Poll of the Day Recap: 63% Voted The 10-Year Treasury Yield is Headed Lower

All year long, consensus has been consistently wrong on bonds, arguing that rates were headed higher. Hedgeye has been on the other side of that trade. We have been advising our subscribers to buy bonds, that U.S. growth was slowing, and that yields were going to continue falling as a result.


In the video below CEO Keith McCullough discusses the positive correlation between the 10-Year Treasury yield and the direction of U.S. growth and how it is one of the key influences which will cause the 10-Year Treasury yield to surprise to the downside in Q3.



We wanted to know what you thought. Is the 10-Year Treasury yield heading higher or lower in Q3?


At the time of this post, 63% voted LOWER, 37% voted HIGHER.


Those who voted the 10-Year Treasury yield is headed LOWER reasoned:

  • U.S. economy's growth stocks have peaked.  2014 has been and continues to be strong for slow-growth stocks/entities/bonds for the foreseeable future.  Given the lack of substantive U.S. growth (sustained 3.5%+), monetary policy will continue to produce inflating costs in stuff and asset prices until it can't.  Currently, the Fed still can, so bonds, commodities, and slow-growth entities is where the market is positioning in this environment.
  • The world still sees the U.S. treasury’s market as the "best house in a bad neighborhood" and they believe the Fed will ultimately give in on the Taper.
  • That is what the bond market is telling us currently.  So unless, the Fed changes course in the next 90 days, the yield should remain flat to lower.
  • If last Thursday's job number can't get the 10 yr yield excited, I don't know what will.


Voters who said the 10-Year Treasury yield is headed HIGHER had this to say:

  • Inflation 

Cartoon of the Day: It's Different This Time

Takeaway: We'll say it again: At first risk happens slowly, then all at once.

Cartoon of the Day: It's Different This Time - Bull and bear cartoon 7.08.2014

VIDEO | McCullough: 3 Reasons Why Stocks Are Getting Whacked

Hedgeye CEO Keith McCullough explains the reasons why stocks have fallen during the last two sessions and why most hedge funds were not positioned for this decline.

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Wal-Mart CEO's Not-So-Good News for U.S. Consumers: 'It's Not Getting Any Better'

Takeaway: When Wal-Mart's CEO talks about the US consumer, we listen.

Editor's note: This is a brief excerpt from Hedgeye retail sector head Brian McGough's morning research. Click here for more information on subscribing to Hedgeye.


U.S. job rebound not spurring spending, Wal-Mart's Simon says


Wal-Mart CEO's Not-So-Good News for U.S. Consumers: 'It's Not Getting Any Better' - walmart

  • "In an interview with Reuters, Bill Simon, the president and chief executive officer of Wal-Mart U.S., said the improving employment picture had so far failed to raise cash register receipts at the retailer's U.S. stores. 'It's really hard to see in our business today … that it's gotten any better,' he said."
  • “'We’ve reached a point where it’s not getting any better but it’s not getting any worse – at least for the middle (class) and down.'"
  • "Simon said Wal-Mart's lower- and middle-income customers appeared to have made a number of changes to their shopping habits that were 'not the best thing in the world for a retailer,' splurging on events like back to school and holidays like the Fourth of July, but pulling back spending in between. 'They’re adapting to what has been a difficult macroeconomic situation,' he said."

Read the whole article at Reuters.


Takeaway: Nothing earth shattering here, but when Wal-Mart (WMT) talks about the US consumer we listen. The company has over 30 petabytes of shopper data to draw conclusions from. All in, this is not a ringing endorsement for the median American consumer. And it doesn’t bode well for our two least liked names in this space - Target (TGT) and Kohl's (KSS).


When we looked at shopping intent over the last 3 quarters, WMT was the only retailer in the space with positive readings, so if it is still feeling the macro heat then that pain is being felt across the rest of the industry.

Reality Check: The S&P 500 Hasn’t Had a +/- 1% Move in 55 Trading Days

Takeaway: At first risk happens slowly, then all at once.

Click image to enlarge.


Reality Check: The S&P 500 Hasn’t Had a +/- 1% Move in 55 Trading Days - Streak

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