Bonds Vs. Gold

Gold is going to outperform bonds for at least another 3 years.  

7 Trillion Bond Refinancing in 2025

7 trillion in bonds to refinance in 2025.  

Not including the treasury bills, it's 3 trillion:

This will have repercussions on bond yields.

Stock-Bond Correlation is Positive

The stock bond correlation is still in positive territory. This means gold goes up with rising bond yields.

Stock Bond Correlation Vs. Gold Yield

Stock-bond correlation is strengthening.

This means gold will rise on higher yields.

Historically, bonds and stocks are positively correlated.

China sells U.S. trashuries

China keeps selling bonds. 

Copper/gold ratio vs 10 year yield

Who is right.

Bond Yields Going Much Higher

As fiscal spending rises along with less money printing. Bond yields will soar. 

 

Gold is the Anti-Bond

Gold is the Anti-Bond. Gold strength since 2008 is not due to lower bond yields, but due to central bank gold buying. 

R-Star Vs. Real 10 Year Bond Yield

The R-Star from the New York Fed gives a measure of the natural real interest rate.

For example: On May 2023, the R-Star was 1.14% while the real 10 year bond yield was -1.5%. This means that the 10 year bond yield should rise further OR the CPI inflation rate should come down.

 

30 year bond to 10 year bond ratio Vs. Gold

The TYX to TNX ratio leads the gold price as it shows the market's expectation for inflation.

Citigroup Surprise Index Vs. Bond Yields

The Citigroup Surprise Index predicts bond yields.

Buy bonds (sell yields) when the citigroup surprise index is overly optimistic.

The holy grail to forecast bonds

The taylor rule rate can be used to forecast bond yields. 

 

R star is a similar measure showing the natural real rate of interest.

Unlimited Bond Buying: ECB vs FED

 

Dividends Coming Down

Dividend yields and bond yields have now intersected.

 

Bond Yields Vs. Stocks Vs. PE ratio

This chart shows how rising bond yields can impact high PE stocks. 

Australia Doubles Down on Bond Buying

Australia increased its bond purchases from A$2 billion to A$4 billion, which crushed bond yields on Monday.

Bond Yields Vs. CPI

A higher bond yield signals inflation (CPI).

U.S. Treasury Maturity Schedule

We know the Fed won't let these mature, because then they would have losses at rising bond yields. These will need to be rolled over at higher bond yields. Or they need to print more money to buy them up.

For more info read my article. 

Bond Forecaster Index

To predict the 10 year U.S. bond yield, we input the following parameters:

• 3-2 year treasury which predicts the slope of the yield curve
• GDP which predicts the 10 year yield 
• Fed balance sheet which has a direct effect on inflation and yields
• USD index which is negatively correlated to bond yields
• Debt issuance which increases bond yields

The same chart but with GDP substituted data.

 

The holy grail for bond forecasting depends on the Taylor Rule rate, which is a leading indicator for bond yields.

 

 The second derivative of the same chart.

To check how the yield curve will evolve, you can look at the leading indicator 3-2 year treasury yield.

 

Gold leads bonds by 20 months.

Long term cycle.

Lantern daily economic index.

Bond valuation.

When foreigners sell treasuries, bond yields go up.

Bond Value = Money Printing + Budget Deficits.

Deficits are going higher.

The Citigroup economic surprise index predicts yields.

The Fed has its bond valuation model (link 2). Buy bonds when the chart is above zero.

Check the natural rate of interest R-Star from the New York Fed and compare it to the Real 10 Year Bond Yield.

 

Maturing bonds. 

QT Runoff 101In the chart below the Blue column is the amount of Bonds and Notes maturing on the Fed's balance sheet. Each month when the blue line is above the 60BN which is the QT cap the Fed proportionally buys bonds across the curve using "add-ons" August is a huge month.

Treasury supply estimates.

Slides here.

Charles Nenner cycle.

Historic look on bonds.

Historic look on interest rates.

Watch Callum Thomas inflation rate model.

Watch maturities.

CTA positioning.