Get started

Interestrates

GBPUSD analysis. Key levels! GBPUSD reached 1,40. At the same time EURUSD is at 1,20 After the FED interest rate decision yesterday, we saw a stronger USD and a sharp drop on both these pairs, which took price to their support levels. Right now those moves could continue to the next possible levels, but we expect it to end and therefore price will reverse and go back to the upside. We suggest that you don't enter short but look for a trend reversal on the lower timeframes with a long bias. Follow us for more opportunities!
Long
by ForexTrendline
9
EURUSD analysis before FEDToday is the most important day of the month for the future movement on EURUSD. The interest rate decision and the comments during the press conference will couse big moves. It's clear to everyone that there won't be changes in the interest rates but comments about any possible future changes will affect price immediately. Our expectations: a downside push in the zone around the 1,20 level and then an upside move will begin. Follow us for more opportunities! Good luck!
Long
by ForexTrendline
5
10 Yr Yields About to Break?When looking at the 10 Yr Yield chart, the price is currently sitting at a key area of support. A breakdown of that support could lead to a massive move to the downside. This would be enough to send equities and commodities soaring. A bounce from here should take yields right up to two big areas of resistance - first, the recent high around 1.75 and long term resistance at ~1.98-2.00. A breakout of those levels, although highly unlikely, would signal the market actually pricing in rate hikes in the near future. If that were to happen, I'm also assuming equities and commodities would not like that one bit. Another probable scenario is a temporary bounce up towards the resistance areas, followed by a rejection of those levels. Then, the most logical place for price to move would be down, down, down. Don't underestimate how important this move in the TVC:US10Y will be for equities and commodities, regardless of which direction it will be. The featured content is intended to be used for informational purposes only. Everything shared here is my own opinion. It is very important to do your own analysis before making any investment based on your own personal circumstances. Please subscribe to our channel if you like what you are seeing!
TVC:US10Y
by jstrasburger
US10Y Direction Will Influence NAS100The US10Y started trending up in February. This adversely affected the NAS100 as growth stocks started to feel the pinch of higher discount rates. The 10-Yr reached a high of around 1.75% at the end of March and then began to pull back (red vertical). This supported the NAS100 and growth stocks in general at first, but yields started to drift and the NAS100 followed. However, from 3rd June (blue horizontal), yields started to decline. Again this has supported the NAS100, which charted an all-time high yesterday. Currently, the correlation coefficient is sitting at -0.88, which shows a strong inverse relationship. Tomorrow's Fed decision is likely to have a large influence on the direction of the 10-Yr and as such growth stocks, through their discount rate adjustment.
TVC:US10Y
by FXCM
1
USDCAD analysis. Important news! Today Bank of Canada will publish their interest rate decision. We don't expect any changes, but there will be moves in the market! Last time in April, the interest rate remained unchanged, however there was a 150 pips move in the first hour! That's why we should expect moves today. USDCAD is currently trading sideways, which is very likely to end today. Entry options: Conservative - wait for the news to come out and once you see a clear breakout, then get involved in the direction of the breakout. Agressive - look for an entry before the news on a lower timeframe. Proper risk management and using stop loss is mandatory! Most probably we will see a downside continuation. Good luck!
by ForexTrendline
2
US Treasury Yield Curve and Inversions.This chart shows three times during the past three decades in which the yield curve inverts. An inversion is when the rate of a shorter term debt security is higher than the rate of a longer term debt security. This is identified on this chart in 2000, 2006, 2019. Treasury Debt Securities: Bill; less than one year to maturity at issue. Note; greater than one year but less than 10 years to maturity at issue. Bond; greater than 10 years to maturity at issue. In 2000 the yield of the 3 month US Treasury Bill was about 6.3% while the yields of both the 5 year Note and 30 year Bond were around 5.8%. In 2006 the yield of the 3 month US Treasury Bill was about 5.1% while the yields of both the 5 year Note and 30 year Bond were around 4.9%. In 2019 the yield of the 3 month US Treasury Bill was about 2.3% while the yield of the 2 year Note was around 1.8%.
