Bond Market is Leading the Way

Yield Curve continues to fall, Amazon is already telling the story of the US consumer.

Bond Market is the Truth.

Monday April 24th the 10/2 Yield Curve closed out the day at a -0.60%. This morning before market open, the 10/2 Yield Curve is at -0.61%. Yield Curve continues heading towards its Silicon Valley Bank low of -1.07%.

Bon

Bond traders are concerned about the move to 1 month US Treasury bills vs 3 month US Treasury bills as we approach the US debt ceiling. The 3 month US Treasury Bills is are approaching the highest level (yields) in comparison of the 1 month in more than 20 + years.

Conclusion

As the United States approaches the debt ceiling, the bond investor is moving more towards 1 month US Treasury Bills and 10 year US Treasury bonds. The debate will continue between the Democrats and Republicans about raising the debt ceiling. If the Republicans can’t find a definitive way to blame President Biden for the US debt, they will wait till the last minute to raise the limit and vote to move it higher. If they do find a way to hang this problem around his neck, they will vote against raising. Then there is a major problem.

The bond market is getting concerned. We are seeing that as we enter the thick of tech earning season. Amazon will be a big indicator of the financial health of the US consumer. It should already be obvious since Amazon has laid off 27,000 employees so far.

Paid subscribers, the asset allocations is set up for this move to risk off assets. As earnings come out on a big portion of tech and energy companies, we could see a sizeable move to higher ground as the high Beta, high risk assets get trampled.