Warning: The Financial System Just Made a Tectonic Shift

Perhaps the best tool for anticipating major shifts in the financial system is the ratio between Treasury Inflation Protected Securities (TIPS): and the Long-term Treasuries ETF (TLT).

In its simplest form, when this ratio rallies, the financial system is anticipating IN-flation. When this ratio falls, the financial system is anticipating DE-flation.

Below is a 10 year chart for this ratio. And as you can see, it has just broke out of a 10-year deflationary channel.

TIP:TLT ratio breaks out

This is an absolute game-changer.

If this breakout continues, then we have a confirmed shift in the entire financial system away from fearing deflation to expecting inflation.

The impact this will have on all asset classes will be massive. And it’s about to blow up the Everything Bubble.

Bonds trade based on inflation.

If inflation rises, so do bond yields.

When bond yields Rise, bond prices FALL.

And when bond prices FALL, the massive debt bubble begins to burst.

On that note, the yield on the most important bond in the world: the 10-Year Treasury, has already broken above its 20-year trendline.

US Treasury Yields Breaking Out

The US is not alone… the yield on 10-Year German Bunds has also broken its downtrend.

German Bund Yields Breaking Out

Even Japan’s sovereign bonds are coming into the “inflationary” crosshairs with yields on the 10-Year Japanese Government Bond just beginning to break about their long-term downtrend.

Japanese Bond Yields Breaking Out

Globally the world has added over $60 trillion in debt since 2007… and all of this was based on interest rates that were close to or even below ZERO.

All of this is at risk of blowing up courtesy of this spike inflation. And it's going to collapse most asset classes in ways we haven't seen since 2008.

On that note, we are putting together an Executive Summary outlining all of these issues as well as what’s in terms of Fed Policy when The Everything Bubble bursts.

It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed, you can join the wait-list here:


Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research



any_mouse Tue, 01/23/2018 - 14:09 Permalink

Dividend yield goes down as share price moves up.

So what?

Somehow with Bonds it is a very bad thing. With Equities it is not worth mentioning.

The problem is current profit margins are stripped to the bone.

Rising cost of debt service with the massive credit bubble is the issue.

When current Debt cannot be Serviced by Revenues or by More Debt that is The End, My Friend.

GreatUncle any_mouse Wed, 01/24/2018 - 08:25 Permalink

Turning Japanese ... not the end though they will CTRL-P and use a totalitarian police state to enforce it.

The final rate will not be normal or ZIRP neither.

Stand in the future and watch the future being stolen and you would know the future is being NIRPed. When the size of the Jewish controlled banking system reaches such a level it has go to NIRP as it overwhelms by size anything that is not NIRP.

This has been done many times before and the normal out is to generate a war and they are attempting to do it again.

Mandrake system is Keynes, they have used it for a long time ...


In reply to by any_mouse

Enrabard Tue, 01/23/2018 - 14:25 Permalink

When you print you get inflaction and that's clear as day. You never know how long it will take it to come, months or years. But it always comes...

Aeonios Tue, 01/23/2018 - 15:38 Permalink

Phoenix capital still does not know how to technical analysis. "Channels" are supposed to be parallel lines around the best fit +/- STD. Not that technical analysis has any real validity or anything anyway.

REAL MONEY Tue, 01/23/2018 - 16:10 Permalink

In order to keep the bond market from imploding, the Federal reserve is buying up these crap bonds.  The more they do this the dollar weakens.  The dollar lost 15% of its value in a year going from 104 down to 90.  If bonds are only paying 2.6 % and the dollar continues to lose value at even 10% which is conservative annually we are heavily into negative interest rates in real terms.  Inflation is here and it will accelerate quickly.  The only way they can protect the dollar is to not  buy bonds and let interest rates rise which will cause a stock market beating and economic chaos.  They Fed is trapped and this shit is going to get real very quickly.  We have global rejection of the dollar happening daily because the Chinese, Russians, most Asian countries, half the Arab countries and Iran/ Pakistan, India, all moving away from the dollar.  Yes the Stock market will continue to move higher but the dollar will move lower faster going forward.  When Zimbabwe experience hyper inflation they also had the highest performing stock market in percentage terms

InnVestuhrr Tue, 01/23/2018 - 16:13 Permalink




Bluntly Put Tue, 01/23/2018 - 18:33 Permalink

"If this breakout continues, then we have a confirmed shift in the entire financial system away from fearing deflation to expecting inflation."

So I'm confused if bond prices fall and stocks fall then we'd be back to deflation right?

ElTerco Wed, 01/24/2018 - 01:14 Permalink

When yields are near zero, isn't a lot of noise expected in the data?

At some point, things are forced to move sideways, and we seem to be reaching that point.