TVC:US30YEducation
by ThrivingProject
1
Are bonds driving the ship?Liquidity is the whole ballgame As I've watched the market rip higher amid massive federal deficits, extremely low taxes, and extremely low interest rates over the last several years, I've experienced a growing conviction that "liquidity is the whole ballgame" where markets are concerned. You can chart stock market performance largely as a function of how "tight" or "easy" monetary policy is. Even the US badly losing a trade war to China and then getting locked down by a global pandemic couldn't keep this market down. Liquidity is controlled by the Fed and bond market, and inflation is the limit To a great extent, monetary policy is controlled by the Fed, and the Fed's mandate is to control inflation. So investors have definitely reacted negatively to rising inflation and Fed talk of eventually "tapering" asset purchases and raising interest rates. To be sure, the private market ultimately sets bond rates. Bond investors may demand higher interest rates if they see inflation coming, and lenders may demand higher interest rates on mortgages and consumer credit, too. But the private bond and lending market responds to signals from the Fed, so Fed policy and bond investor behavior go hand in hand. The bond market tries to anticipate the Fed and can be viewed as a leading indicator of what the Fed will do. Rising rates in early 2021 were bad for growth stocks and good for financials In the first months of 2021, bond rates rose sharply as inflation expectations rose and investor demand for low-interest bonds dried up. Technology stocks, especially unprofitable growth stocks like those held by Cathie Wood's ARK funds, sold off along with bonds. (Higher interest rates make it harder for unprofitable growth companies to raise capital through low-interest debt.) Meanwhile, financial stocks and highly profitable "cash cows" outperformed. (These companies are net lenders rather than net borrowers, so they tend to benefit from higher yields.) Basically, if you think the Fed will continue to pump liquidity into the system forever, you should bet on cash flow-negative bubble stocks like Cathie does. If you think liquidity's days are numbered, you should short ARKK and go long on Goldman Sachs. Liquidity rebounded in mid-March, but can it last? The bond selloff bottomed March 18, and since then, both bonds and growth stocks have made modest recoveries as yields eased. Partly this is just regression to the mean, and partly it may be that bond investors believed the Federal Reserve's narrative that inflation is "transitory" and that we won't need to taper asset purchases or raise interest rates until 2023. But inflation expectations have continued rising, and official inflation data have lately been surprising to the upside. The Citi inflation surprise index is at its highest level in 13 years. The dollar has been weakening, and foreign purchases of US treasuries have almost entirely dried up. The Russian government announced today that it will sell its reserves of US dollars and replace them with other nations' currencies. The dollar reserve system that made the last decade of "easy" monetary policy possible looks to be at risk. And the Fed is sluggishly beginning to respond to these warning signs. Regional Fed presidents Robert Steven Kaplan and Patrick Harker have been vocally calling for the Fed to start thinking about "tapering" bond purchases, and yesterday the Fed announced that it is, in fact, winding down one pandemic program to purchase corporate bonds. (But this is not a signal about tapering, they insisted to the press!) For now, Fed funds rate futures continue to price the odds of an interest rate hike in 2021 at less than 10%. But in April alone we saw month-over-month inflation of 0.8%, bringing the trailing 12 months' inflation rate to 4.2%. And 0.6% seems to be the consensus for the next two months, which would bring July's trailing 12 months' inflation rate to 4.9%. The Fed probably can't ignore 5% inflation for long. (And really it's a 7-10% inflation rate right now if you annualize the rates for March-July instead of adding up the rates for the trailing 12 months.) The technicals are flashing warning signs Although bonds have rallied since March 18, they hit a ceiling in the $140.50 - $141 range. They've also been unable to hold above their 50-day EMA or their 200-week EMA. Presently TLT is below all its major moving averages not only on the hourly chart, as shown above, but also on the weekly and daily charts: Note that TLT is still within the green triangle, but it is fast approaching a decision point. Also note the bearish hidden divergence on the RSI, which would tend to favor a downward breakout from the triangle. Recent strong economic data, including this morning's blowout payroll report, paint a picture of a strong economy and may lead to faster tapering by the Fed. That's one reason that both stocks and bonds sold off today despite the positive economic data. Sentiment is bearish I'm not the only one feeling bearish on bonds right now. The put/call ratio on TLT, is 1.8, significantly worse than the 30-day average of 1.4. And investors seem to expect the indices to sell off as well. SPY has a 1.9 put/call ratio, in line with the 30-day average, and QQQ has a 2.0 put/call ratio, only slightly better than the 30-day average of 2.1. The put/call ratio for ARKK has recently improved, down to 1.5 from the 30-day average of 1.8. But if I'm right that a bond sell-off would disproportionately affect growth stocks, then ARKK's put/call ratio may turn bearish again if TLT breaches the bottom of this triangle. ARKK's price action the last few days certainly doesn't look good:
Editors' picks
NASDAQ:TLTShort
by ChristopherCarrollSmith
82
US dollar index facing key support line!The DXY has broken down from of a bearish ascending wedge. Looking to test the .618 Fib retracement level. If we break below this, the next support level at the .786 Fib level at about $81.5. If this happens, Equities will likely remain in an uptrend, particularly commodities. Gold is normally in this category, but due to central bank manipulation I would say it is in its own category (silver also). Real rates are key to watch to determine which way gold is heading. At the moment, Real rates are negative. Should we see higher CPI (inflation) prints and nominal rates stay around current levels, real rates will continue to head lower. Not investment advice* Do your own research ! Happy trading
TVC:DXYShort
by Joelthebowl
Potential Reverse Head and Shoulders Pattern SpottedWhile the markets are looking long overdue for a pullback, the dollar, in direct contradiction (as it should be!) looks to be ready to move up (strengthen). A potential reverse Head and Shoulders (H&S) pattern appears like it could be forming on the daily. This coincides with the theory and timeframe of my prediction regarding The Fed's upcoming meeting in June, interest rate increase, and the DJI (see link to related ideas below).
