We knew it was an event heavy week and that extreme fear was priced into risky assets, but the ensuing moves across markets were prolific.
The question for this week is whether to chase, to buy weakness within the ST trend or to counter.
The fact we saw US 10-year Treasuries drop 26bp on the week to 4.57%, with 10-year real rates -23bp to 2.17%, catching a...
Having been on hold since June the RBA should hike by 25bp to get the cash rate to 4.35%.
We see a 60% chance of a hike priced into interest rate futures, with the market having a high conviction that if they don’t hike next week then they will almost certainly in December. 21 of 24 economists (surveyed by Bloomberg) are calling for the hike.
The doves do have...
Westy and Blake are back at it! Risk has been flying but for how long? They're talking macro (current session, FOMC, FX Plays & Oil), charts (AUDJOY, USDNOK, NAS100 & GBPUSD) and trade ideas (MXNJPY & EURCHF). See you there!
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Timing – 31 Oct (no set time – likely between 1 pm to 3 pm AEDT)
The tide is turning in Japan and while BoJ policy change is glacial - especially when we consider the intense pace at which other G10 central banks have acted – we’re now hearing that Japanese pension funds are looking are re-weighting of domestic JGBs, with yields on long-end bonds more attractive...
The November Bank of England decision is likely to be one of the most predictable since the Old Lady’s first hike in December 2021, with the MPC set to vote in favour of a pause at a second straight meeting, while leaving the door open to the possibility of further tightening, depending on the persistence of price pressures, though the bigger focus remains on the...
Equity continues to trade heavily, and while we are getting to a point of extreme fear, the price action, and the bearish momentum in EU, AUS200 and US equity indices, suggest this is still a sellers’ market. While we have some big catalysts due this week, I still think we must navigate a passage of darkness before we see light in this tunnel.
The geopolitical...
The Trade Off is back! As always, Westy and Blake are talking macro (equity, US Data, Central Bank & Gold), technicals (Nas100, AUDNZD, EURGBP & Silver) and trade ideas (NZDJPY & USDMXN).
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Things move quickly when the central bank detail that their tolerance for inflation is low. Only recently it was the widely held consensus that interest rates in Australia were on hold for an extended period, and the next move was most likely a cut.
Well, that school of thought has been blown out the window and rate hikes are now once again being priced to rise....
The October ECB meeting is unlikely to be nearly as interesting, or exciting, as the surprise 25bp rate hike delivered last month. Instead, this decision is likely to be a relatively straightforward one for the Governing Council, with no changes to any policy instruments expected, and discussion on some more nuanced areas of the ECB’s toolkit unlikely to reach...
Bitcoin has come alive and after a period of sleepy conditions, we’ve seen the price break out of the defined trading range it held since March, with the biggest high-low trading range we’ve seen since June 2022.
Our high price has been 34,742, the best level seen since May 2022, where the breakout has taken the rally that started on 11 Sept to 40% and 110% YTD....
A Traders’ Playbook; Buying risk when its darkest
Equities continue to find few friends and reviewing so many of the daily and weekly set-ups in our core equity indices, standing in front of the move and countering seems a low probability outcome at this juncture.
The China CN50 and AUS200 look particularly weak, while EU equity markets are in steep decline,...
Sentiment in markets continues to sour, with the market heading towards the safety of gold, the CHF and equity index volatility. We see the VIX index above 20%, showing a pickup in market players hedging equity drawdown, and paying up for downside puts in the S&P500.
The VIX index at 21.4% equates to implied daily moves in the US500 of 1.34%, and 3% over the...
The Trade Off is back and there is a lot going on! Westy and Blake are talking macro (geopolitics, Powell, Commodities & USD), technicals (Gold, NatGas, US500, GBPAUD) and trade ideas (NZDCHF & USDNOK).
Positioning
Clients are skewed long, with 63% of open interest is held looking for upside in AUDUSD.
In the broad market, the big flow desks report that hedge funds (leveraged players) are small net short of AUDs, while ‘real money’ (pension funds, insurance, asset managers) have a large net short AUD exposure.
Factors that could move the AUD?
• The RBA...
Since breaking the Feb highs in mid-March we’ve seen BTCUSD tracking a well-defined range of $31,000 to $28,500, with the former breakout high acting as strong support on multiple occasions.
These levels also marry up well with the upper and lower Bollinger band, if we use the 200-day moving average as the mean of the bands. These levels are significant and...
