DeFi_Machine

Investor and Trader | AI + Crypto + Macro 🌐
Daily market analysis. No noise.
Not financial advice.

[DeFi_Machine @DeFi_Machine]

🚨 THE US JUST SOLD $25B OF 30-YEAR BONDS AT 5.441%. THE HOUSING MARKET IS ALREADY AT ITS WORST LEVEL SINCE 2010.

Today the US Treasury sold $25B of 30-year bonds at a yield of 5.441%.

Why you should care: the 30-year bond sets the tone for long-term borrowing costs. That includes your mortgage.

Where yields are right now:
→ The 30-year auction cleared at 5.441%
→ The previous 30-year auction was at 5.618%
→ In early October the 30-year yield hit 5.68%, the highest in 24 years
→ The 10-year yield is back near 5%
→ Two days ago the 10-year auction was weak: bids fell to 2.46 times the amount offered, from 2.77 last time

Look at what long bonds did to investors.

Take TLT, the fund of US bonds with 20+ years to maturity. Over the last 5 years it is down 46%. It trades like a shitcoin in crypto.

And these same people told us crypto is the risky asset.

Now look at housing. Yesterday we got the October data:
→ Existing home sales fell to 3.75M, below the 3.85M forecast
→ That is the lowest level since 2010
→ Sales are down 5.5% in a month and 8.8% in a year
→ The median price is $416,700, still up for the 40th month in a row
→ Supply rose to 5.1 months
→ First-time buyers are only 29% of sales
→ The average mortgage rate in October was 7.33%, vs 6.25% a year ago

Prices keep rising, mortgages cost about 7%, and buyers are leaving. NAR chief economist Lawrence Yun said buying is difficult when mortgage rates are this high.

Freddie Mac shows the 30-year mortgage at 7.11%, the lowest in seven weeks. It looks like relief. But yields are back near 5%, so it may not last.

The Fed makes it worse. Markets price a December hike at about 91% for 25 bps and 9% for 50 bps.

The US owes over $40.5T and pays about $1T a year in interest. It also borrows around $2T more every year. And the Treasury just removed the words at least from its guidance on auction sizes. That gives it room to change how much it sells.

So the 30-year auction came in below October. That is not a panic. But 5.441% is still a very high price for the government to borrow, and mortgage rates follow these yields.

Housing is frozen. And bonds that were called safe now act like the riskiest assets in the room.

Over 12 years in these markets.
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[DeFi_Machine @DeFi_Machine]

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[DeFi_Machine @DeFi_Machine]

🚨 PPI HITS TODAY. THE LAST INFLATION TEST BEFORE THE FED DECIDES.

US Producer Price Index (PPI) at 13:30 UTC (8:30 AM ET).
Expected: 0.4% MoM

IF PPI > 0.4% → MARKET DUMPS
IF PPI = 0.4% → NOTHING CHANGES NEAR-TERM
IF PPI < 0.4% → MARKET PUMPS

Core PPI comes out at the same time. Expected: 0.3% MoM.

A December hike is now priced at 100%. A 25 bps hike is at 87.4%, and a 50 bps hike has already jumped to 12.6%. Another hot inflation number can push that even higher.

Over 12 years in these markets.
Do not miss the next big move. Follow me and turn notifications on.

[DeFi_Machine @DeFi_Machine]

@RealArchieLi Part of it, yes. Big deficits add demand, and that can push prices up. But inflation also depends on oil, wages and what the Fed does

[DeFi_Machine @DeFi_Machine]

🚨 THE US JUST SOLD $25B OF 30-YEAR BONDS AT 5.441%. THE HOUSING MARKET IS ALREADY AT ITS WORST LEVEL SINCE 2010.

Today the US Treasury sold $25B of 30-year bonds at a yield of 5.441%.

Why you should care: the 30-year bond sets the tone for long-term borrowing costs. That includes your mortgage.

Where yields are right now:
→ The 30-year auction cleared at 5.441%
→ The previous 30-year auction was at 5.618%
→ In early October the 30-year yield hit 5.68%, the highest in 24 years
→ The 10-year yield is back near 5%
→ Two days ago the 10-year auction was weak: bids fell to 2.46 times the amount offered, from 2.77 last time

Look at what long bonds did to investors.

Take TLT, the fund of US bonds with 20+ years to maturity. Over the last 5 years it is down 46%. It trades like a shitcoin in crypto.

And these same people told us crypto is the risky asset.

Now look at housing. Yesterday we got the October data:
→ Existing home sales fell to 3.75M, below the 3.85M forecast
→ That is the lowest level since 2010
→ Sales are down 5.5% in a month and 8.8% in a year
→ The median price is $416,700, still up for the 40th month in a row
→ Supply rose to 5.1 months
→ First-time buyers are only 29% of sales
→ The average mortgage rate in October was 7.33%, vs 6.25% a year ago

Prices keep rising, mortgages cost about 7%, and buyers are leaving. NAR chief economist Lawrence Yun said buying is difficult when mortgage rates are this high.

Freddie Mac shows the 30-year mortgage at 7.11%, the lowest in seven weeks. It looks like relief. But yields are back near 5%, so it may not last.

The Fed makes it worse. Markets price a December hike at about 91% for 25 bps and 9% for 50 bps.

The US owes over $40.5T and pays about $1T a year in interest. It also borrows around $2T more every year. And the Treasury just removed the words at least from its guidance on auction sizes. That gives it room to change how much it sells.

So the 30-year auction came in below October. That is not a panic. But 5.441% is still a very high price for the government to borrow, and mortgage rates follow these yields.

Housing is frozen. And bonds that were called safe now act like the riskiest assets in the room.

Over 12 years in these markets.
Do not miss the next big move. Follow me and turn notifications on.

