US Credit spreads are widening against most majors and also against HYG suggesting tightening of monetary policy. If this trend continues alongside rate divergence then it may provide a catalyst for technical levels to the downside to be reached. The 61.8 fib of the last move up combined with a CDX HYG of 400 (prior structure) provides for an SP500 at 4600.
Points...
We have data at 1400 NZST with the RBNZ rate announcement and statement that could provide a catalyst for the next move. Markets are pricing in three rate cuts this year for the kiwi whilst the reserve bank are suggesting none until next year. If the bank remains hawkish and holds interest rates then we might see some profit taking in the pair. I personally...
