Once inflation collapses, bond market health will return and so...

Once inflation collapses, bond market health will return and so will risk on

The sticky inflation should end soon, this will spark the bulls as the dollar will be under $100 (DXY).



Chart 1 - The US Bond market MOVE index is showing huge stress in the $31 trillion market.

Chart 2 - Bond market is a $31 trillion market and foreign buying have not kept pace with debt expansion (as the dollar is too high and the US supply of debt is too great).

Chart 3 - Of the $31 trillion US debt 28% of it must be refinanced in 2023 or $8.6 trillion. This while the FED is selling via QT $1 trillion and US deficits are expanding and the US dollar is over $100 on the DXY. WOW! If the US dollar does not come down to provide more US dollar liquidity to the world the MOVE index will explode higher and will also lead to huge equity market volatility (!VIX), or stock market crash.

Chart 4 - The Dept of Treasury can make it easier for the bond market by getting the US dollar lower. But a low US dollar is inflationary and may scare foreign holders of US debt. The FED must get US inflation down before the US dollar can be allowed to slowly sink into the 90's (DXY). The US inflation forecast is to sink hard over the next 3 months.

Chart 5 - Once inflation is contained below 4% then the US dollar will follow the model below lower, this will allow the MOVE index to calm down, and the Dept of Treasury to sell trillions of bonds. MOVE index risk removed will allow risk on to flourish.

POINT: A lower US dollar will calm the US bond market fears and allow risk on assets to shoot higher in 2023 H2 once US inflation is contained. If not the FED will have a bigger mess to clean up.

<THIS IS A PRIVATE POST FROM RTT PLUS .. readtheticker.com , Enjoy!>