No...I do not think that is an overstatement.
The 4.12% level on the US 2-year yield is the proverbial "Line in the sand" in my view and the chart below only emphasises that.
Look at the amazing similarities with 2007 and in particular look when the equivalent pivot back then at 4.45% was broken for the first time.
That was on Friday 3rd August 2007- 17 years ago (long term 17-year economic cycle) and we also sustained below it on a weekly close.
That happened when NFP missed on the downside printing 92k and the prior month was revised down by 53k. The unemployment rate also rose 1/10th. (NFP also missed on the same print in 2000 a year that we have been focused on for the Equity market. So right now, we have a compendium of history incorporating 2007 for the bond market and 2000 for the equity market)
So, today's employment report has now taken on even greater significance
We ended up going about 10 bp's lower before a choppy bounce but ended the month (August 2007) materially lower at amazingly 4.13%
We inverted 140 bp's + to the Fed Funds rate in the first week of Sept and the Fed cut 50 bp's on the 18th Sept exactly 17 years to the day back from this month's meeting.
One small question we could ask is whether 4.10% is 140 bp's inversion (upper band) or whether that is 3.85% (based off lower band)
That level of inversion just before the first Fed cut has only occurred 3 times in the last 40 years- in 1989,2000 and 2006 and those periods all ended badly
To me a weekly close below 4.12% signals that "it is all over"
The Fed has once again missed the boat, overstayed its welcome and got caught behind the curve. They will have to do more that they thought and possibly start more aggressively (50 bp's in Sept like in Sept 2007 and Jan 2001 before that)
Levels to watch after 4.12% are 3.955% (76.4% of Mar-oct 2023 move higher), 3.85% (140 bp's below lower Fed Funds band) and 3.55% (Mar 2023 low). IF that latter level goes then sub 3% comes into play
Never has one data point been such a small step for man but such a big step for mankind.
In less than an hour the "Die will be Cast"
