Fade the US Yield Surge on LPPL Exhaustion Signals, Excessive Stagflation Fears - Weekly Wrap

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Fade the US yield surge on LPPL exhaustion signals, excessive stagflation fears

• Our LPPL (Log-Periodic Power Law) model suggests the fixed income sell-off is becoming disorderly and nearing tactical exhaustion.
• We now have an active LPPL Buy Signal (Crash Exhaustion) on the US 5 Year Note Future (i.e. bond prices are set to rise and yields are set to fall).
• This is after a historic rally for US equities that has driven the short-term stock-bond ratio to very high levels. An overbought equity markets may need a bit of time to digest the semiconductor rally.
• Going long the 5y note future would benefit from any short-term equity market drawdowns.

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