[Altos Weekly Traders Edge] The Role of U.S. Treasury Yields in the Fed's Strategy...Details Inside

Sponsor EMAIL}/redirect [Privacy Policy](EMAIL}/redirect?privacy=follow) | [Advertiser Disclosure](EMAIL}/redirect?disclosure=follow) The Ascending Role of U.S. Treasury Yields in the Fed's Strategy Weekly Market Overview Hi Traders, Whenever I discover an efficient method of achieving a task, I consider it a win. Seems like the U.S. Federal Reserve (Fed) feels the same. Recently, the 10-year U.S. Treasury yield has effectively facilitated the tightening of financial conditions. Just within a span of ten days, there was a shift from 4.59% on October 13 to 5% on October 23. It's almost like having an assistant take on some of your responsibilities. This reminds me of my son's younger days when he took delight in cleaning with his grandma rather than playing with toys. Sure, a toddler's efforts with cleaning agents can be questionable, but when there's willingness, why not harness it? Similarly, the Fed seems to be capitalizing on the 10-year yield's upward movement. Recent statements from various Fed members, and even from Fed Chair Jay Powell, underscore the significant impact of long-term bond yields on the financial landscape. Now, one may wonder, why this surge in long-term bond yields? Here's the breakdown: Two-Pronged Influence on 10-Year Yield: This yield is determined by short-term rates and a "term premium." While short-term rates are self-explanatory, the term premium considers potential events throughout the bond's duration, such as growth and inflation expectations. Fed's Future Actions: The market anticipates the Fed will sustain high rates over an extended period. Revelations like the September “dot plot” hint at potential rate adjustments in 2024. The Supply-Demand Equation: Treasury bonds saw an uptick in issuance after last summer's debt ceiling elevation. Couple that with reduced foreign demand, concerns about the U.S.'s burgeoning debt, and historical hesitations, and you've got a notable tilt in the term premium. However, "safe haven" assets can act as a counterweight to these yields. Situations, like the Middle East conflict, can push investors towards these assets, though preferences fluctuate based on the current global economic pulse. Is a climbing 10-year yield a boon or a bane? It can be perceived as positive since the Fed might not need to push rates further. Yet, it does apply a downward tug on stocks. Conversations with international clients reveal concerns about how these yields might impact the U.S. mortgage scenario. Though the national mortgage rate has reached a notable 8%, I'm optimistic. The majority of existing U.S. mortgages are long-term fixed rates, with averages below 4%. Hence, the immediate effects on households might not be as drastic as one might assume. But the housing market might see a stagnation in listings due to high rates, a phenomenon I'd like to call "golden handcuffs." So, what's next? Clarity from the Fed will determine the yield's trajectory. Fed Chair Jay Powell's recent commentary suggests a satisfaction with the labor market's trajectory. In my analysis, the U.S. is heading for an economic slowdown. We're likely to witness this transition in stock market behaviors too. Diversification remains crucial. As I often emphasize, it's not just about equities or fixed income, but a broader spectrum including alternatives. - The Team at Altos Trading Sponsor My good friend and fellow trader Steven Brooks has developed a brand new, 5-minute, automatable system and is planning on showing you how THIS WEEK. This week, you will be taught how to: • Find the best trades each day • Automated the best trades • In less than 5 minutes, • BEFORE the market even opens. [Click here to reserve your seat]( for this very, very exciting training Couldn’t join our Live Weekly Market Review? No problem; we’ve recorded it for you. The team shared how they plan their trades by mapping out key levels, reviewing a simulated trade, a moving average, and option spreads, and answering questions about various tickers. For real-time insights, join us live every Tuesday evening. If that doesn’t work for you, you can watch the playback by Wednesday noon at your convenience. This week our topics were... - Market Overview - Mapping Out Key Levels - Review RTY Simulate Trade - Review 35-Month MA - Setting Up Option Spreads - Ticker Q&A Roundtable [CLICK HERE TO WATCH THE FREE REPLAY]( Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. 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