2021-09-14

Turning Japanese or Not?

The 10-year / 2-year Treasury yield ratio. The lower horizontal was last breached (cleanly) in June 2014. The start of the U.S. dollar bull market.
Here is the ratio vs UDN, an inverse DXY ETF.
Long-term the trend is towards a higher and higher peak for the ratio, a system hitting greater extremes in each crisis. The ratio will go infinite if the 2-year gets down to zero. The chart is mapping the rising waves of financial crisis hitting the U.S. economy. I don't know if the currency relationship will hold because there's only one record and that bull market was "on schedule" according to my read of the USD cycle. According to the cycle, DXY should be 1.5 years into a 5 to 6 year bear market.

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