CapitalFlash | Market Regulatory Outlook: Bonds and bitcoin hint at bubble territory



Rates have started to sell off, while Bitcoin price rises to $51k and continues to soar. Treasury yields are growing aggressively! We are watching a loud sell-off in rates with yields moving quickly higher.

Inflation expectations are becoming unanchored and spread worries in other asset trading classes such as Stocks, Forex and even Crypto Currencies. The main worry concerns the rapidity of Treasury Yields move. In fact, they Tuesday, smashed their biggest gain since the bubble started back in December. The 2s10s spread amplified to 1.18 per cent. This make it the widest since 2016. Therefore, inflation expectations are becoming unanchored.


Nasty Bonds: Managing Risk in your Trading Portfolio

Back in January, four reasons pushed our experts to predict a boundless inflationary stimulus in 2021. To start with, we noticed a large expanse of pro-cyclical fiscal impetus. We also witnessed pent-up demand and a savings glut. Finally, it was obvious how the ultra-loose monetary policy would lead to inflation becoming higher.


Knock-on impact on stocks

The ProShares UltraShort 20+ Year Treasury ETFs tracks twice the inverse (-2x) of the daily performance of the US Treasury 20+ Year Bond Index for one day. It is exploding more and hits almost 20% this year. Vix March futures also progressed thru a mixed session on Wall Street. The session left the Dow up 0.2%, the S&P 500 flat and small cap Russell 2000 0.7% lower. Bigger rates concern bond proxies as real estate, services and healthcare. 

Stocks in Europe are moving down after Tuesday’s pause. Concern about profit rates growing as fast as they are starts to worry some investors. Indeed, what matters isn’t the absolute yield. It is the rate of change which’s catching traders by surprise. UK inflation bumped up to 0.7% last month from 0.6% back in December. That was due to the cost of household goods, restaurants, hotels and transport being all rose. And this is only the beginning: The roaring 20s will lead to louder price rises by the end 2021. In addition, United Kingdom 10 year gilt yields are at 1-year highs beyond 0.6%.

DISCLAIMER: If the yield climbs impact makes you worried on your portfolio, it is highly recommended that you consider other ways to invest for income. Keep in mind that you can always join our investment platform and let our top trading experts strategically invest your funds with ZERO losing risk.




Bitcoin or Forex: How to invest with Zero risk?

Bitcoin hit $50k and has kicked on to $51k. As previously mentioned, the market is looks totally different to how it did back in the 2017 bubble.

 Microstrategy Business Intelligence Company plans to offer $600m of senior convertible notes to purchase and hold more Bitcoin. Truly, its bet on the cryptocurrency last year on was successful. It now owns 72k BTC worth $3.6bn. Remember that in 2020 it only started with an acquirement of 21,454 BTC as part of its capital distribution strategy. Yet more corporate backing.

Meanwhile gold is weaker as yields (nominal rates rose faster than inflation expectations yesterday, pushing up real rates) and the dollar rose with prices testing the Feb 4th low at $1,784, with the key 50% Fibonacci retracement and 30 November low sitting at $1,764.



In Forex, it seems like the move in yields has provided some respite for the dollar. Sterling has just come off it’s newly hit 3-year high at 1.3950 to put in a couple of near-term support markers around the 1.36860 area. Just some emerging signs of a bounce shaping up on the hourly chart. Dollar index making a fresh swing high.




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