Even the Groundhog is Tired of This Market

To say that this market has been stuck in a redundant feedback loop which would make Groundhog Day (1993) blush would be the understatement of the century at this point.

In particular, each and every single day (and overnight) the tape is bombarded with headlines from Trump, the White House, and various Fed-heads attempting to assuage any fears regarding oil, rates, Iran, AI revenue concerns, etc.. Those headlines are still obviously having an effect on markets, with the last few days featuring some voting members of the FOMC soothing markets (at least superficially) by suggesting that there is no rush to raise rates again at the October 28th Fed meeting. 

That said, I remain skeptical that whispering magic words will work as easily as it has in the past for The Fed (namely during the post-2008 Bernanke, Yellen, and then Powell years), at least as far as the long end of the curve is concerned.

Specifically, today's initial fade in rates and bounce in Treasuries brought out droves of bottom callers again for TLT (ETF for Treasuries, essentially inverse to rates on the long end). We have seen bond bulls actually become more emboldened into each downdraft in Treasuries, rather than voice genuine fear and panic.

From a contrarian perspective, one would almost prefer to see fear and panic in order to arrive at a true, actionable bottom for more than a quick bounce. In other words, sentiment in the bond market still seems remarkably complacent and, perhaps, ripe for a further washout in Treasuries. 

In fact, as I write this I see that TLT is back in the red, seen on the updated daily chart, below. TLT is "riding along" its lower Bollinger Band steeply and slightly below it today. However, it is far from a dramatic undershoot in terms of a clear gap below the lower Band, which again from a contrarian perspective would get us closer to a tactical bottom.

Tomorrow morning's jobs report sets up a dilemma of sorts for the White House and GOP: If it comes in hot then it may re-open the door to a hike sooner than later. If it comes in cold it raises stagflation concerns headed into the midterms. Of course, the tinfoil hats will argue a goldilocks number is rigged. 

But my focus will be, as always, on the action in the long end of the curve, as I still think the bond market is slowly but surely seizing control over politicians and central bankers.