TVC:DXYLong
by stewdamus
3
Breakout and reversal on GBPNZDIn April we saw a clear downtrend on GBPNZD. The pair couldn't make another lower low and it broke out. This gives us a trend reversal opportunities. Today is a very important day for the GBP due to BOE interest rate decision as well as the elections in Scotland. That means we will see big moves! If you don't want to take on any risk, then wait for a higher high! But if you're looking for a greater risk to reward ratio, then make sure to check out this opportunity.
Long
by ForexTrendline
Think differently about inflation to recognize opportunitiesCredit to Lyn Alden on Twitter for the idea for this chart. As she quipped when she posted a similar chart, inflation is low... as long as you don't buy food, or a house, or commodities. CPI inflation has been unusually low for the last decade From 2010 to 2019, CPI (the Consumer Price Index, a popular measure of inflation) averaged 1.73%. That's a historically low inflation rate. Since 1913, CPI inflation has averaged about 3.1% per year. The Federal Reserve's target inflation rate is about 2% per year. The last decade's low CPI inflation rate puzzled economists and gave rise to a new economic theory called "Modern Monetary Theory," which argued that the US government needed to increase its deficit spending in order to hit its 2% inflation target. According to MMT, the limit on government spending is inflation, not revenue. In times of crisis, CPI inflation can get much higher During certain historical periods-- usually periods of crisis, such as wartime-- CPI inflation got much higher. In the WWI / Spanish Flu decade it averaged nearly 10%, and in the WWII decade it averaged nearly 5%. In the Vietnam War decade the average exceeded 7%. High inflation during times of national crisis seems to result from "loose" monetary policy and enormous deficit spending. When inflation gets this high, the Central Bank typically has to "tighten" monetary policy in order to control it. That means raising taxes, raising interest rates, and reducing deficit spending. "Tight" monetary policy can cause prolonged recessions. It took over a decade of high interest rates to get Vietnam War-era inflation under control. Could the massive deficit spending and loose monetary policy of the Covid-19 crisis usher in a new era of high CPI? Presently, economists don't expect it. The Federal Reserve forecasts about 2.5% inflation this year, to fall to 2% in 2022. But the Fed also doesn't have good models of inflation, so to some extent these projections are a shot in the dark. Is CPI a broken measure? CPI includes several components, including food, energy, apparel, and rent. Several factors have conspired to keep CPI low. Thanks to technological changes such as automation and renewables, apparel and energy costs have trended downward over the last couple decades. And rents are kept artificially low in many areas of the country by rent controls that limit how much landlords can increase rent. Purchase prices for single-family homes are not included in CPI, and purchase prices have grown much faster than rents: imageproxy.themaven.net Obviously CPI also doesn't include stocks, bonds, and other investment assets, which have inflated to pretty astronomical levels. It also doesn't include the cost of healthcare, which grew about 3.7% per year over the last decade and are projected to grow nearly 5% per year over the next decade. So there's a case to be made that "real" inflation in the economy may actually be higher than the CPI numbers suggest. Ben Bernanke once said that "inflation is always a monetary phenomenon." If so, then CPI isn't a very good measure of inflation, because CPI is influenced by all sorts of non-monetary phenomena like supply and demand shocks, technological changes, price manipulation, and government regulations. CPI is a crude approximation at best, and at worst a broken metric. What if there's not just one inflation rate? The reality is that different categories of prices "inflate" at different rates. For instance, large increases in the money supply often cause inflation in asset prices, but not in consumer prices. It's partly a function of how the newly created money is distributed. If it goes into the pockets of the wealthy, they will use it to speculate on stocks and real estate. You will see asset price inflation, but not consumer price inflation. But if you put it into the pockets of regular people, then you may see consumer prices start to rise. And even within the broad categories of "consumer goods" and "assets," there are loads of subcategories. During a pandemic, socially distanced assets (like suburban housing and food at home) will be in high demand, while non-socially distanced assets (like urban housing or commercial real estate or restaurant food) will not. Thus, urban home prices might deflate even as suburban home prices inflate. Once you start to see inflation as lots of different numbers rather than as a single number, you will start to recognize new investment opportunities. You want to own asset categories where inflation will run hotter than CPI, not asset categories where it will run cooler than CPI. It's extremely valuable to understand the forces that influence some categories to inflate faster than others, and to be able to recognize turning points where a category's inflation rate will change. That's how fortunes are made.
Editors' picks
E
by ChristopherCarrollSmith
51