Two central banks are selling US Treasuries at the same time.
Blake Young recorded this afternoon’s video on how to tell which one is doing it on any given day, and it takes two charts.
Put bond prices next to the yen. Falling bonds alongside a strengthening yen means the Bank of Japan is selling Treasuries to raise dollars and defend its currency.
When bonds fall while the dollar strengthens instead, the selling is coming from inside the US. Heavy volume on top of that points at the Federal Reserve.
He walked back through the last two weeks and showed both patterns. A two-day spike in the yen against falling bonds was Japan. Four days of heavy volume with a strengthening dollar was something else entirely.
Today it was the second one.
None of that stays in the bond market. More selling pushes prices down, which pushes borrowing costs up, and higher borrowing costs squeeze every company carrying leverage.
Every sector was negative today except energy.
So Blake spent the rest of the video on where to go instead.
Here is what he covered:
→ The German ETF that broke out on 150% volume and still pays 3.8%, plus the level he wants before adding to it
→ Mexico, where the peso is strong and the economy is running, and the price he would buy the bounce at
→ Why he’s avoiding Brazil for now
→ The Taiwan ETF that already doubled off the April low, and the target he has on the next leg
→ Australia supplies 10% of the world’s metals and mining. He walked through the breakout he’s waiting on, the level that confirms it, and where he’d rather buy if it pulls back instead.
PLUS he gave the one filter to use if you are staying in US stocks, which has nothing to do with sector or chart pattern.
One line from the video is worth keeping. Don’t chase any of these for the dividend, because you have six months to time the entry and the dividend is a bonus, not the trade.
