05Dec1:14 pmEST

The Big Picture is Still There

We have some slow-drip type of price action taking place in the early segment of holiday trading, as the indices flounder and commodities are correcting while the Dollar and Treasuries rise. 

On that note, I am still biding my time before adding back to a short in Treasuries (and thus a bet on higher rates, which was my biggest position by size for most of 2023 until last month). The TLT daily chart, below, shows us that Treasuries could easily push up to the 200-day moving average before I would more seriously look to fade this counter-trend bounce as rates dip--And that is precisely what this is, a counter-trend move, despite how many are complacently assuming a bonafide bottom in Treasuries going forward. 

Overall, the tension lurking below the surface this year is the same issue which has been building all year: The market is way too far ahead of itself in pricing in Fed rate cuts, and is assuming inflation is done with no need for any further hikes, regardless of how tough Powell tries to talk. 

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