After a strong tightening of US financial conditions – primarily led by higher real rates and USD – we hear increasing acknowledgement that the markets are doing the heavy lifting of central banks and replacing the need for them to hike the Fed funds rate. That was the message we heard last week from Fed members Daly, Goolsbee and Bostic.
This suggests that if...
US Q2 earnings this week – Citi, JP Morgan, Bank of America, Wells Fargo, UnitedHealth
This week we get the US big money centres out with earnings. The focus falls on asset quality, loan growth/contraction, net interest margins (NIM) and any commentary on the recent tightening of broad financial conditions.
When we look at the companies included in the US30,...
Westy's back from the Outback and right back into it! In this reunion episode, they're talking macro (market sentiment, Bonds, BoJ shenanigans, NFP/CPI), technicals (EURUSD, USDMXN, Coffee & USDCAD) and trade ideas (long/short NAS/R2K & NZDJPY).
While the Fed’s Bank Term Funding Program (BTFP) has been a key factor in supporting bank equity, the rapid rise in US Treasury bond yields is a concern, and so is the exposure to Commercial Real Estate (CRE). We can see CRE benchmarks rolling over of late and heading lower and this is keeping investors from buying into regionals. One for the radar, but if we see...
Gold has found few friends of late as both US nominal and real Treasury yields rocket higher, and the USD has been on a one-way bull trend. If funds want to play defence in the portfolio, they increase their USD exposures, given the strong inverse correlation vs. the S&P500 and NAS100. Funds can also get a 5.58% yield holding risk-free US 6-month T-Bills and when...
There was always a threat of JPY intervention from the Japanese Ministry of Finance (MOF), with many seeing ¥150 in USDJPY as the danger zone. Post the US JOLTS report, and the ensuing move higher, we subsequently saw a rapid decline into 147.25 and a 290-pip range on the day. The MOF has refrained from commenting on whether this was genuine intervention, but the...
Arguably one of the biggest themes through Q323 was the one-way trend in the USD. During the quarter we saw trade-weighted USD gain 3.1%, with the USD essentially outperforming against all G10 currencies, except the NOK, which caught strong tailwinds from a surging crude price.
We consider the recent drivers, but we explore the scenarios that could see further...
After 11 straight weeks of gains in the USD (DXY index), driven by EURUSD trading into 1.0488, and a key weekly close above the YTD range highs (105.40), we ask whether the dollar can make it a 12th.
News that Congress had miraculously pushed out the govt. shutdown for 45 days should be welcomed by risky assets and there is modest gapping risk for the open....
Blake and Michael are back for TTOO vol. 2 while Westy is still herding cattle in the Outback. Volatility is back in as always, they're talking macro, charts and trade ideas to help you make the most of the fresh movement in markets!
It's finally happening! For the first time ever, we have a collab between the OG Aussie Trade Off (represented by Blake while Westy is away...again...and Michael from TTO UK. It's a good one - as always, they're talking macro, charts and trade ideas.
Westy and Blake are back and talk about all market factors you need to have on your radar! Macro FOMC, ECB, Energy & Inflation), juicy FX charts (CADJPY, AUDJPY, EURCNH & AUDUSD) and actionable trade ideas (L/S XLE/XRT ETFs & EURCHF). See you there!
It’s a central bank bonanza this week, where a good number of these meetings are ‘live’, and where we should see further tightening. The Fed meeting is not a live one (they won't raise rates), but it will get central focus, as it always does.
While swaps markets for a number of counties price a hike this week, and a risk of another in November, residual slowing...
While NOK (Norwegian krone) has the strongest statistical relationship with Brent and WTI crude, we can see a strengthening correlation between crude and the CAD. We see the 1-month correlation between crude and CADJPY at 0.68, so it's meaningful. We also see (on the daily) price breaking out of the top of its recent range of 108.50. While many will be concerned...
Further highs in crude have been seen in this momentum move. This time courtesy of some punchy OPEC forecasts for a 3.3m barrel p/d deficit in Q4. The IEA (International Energy Agency) are due to provide their update in the session ahead, and one can also expect a change in the forecast, given they previously pencilled in a 230k bpd deficit. $90 is the obvious...
It was all very exciting on the floors in Asia yesterday, with traders reacting to a hawkish interview by BoJ Governor Ueda. Essentially, Gov Ueda laid out a conditional path and timeframe for the first-rate hike and a move away from its Negative Interest Rate Policy (NIRP), should the data permit.
One can assume that the BoJ are also one step closer to moving...
Trading Overview
We head into the new trading week with the USD index (DXY) closing higher for the 8th straight week, a fate we haven’t seen in some 18 years – it's little surprise that retail traders are countering that move, accruing a solid net short position. EURUSD has closed lower by the same duration, and that makes a fitting backdrop for the two...
Westy and Blake are back and talk about all market factors you need to have on your radar! Macro (USD, ECB, FOMC & Crude Oil), juicy charts (GBPUSD, EURMXN, Apple (AAPL) & Russell 2000) and actionable trade ideas (KRE ETF & EURUSD). See you there!
To understand the fundamentals at hand we can revert to the USD smile concept. Essentially, this portrays a model where the USD outperforms in times of ‘risk off’ (equity drawdown/higher volatility), and/or when global economic data slows, and the US economy looks 'exceptional'.
In the past 24 hours, one could argue that both the left and right sides of the...
