Macro, FX and Rates Strategist

Ishaan Dev Kapoor

Macroeconomics

<ul>
<li>Three Treasury interventions in three weeks, EUR/JPY sales, FIMA request, doubled buybacks, read as term premium suppression. The Treasury put looks to have a higher strike than the Fed put.</li>
<li>Rising term premium squeezes the Treasury twice: it inflates the interest bill, and it threatens equities, the one asset class keeping US financial conditions loose. Debt management becomes financial stability.</li>
<li>Japan's bill buffer is spent. The next yen defence sells coupons into the long end or borrows through FIMA. By 16 September the cap has moved or it hasn't.</li>
</ul>


Three Treasury interventions in three weeks, EUR/JPY sales, FIMA request, doubled buybacks, read as term premium suppression. The Treasury put looks to have a higher strike than the Fed put.
Rising term premium squeezes the Treasury twice: it inflates the interest bill, and it threatens equities, the one asset class keeping US financial conditions loose. Debt management becomes financial stability.
Japan's bill buffer is spent. The next yen defence sells coupons into the long end or borrows through FIMA. By 16 September the cap has moved or it hasn't.


The Treasury Put, Financial Stability and the Road to Fiscal Dominance

Metals, Ores, and Mining Firms, Mint Finance

Pranay Yadav

Metals, Ores, and Mining Firms

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

Cross Asset Strategy

<ul>
<li>The July Nonfarm Payroll report showed only 114k jobs added, increasing the unemployment rate to 4.3%, the highest since 2021.</li>
<li>The Sahm rule, a reliable recession indicator, was triggered with a current value of 0.53, signaling a potential recession on the horizon.</li>
<li>FedWatch indicates a &gt;90% probability of a 50 basis point rate cut in September, up from 10% last week, due to recession fears.</li>
</ul>


The July Nonfarm Payroll report showed only 114k jobs added, increasing the unemployment rate to 4.3%, the highest since 2021.
The Sahm rule, a reliable recession indicator, was triggered with a current value of 0.53, signaling a potential recession on the horizon.
FedWatch indicates a &gt;90% probability of a 50 basis point rate cut in September, up from 10% last week, due to recession fears.


Recession Fears Resurface Triggering Yield Curve Normalization

<ul>
<li>The likelihood of imminent rate cuts has increased due to recent cooling in core CPI, driving anticipatory normalization of the yield curve.</li>
<li>According to FedWatch, expected rate cuts totaling 100 basis points by March 2025 are driven by cooling inflation, improving economic data, and the increasing fiscal burden of U.S. debt.</li>
<li>Historical data shows yield spread between 2Y and 10Y treasuries recovered just before and after rate cuts, signaling investor expectations front-running monetary easing. </li>
</ul>


The likelihood of imminent rate cuts has increased due to recent cooling in core CPI, driving anticipatory normalization of the yield curve.
According to FedWatch, expected rate cuts totaling 100 basis points by March 2025 are driven by cooling inflation, improving economic data, and the increasing fiscal burden of U.S. debt.
Historical data shows yield spread between 2Y and 10Y treasuries recovered just before and after rate cuts, signaling investor expectations front-running monetary easing. 


Yield Curve Normalisation on Rate Cut Anticipation

<ul>
<li>Discrepancies between establishment and household job surveys highlight economic stress; full-time employment declines, indicating households remain stressed even as non-farm payrolls rise.</li>
<li>Subsequent bond yield movements, particularly the persistent inversion of the 30Y-2Y spread, reflect investor skepticism about long-term economic stability and delayed rate cuts.</li>
<li>Upcoming U.S. elections and this week's economic reports, including the May CPI and revised Federal Reserve projections, may push rate cut expectations even further ahead.</li>
</ul>


Discrepancies between establishment and household job surveys highlight economic stress; full-time employment declines, indicating households remain stressed even as non-farm payrolls rise.
Subsequent bond yield movements, particularly the persistent inversion of the 30Y-2Y spread, reflect investor skepticism about long-term economic stability and delayed rate cuts.
Upcoming U.S. elections and this week's economic reports, including the May CPI and revised Federal Reserve projections, may push rate cut expectations even further ahead.


