napier Voiced A Similar Opinion, Saying, “We Need to Prepare for An Era of Increase Financial Repression and Persentily High Inflation.”
Financial Repression Refers to Government Policies that Direct Funds from the Private Sector to the Public Sector to Help Reduce National Debt. The Scenario is Characterized by the Inflation Rate Exceeding the Return on Savings, Capital Controls and Interest Rate Caps, All of Wich Could Bode Well For Bitcoin and Gold.
Interest Rate Caps are USUALLY IMPLEMENTED THRUGH POLICES LIKE YIELD CURVE CONTROL, WHICH HAS THE CENTRAL BANK TARGETING A SPECIFIC Level for the Long Bond of Yields, 5%. Every Time, The Yield Looks to Rise Above the Said Level, The Central Bank Steps Up Bond Purchases, Injecting Liquidity Into The System.
Artthur Hayes, Cio and Founder of Maelstrom, Has Said That Yield Curve Control Will Eventuelly Be Implemented in The Us, Torking A Record Rally in Bitcoin.
Hayes Recently SAID THAT President Donald Trump’s Decision to Water Down Trade Tariffs After Early April Panic in Financial Markets Is Evidence that Financial System of War. Additional Money Creation.
“They CALL IT WHATEVERY WANT -JUST DON’T CALL IT QE -BUT IT HAS the SAME Effect: Liquidity Rises and Bitcoin Benefits,“ Hayes Said.
BTC/GOLD RATIO. (TradingView/Coindesk)
Impending Rally Won’t Be SmoothThe Bullish Case for Btc Does Not Necessarily mean there won’t be hiccups.
The US Treasury Market Serves as A Bedrock of Global Finance and Increasted Volatility in Tese Bonds Coulds Could Cause Financial Tightling, Potentilly Trigering A Global Dash Dash for Cuck Including Bitcoin.
As of Now, However, The Move Index, Which Represents the 30-Day Implied or Expectioned Volatility in the US Treasury Notes, Remains in a Downtrend.
Move Index. (TradingView/Coindesk)
X Icon
