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USD, Treasuries, Oil: One-Way Street About To Hit A U-Turn

Published 08/19/2015, 12:16 AM
Updated 07/09/2023, 06:31 AM

I live on a one-way street that's also a dead end. I'm not sure how I got there. - Stephen Wright

Despite the incessant clarion calls by the deflationists that the dominant macro trade: long US dollar, long Treasuries and short oil - will extend indefinitely; the bend in the road in Q1 and the familiar patterned streetscapes, continue to point towards an approaching U-turn in this one-way street.

Long-term Treasuries (iShares 20+ Year Treasury Bond ETF (NYSE:TLT)) appear poised for a downside reversal - and are completing a similar descending topping pattern, evident in the two previous multi-year Treasury rallies. We maintain our expectations that the 10-Year yield will challenge overhead resistance around 2.65 percent later this year and that we'll see the US dollar index following suit lower - which should provide an exit for commodities from the dead end street they've remained in since Q2 2011.

USDX vs TLT Weekly 2014-2015

Euro:Oil Weekly 2014-2015

TLT 2008/2009 vs 2014/2015

TLT 2008/2009 vs 2014/2015

TLT 2012/2013 vs 2014/2015

TLT 2008/2009 vs 2014/2015

TLT 2011/2013 vs 2013/2015

TLT 2007/2009 vs 2013/2015

10-Y Yield Daily 1998/1999 vs 2014/2015

10-Y Yield Weekly 1998/1999 vs 2014/2015

TNX (10-Y Yields) 2009-2015 vs 1979-1985 (Inverted)

USDX Weekly 2011 (Inverted) vs 2015

USDX Daily 2011 (Inverted) vs 2015

Gold Weekly 1998/1999 vs 2014/2015

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