When it comes to flight to safety products, the 30-year Treasury bond is the top of the list. Gold has its flight to safety type moments, but gold is a traditional hedge against inflation type product.
On Thursday morning, April Gold traded $1240.60. Over the next twenty hours, gold traded $35 higher at $1275.90. I contested that the move in gold was an early indication of a better than anticipated Non-Farm Payroll. I held a short 30-year short bond futures position through the number. Estimates were for +195,000. The actual number was +242,000.
It is lunchtime, and the bond market is trading almost two full points lower. I am still short with every intention of running this position well into next week.
As I sit here this Friday afternoon, they say the markets are 6-9 months forward-looking. I think the breakout higher in the gold market this week
is an early indication of inflation on the horizon.
And what I know about the bond market
is this. The bond market’s #1 nemesis is inflation. Keep an eye on the gold market. The higher it goes, the lower the bond markets go.
We all know markets go down a lot faster than they go up. The bond market in 2016 has rallied from a low or 15309 to a high of 17026. The rally lasted a total of six weeks. The bond market topped out on February 11, 2016. Three weeks later this market is already trading below it’s 50% retracement. I think the remainder of Friday we will see the 30-year bond take out their intraday lows at 16120 and fall further. And then next week is when they hammer it lower. The bigger they are, the harder they fall.