Interest Rate Spread - Difference in TYX-TNX (30Yr%-10Yr% US Gov't Bond Yields)
The decline in US 30 year bond yield (TYX) relative to US 10 year bond yields was alerting us to a weakening US economy and was setting up this monster trade to sell short Crude Oil (CL1! = front month NYMEX crude oil futures)
Thanks to user @jangseohee who asked me to look at this relationship of TNX to Crude Oil to find this amazing relationship that will hopefully set up future trades. I think this picture tells a story all by itself. The basic story is that if long term rates drop relative to shorter term rates, it means a cooling economy ahead and perhaps lower demand for oil. If long term rates pick up relative to shorter term rates, then the economy is picking up steam and oil prices can rise.
Scroll further back and see how this sets up other trades. For now, they are back together, the profits are already taken.
Tim 10:25PM EST, May 21, 2015
Komen
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The spread opened up on hopes for OPEC production cuts and a strengthening Trumpoconomy and then promptly closed again.
March 31, 2017 4:57PM EST
Komen
LastBattle
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Crude oil vs 1/ DXY is pretty similar too :)
timwest
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I think the crude vs currency correlation has been well covered. I think I have posted a few charts on it too.
rere04
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Very nice.
TheBulltrader
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are you looking to buy crude oil for the long term now?
5thdisciple
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McClellan posted a similar chart but with oil leading tresuries.
5thdisciple
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Was not able to post the link, but essentially his chart indicated that crude oil futures prices tend to lead T-Bond interest rates by about 3 weeks.
timwest
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If you find the link - please post it. I don't "see" the 3 week lag you mention, but any relationship is just that - there is a period of dating, that can lead to marriage, then possible separation and divorce, just like in real life.
Thanks - The 3-week lag isn't necessary. If you look on the left side of the chart, the moves were together. It's well written and I have a lot of respect for Roger McClellan. He is a very smart man. I've had lunch with him and he's a humble, nice man.