Cushing inventory bottoms signal long-term bond rally
Historically, when crude oil inventories at the Cushing storage hub hit minimum operational levels ('tank bottoms') and begin to refill, long-term Treasury bond prices tend to rise as yields fall.
The argument
The guest argued that mapping Cushing inventory levels against long-term Treasury proxies reveals a highly reliable historical correlation. As inventories inevitably begin to rebuild from depressed levels, it serves as a low-risk macro signal for a rally in long-term bonds.
The thesis, stress-tested
✓ What validates it
- ✓A sustained upward trend in Cushing physical crude inventory data
- ✓A corresponding drop in long-term Treasury yields
▸ Risks discussed
- ▸Persistent inflation or tight monetary policy could keep interest rates elevated despite inventory builds
- ▸Structural changes in pipeline flows could alter the historical relationship between Cushing levels and macro yields
Hear it yourself
"There's a there we're at the minimum levels here. And then go through and overlay, like, long term interest rates or long term bonds. You can use, like, the TLT great proxy or long term, treasury ETF and map it right alongside where those bottoms and tank inventories happen."
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