Nasdaq 100 Continues to Advance for a Third Day
By: Eddy Peng Dec 8, 2017
Chart 1: Total balance sheet of Fed, ECB, BOJ and PBOC
However, a high liquidity did not push the inflation rate this time as what it normally did, even in the context that unemployment situation has already recovered to the pre-crisis level. Recently, the Fed consisted its rate hike as a protection from overheated economy. While at this time, it is surprising to find that the U.S. Treasury yield curve is flattest since 2007. The difference between the yields on two-year Treasury notes and 10-year Treasury bonds dropped below 55 basis points in afternoon trading in New York. While the 10-year Treasury was little changed, prices of two-year notes fell for the second consecutive day.
Chart 2: Difference between the yield on the 10- and 2-year Treasury
The narrowing gap between long-term and short-term Treasury yield shows a potential economic downturn, which should be more cautious by investors. The broader outlook for the index is still developing in the ascending price channel which started early this year. While in the near term, especially after finding support from the Kijun Sen on Monday and now already standing above the Tenkan Sen, it tends to remain stable and gradually climb for a certain level.
Chart 3: NAS100 Daily
