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After a quiet weekend, Alex is utilizing his full toolkit to determine where this volatile market is headed next. He is breaking down potential setups using The Wave and revealing the specific stocks on his radar for the week ahead on the show today [tap to join us for Profit Panel]
Something odd’s been happening in the Treasury market, and I want to walk you through it because it doesn’t add up the way it should.
Bond prices have been climbing. The 30-year Treasury bond rallied from 109 up to 113, which tells you one thing straight away — when bond prices go up, interest rates go down.
Here’s how that works if you’re not familiar. Say I own a bond yielding 4% and interest rates climb to 6%. Who wants my bond? Nobody. So the price drops.
Flip it around. If I’m holding a 6% bond and rates fall to 4%, everybody wants mine. Price goes up.
But here’s where it gets strange.
The Dollar Shouldn’t Be Doing This
Bond prices went up, interest rates went down and yet the dollar rallied. The dollar index moved from around 97.5 and is now sitting at 100.60 — up 76 cents in a single day.
That’s not supposed to happen. When rates drop, the dollar typically weakens because your currency becomes less attractive. Yet here we are with the dollar charging higher while rates fall.
And get this — we just had a Fed meeting where Kevin Warsh sounded hawkish, almost like he might raise rates, but bonds still went up. That disconnect tells me the bond market isn’t buying what the Fed’s selling.
Part of it comes back to crude oil. When it’s sitting at $85 or $90 a barrel, it puts pressure on everything. High crude feeds inflation, and inflation keeps the Fed on edge.
But crude has fallen from around $90 to $75, and that drop signals to bond traders that inflation may not be the threat it was. If that pressure fades, so does the case for tighter rates.
Why I’m Paying Attention
Bond traders are some of the smartest traders out there. I’ve never met someone who worked the bond pit who wasn’t halfway brilliant.
So when they position themselves against the Fed’s tone, I listen. Their read on the market has a way of proving right sooner or later.
Right now, gold is getting pushed down purely because of dollar strength, even though falling rates normally give gold room to run.
And gold can be fickle — sometimes it latches onto crude, sometimes bonds, sometimes the dollar and sometimes it just moves on its own. That makes this moment even more unusual because the signals aren’t lining up the way they typically do.
You don’t have to trade something to watch it, and watching tells you what interest rates are really doing.
The message from the bond market is clear — the Fed is probably not going to raise rates, no matter how tough it sounds. And that matters for every trade you’re making right now.
Geof Smith
Geof Smith Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. My Next Move If Rate Hikes Return This Summer
It seems Fed Chair Warsh is looking to kick off a rate hike cycle over the coming months. I won’t be surprised…
In fact, I’ll be playing the same move on the same asset that’s handed me 20 wins in a row.
Disclaimer: We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading past performance is not indicative of future results. Since LIVE trading began on 9/18/25, there have been 20 winners, continuing the undefeated streak. In LIVE trading, the average return has been 32.05% and the average hold time has been 16 days.
