Thesis
In an American market that is still bearish, the first reversal signal can be noticed starting from the short-term Treasuries yield and Dollar Index correction.
Development
According to the financial cycle (Bond-Equity-Commodities) they were the first to reverse upwards in the summer of 2021, 5/6 months ahead of the equity correction. For the Bond, an upward reversal of yields implies a correction of the underlying.
The presence of bearish patterns on the US2Y (H&S) and on the Dollar Index indicate, in advance, the probable restart of the american financial cycle for 2023, following the same Bond-Equity-Commodities cycle as well as the expectation of a FED Pivot.
Conclusions
The market is likely pricing a FED pivot about aggressive monetary policy and set the stage for a equity bullmarket on the first half of 2023. A bearish acceleration of the 2-year US Treasury yields with a new curve inversion (2Y vs 10Y), now at the extremes, would be a confirmation.
Please note that the information provided is not financial advice. It’s important to conduct thorough research and consider consulting with a financial professional before making any investment decisions.
