Diary Week 23: The Financial Bible- When Will We Find "Financial Religion" Again

I have long mentioned that the US 2’s 5’s curve is my “Financial Bible” and when it gives a signal then it overrides all else.

The present technical picture is looking promising for a renewed topside move, but we still need to see more in terms of the levels above noted that need to be broken.

The area around minus 15 to minus 25 is pivotal in determining whether a more sustainable steepening can occur albeit that medium term picture strongly suggests it can.

Unemployment data is likely going to be critical in that respect and as per my diary piece last week we look to be an important juncture in that respect.

The historically sustainable patterns have tended to be bull flattening and accompanied by the 2-year yield inverting well in excess of 100 bp’s to the fed Funds rate.

By definition there is much work to do here with respect to seeing that picture develop-if it even does. US 2’s 5’s curve is my “Financial Bible” and when it gives a signal then it overrides all else.

While at this point that signal has yet to materialize it is worth taking a look at where we are, and what could be important.

However, I think the roadmap above clearly lays out the path to the “Financial Bible” once again becoming the “Financial Religion” of choice.

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Best

FITZ

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