Next Week Could Get Spicy

Hey There Income Hunters,

Before the open on Thursday, I laid out three negative price/RSI divergences that I then executed at the end of day.

As bullish as I am, I maintained my objectivity …

And, sure enough, each one came in on Friday — which translated to profits of 25% overnight. (That was enough to cover the electric vehicle stocks I bought earlier in the week. Well played, Griff!)

Bond-ing Time

Next week is all about US Treasury Bonds …

The Fed must step up to the plate this week or yields will rise another .25% …

Both the European Central Bank and Bank of Japan have already bought all the bonds necessary to keep their interest rates ultra low.

I think the Fed will announce a new twist — as in yield curve twist — at the Federal Open Market Committee (FOMC) meeting on Wednesday …

Yield Curve twist is when the Fed sells short-duration securities — like 0-1yr T-Bills and 2yr notes — to buy 10yr-30yr Treasury Bonds. This caps how high rates can go.

If it doesn’t happen next week, we will see higher rates until it does, because the banks are restricted in how many they can hold …

Treasury auctions $24 billion in 20-yr bonds on Tuesday, and this auction will be difficult to absorb. The 20yr is the least popular auction for real end-users since it is not a common maturity target for asset managers.

Plus, in general, the Fed Primary Dealer community — a group of 22 major banks and broker/dealers — have reduced their proportion of Treasury supply held over the past few years. See the graph below:

So, get ready for some fireworks next week. Between the auction and the FOMC meeting we will see plenty of volatility.

Blue Wave, Reflation Not Going Away

Here’s a look at my core positions to capitalize on growth and inflation acceleration in the months ahead …

Bring it Home

Next week is going to be busy, so rest up my fellow #IncomeHunters and have a great weekend.

And as always…

Live and Trade With Passion My Friends,


SOUNDOFF: I always love to hear from readers, so drop a comment or reply below! And be sure to follow me on Twitter @bill_griffo

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