Yield Curve Inverts Further on Rising Recession Risk

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We've discussed for months that we'll need to see SPX and NDX (QQQ) close below their 20-day MAs/21-dayEMAs for more than 2-3 consecutive days in order to get more cautious.</li>
<li>Today (Tuesday) marks 3 consecutive days as the DXY climbs to test major $106 resistance, and amid 10- and 30-year Treasury yields breaking above long-term resistances. Caution is warranted.</li>
<li>Still, in order for there to be a meaningful pullback, important 2-month supports <em>that are currently being tested</em> would need to break, including 4983-5050 on SPX and $425-$433 on QQQ.</li>
</ul>


We've discussed for months that we'll need to see SPX and NDX (QQQ) close below their 20-day MAs/21-dayEMAs for more than 2-3 consecutive days in order to get more cautious.
Today (Tuesday) marks 3 consecutive days as the DXY climbs to test major $106 resistance, and amid 10- and 30-year Treasury yields breaking above long-term resistances. Caution is warranted.
Still, in order for there to be a meaningful pullback, important 2-month supports that are currently being tested would need to break, including 4983-5050 on SPX and $425-$433 on QQQ.


The Pullback Finally Begins; SPX and NDX Testing 2-Month Supports; Market Dynamics Shifting

United States

Legacy Government (Sovereign) Generic Index-key ticker

US 30Y (USGG30YR INDEX)

The Treasury Put, Financial Stability and the Road to Fiscal Dominance

The US Treasury keeps feeding the fiscal dominance trade. We read three interventions in three weeks as term premium suppression, trace the...

Ishaan Dev Kapoor

Recession Fears Resurface Triggering Yield Curve Normalization

The recent market turmoil and dismal job reports have led to significant yield curve movements, with the 10Y-2Y spread showing substantial...

Mint Finance

Yield Curve Normalisation on Rate Cut Anticipation

Recent cooling in core CPI has increased the likelihood of rate cuts, driving anticipatory normalization of the yield curve with expected cuts...

Mint Finance

Yield Curve Inverts Further on Rising Recession Risk

Discrepancies in job surveys show economic stress, full-time employment drops despite rising payrolls. Bond yield inversion signals investor doubt...

Mint Finance

The Pullback Finally Begins; SPX and NDX Testing 2-Month Supports; Market Dynamics Shifting

The Pullback Finally Begins; $SPX and $NDX $QQQ Testing 2-Month Supports at 4983-5050 and $425-$433 (2/22/24 gap supports); Market Dynamics...

Vermilion Research

The Treasury Put, Financial Stability and the Road to Fiscal Dominance

The US Treasury keeps feeding the fiscal dominance trade. We read three interventions in three weeks as term premium suppression, trace the...

Ishaan Dev Kapoor

Recession Fears Resurface Triggering Yield Curve Normalization

The recent market turmoil and dismal job reports have led to significant yield curve movements, with the 10Y-2Y spread showing substantial...

Mint Finance

Yield Curve Normalisation on Rate Cut Anticipation

​Recent cooling in core CPI has increased the likelihood of rate cuts, driving anticipatory normalization of the yield curve with expected cuts...

Mint Finance

Yield Curve Inverts Further on Rising Recession Risk

​Discrepancies in job surveys show economic stress, full-time employment drops despite rising payrolls. Bond yield inversion signals investor doubt...

Mint Finance

The Pullback Finally Begins; SPX and NDX Testing 2-Month Supports; Market Dynamics Shifting

The Pullback Finally Begins; $SPX and $NDX $QQQ Testing 2-Month Supports at 4983-5050 and $425-$433 (2/22/24 gap supports); Market Dynamics...

Vermilion Research

Recent cooling in core CPI has increased the likelihood of rate cuts, driving anticipatory normalization of the yield curve with expected cuts...

Discrepancies in job surveys show economic stress, full-time employment drops despite rising payrolls. Bond yield inversion signals investor doubt...