Below is what we discussed yesterday, with the blue arrows showing where 10-Year YIELD and GOLD were trading yesterday morning at around 8:20 AM ET.
Today we had stronger than expected Q2 GDP data, and Q2 Corp Profits, yet 10-year YIELD remains under pressure, falling to 2.32% from 2.36% yesterday morning, and continuing to decline from its Aug 21 lower rally high at 2.45% towards a test of the Aug 15 low at 2.30% in an effort to preserve its Aug downtrend.
Meanwhile, Spot GOLD has popped to a new recovery-rally high this morning, extending its post-Aug 21 series of higher-highs and higher-lows.
It is very perplexing that YIELD cannot catch a bid amidst a supposedly compelling economic recovery.
Fear rules... money is flowing into safety into both Treasuries and GOLD. MJP 8/28/14
During the past week, or so, we can make the preliminary argument that the August downtrends-- the series of lower-lows and lower-highs--in my hourly 10-year YIELD and spot GOLD patterns have diverged.
That is, spot GOLD appears to have neutralized its downtrend, while YIELD remains constrained within its still bearish August stair-step decline.
Although we should think that recently improved eco data would trigger a bit of upward pressure on YIELD, nothing of the sort seems to be happening.
We can only wonder if 10-year YIELD is heading for yet another new low beneath the Aug 15 low at 2.30%?
Perhaps it is, but the GOLD market is not so enamored with such a prospect, because inflation is percolating beneath the surface, or a geopolitical flight-to-safety is unfolding that is slowly sending capital into GOLD? MJP 8/27/14