1. Treasury Yield Curve & Treasury Bill Curve (Near term Forward Spread)

The Treasury yield curve is a critical tool for understanding economic conditions, plotting interest rates for U.S. Treasury securities with varying maturities. Typically, the curve slopes upward, indicating that long-term bonds carry more risk and thus demand higher yields. However, when the curve inverts—meaning short-term rates are higher than long-term rates—it often signals a potential recession, as markets anticipate economic slowing or lower future interest rates.

Similarly, the Treasury bill curve focuses on short-term securities (less than one year), offering insight into liquidity and interest rate expectations over a shorter time horizon. A steep or inverted bill curve may indicate market stress or liquidity issues, often signaling that the Federal Reserve might lower rates in response to these pressures.

In this graph, users can explore both the Treasury yield curve and the Treasury bill curve using the following key data points:

• DGS10, DGS3, DGS1: These represent the 10-year, 3-year, and 1-year Treasury bonds, respectively. These data points highlight the longer end of the yield curve and are typically used to assess long-term economic growth and inflation expectations.
• DTB1YR, DTB6, DTB3: These represent the 1-year, 6-month, and 3-month Treasury bills, which provide a snapshot of short-term interest rate expectations and liquidity conditions.

By analyzing these data points, users can see how the curve shifts over time, and whether it’s signaling stability (upward sloping) or market stress (inverted). When the yield on short-term bills (like DTB3) exceeds that of long-term bonds (like DGS10), it may indicate a significant shift in investor sentiment and economic expectations.

2. VIX (Volatility Index)

The VIX is a real-time measure of market expectations for volatility, often referred to as the “fear gauge.” High VIX levels suggest market uncertainty or fear, while low levels indicate market calm. Investors use the VIX to assess potential price fluctuations in the stock market, which can affect investment decisions across different asset classes. Historically, vix over 30 signals a high volatility.

3. Credit Spreads & US Dollar Index (DXY)

Credit spreads refer to the difference in yield between corporate bonds and risk-free government bonds (such as Treasuries). A widening spread indicates increased default risk or economic uncertainty, potentially signaling losses in corporate bonds and equities. Conversely, a tightening spread suggests higher investor confidence in corporate creditworthiness.

Credit rates include various benchmarks such as LIBOR, commercial paper rates, certificates of deposit, and Ameribor. Typically, for a given maturity of 3 months, we subtract the 3-month credit risk rate from the 3-month Treasury bill rate to assess the credit spread. Historically, credit spread over 1 is considered dangerous.

The DXY (US Dollar Index) measures the value of the U.S. dollar relative to a basket of foreign currencies. A strong dollar can hurt U.S. exporters but benefit importers, while a weak dollar tends to drive inflation by increasing the cost of imports. This can have significant implications for global investments, especially for commodities priced in dollars like gold and oil. If the DXY percentage change from a year ago is negative, it typically correlates with high commodity prices like gold and silver.

4. Real Rates

Real interest rates adjust nominal interest rates for inflation, offering a clearer view of the true cost of borrowing. Positive real rates, where interest rates outpace inflation, encourage saving, while negative real rates incentivize borrowing and investing. Investors closely monitor real rates as they influence capital flows into fixed-income assets like bonds and inflation-sensitive investments such as gold. Historically, negative real rates signal trouble for the bond market.

To measure inflation, economists often refer to two forms of the Consumer Price Index (CPI):

• Headline CPI: This is the overall measure of inflation, reflecting price changes in a broad basket of goods and services. It includes more volatile components like food and energy prices.
• Sticky CPI: This subset of CPI focuses on prices that tend to change more slowly over time, such as rent or medical services. Sticky CPI is considered a more reliable measure of underlying inflation trends because it excludes the more volatile, short-term price movements found in the broader CPI.

While the normal CPI can fluctuate significantly due to short-term shocks like energy price swings, the Sticky CPI provides a clearer picture of long-term inflation trends. Both are important for investors, but sticky inflation can have a more lasting impact on real interest rates and the broader economy. Historically, negative real rates are a bad signal for the bond market.

5. Gold Fundamental Indicator: M2 Money Supply & Gold

The Gold fundamental indicator is a unique way to evaluate whether gold is overvalued or undervalued. When the ratio approaches zero, it signals that gold might be overvalued (gold prices are high relative to money supply). On the other hand, when the ratio is near 2, gold is likely undervalued. This metric can guide investors in timing their exposure to precious metals, especially during periods of monetary expansion or contraction.

Fundamental = M2/ (Gold Price * 10000000000)