[DeFi_Machine @DeFi_Machine]

@drjoemig Mostly Americans. Around 70% of the debt held by the public is domestic: the Fed, banks, funds, pensions and individuals. Foreign holders own roughly a quarter to a third

[DeFi_Machine @DeFi_Machine]

@OldinSloe Maybe, but nobody knows. Prices are still rising and rates depend on inflation and the Fed. In two years it can go either way. Not financial advice

[DeFi_Machine @DeFi_Machine]

@Anutr_Amr Thank you! You are right, BTC is far more volatile. But long US bonds are sold as the safe option, and US debt keeps growing at a crazy speed

[DeFi_Machine @DeFi_Machine]

@Gratitu12757037 We did get used to cheap money. But the issue now is both a 7% rate and record high prices at the same time

[DeFi_Machine @DeFi_Machine]

@zippysworldzp Both matter. The 10 year is the closer benchmark, the 30 year shows demand for long debt. Both are near or above 5%

[DeFi_Machine @DeFi_Machine]

The biggest updates go to Telegram first.
Join so you do not miss anything important https://t.co/8lYTcLKZUC

[DeFi_Machine @DeFi_Machine]

The biggest updates go to Telegram first.
Join so you do not miss anything important https://t.co/8lYTcLKZUC

[DeFi_Machine @DeFi_Machine]

🚨 BREAKING: JOBLESS CLAIMS RISE TO 200K VS 195K EXPECTED.

Initial jobless claims came in at 200K, above the 195K forecast. More people are filing for unemployment, and the labor market is cooling.

Bad for the economy. Good for the market. Weaker labor data gives the Fed less room to push a bigger hike. A December hike is still the base case, but the case for 50 bps gets weaker.

Over 12 years in these markets.
Do not miss the next big move. Follow me and turn notifications on.

[DeFi_Machine @DeFi_Machine]

The biggest updates go to Telegram first.
Join so you do not miss anything important https://t.co/8lYTcLKs54

[DeFi_Machine @DeFi_Machine]

🚨 JOBLESS CLAIMS HIT TODAY. ONE NUMBER CAN MOVE THE WHOLE MARKET.

US Initial Jobless Claims at 13:30 UTC (8:30 AM ET).
Expected: 195K

IF CLAIMS < 195K → MARKET DUMPS
IF CLAIMS = 195K → NOTHING CHANGES NEAR-TERM
IF CLAIMS > 195K → MARKET PUMPS

After hot CPI, the market is now pricing a December hike at 100%. A 25 bps hike is at 92.8%, and a 50 bps hike is already at 7.2%.

A strong labor market keeps the Fed on this path.

Over 12 years in these markets.
Do not miss the next big move. Follow me and turn notifications on.

[DeFi_Machine @DeFi_Machine]

@JamesHongrcp True. Strong buyers underneath, a strong dollar on top. The 4154 level will show which side wins

[DeFi_Machine @DeFi_Machine]

🚨 BUY GOLD NOW BEFORE IT IS TOO LATE. THE BREAKDOWN WAS FAKE.

Why gold can rise from here:
→ Central banks bought 321 tonnes in Q3, up 42% from last year. In the first nine months they bought 675 tonnes
→ China central bank has bought gold for 24 months in a row
→ Gold ETFs hold a record 4,275 tonnes
→ US debt keeps growing, with deficits near $2T a year
→ War risk around Iran is still on the table
→ Gold bounced back even after hot CPI and yields near 5%

The risk is a Fed hike in December. Strong yields and a strong dollar hit gold hard on Tuesday. But the biggest buyers keep buying, and they do not care about one week of data.

Technical view:
Gold is still about 27% below its January record. It fell hard, and now it has been stuck in a range for months.

The floor of that range is 3941. This level has held several times, including the last drop. Early this month gold dipped below it, but sellers could not hold the price there and it closed right back above. That is a false breakdown, and false breakdowns near a strong support often end with a bounce.

Now gold trades near the psychological 4000 level. This is the zone where I expect buyers to step in again.

The ceiling of the range is 4154. Gold got rejected there again this week. A daily close above it would break the range and open the way to 4225, then higher. I expect that break.

Not financial advice.

Over 12 years in these markets.
Do not miss the next big move. Follow me and turn notifications on.

[DeFi_Machine @DeFi_Machine]

@Haggerst1Martin Central banks do keep buying. Just remember gold is not risk free. It is still about 27% below its January high, so size your position

[DeFi_Machine @DeFi_Machine]

The biggest updates go to Telegram first.
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[DeFi_Machine @DeFi_Machine]

@Teejayh3re Agreed, the tail was small. The yield at 5% and the weaker demand are the story

[DeFi_Machine @DeFi_Machine]

🚨 THE BOND MARKET IS SCREAMING. 10-YEAR YIELD IS BACK AT 5% AND THE TREND IS UP.

Yesterday the US held its 10-year bond auction.

What just happened:
→ The US sold $42B of 10-year bonds
→ Buyers asked for 5.02% interest
→ Demand was the weakest since June
→ Inflation came in hot, and the Fed talks about more hikes

In simple words: the government has to pay more to borrow, and buyers are not rushing in. Treasury Secretary Bessent has not said anything about it yet.

On the chart, the yield broke above 4.8% a while ago, came back to test it, and held. That is how a strong uptrend works: break, retest, then up.

If it keeps rising, loans and mortgages get more expensive, and stocks and crypto lose support.

Over 12 years in these markets.
Do not miss the next big move. Follow me and turn notifications on.

[DeFi_Machine @DeFi_Machine]

The biggest updates go to Telegram first.
Join so you do not miss anything important https://t.co/8lYTcLKZUC