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...
We noted last week that the investment case for gold was shifting and there were more reasons to be long than short – this remains the case and the investment case, although we are in a headline-driven environment and sentiment can shift rapidly.
What’s important for gold traders is to recognise the changes in trading conditions. Changes in volatility, range...
We look at the scheduled economic data and US earnings this week and question if given the fluid news flow from the Middle East, these events move the dial or if geopolitics consumes the full attention and direct sentiment.
We saw a rush to hedge portfolios on Friday ahead of a darkening picture emerging in the Middle East. The situation is dynamic and it's too...
It has not been the case for several months now, but the investment case for gold is certainly warming up and the reasons to own gold seemingly outweigh the reasons to be short. In a world of probabilities, the odds look to be swinging in favour of the gold bulls.
Keeping me cautious is the fact that the USD still offers appeal, and unless Europe pulls a rabbit...
The high on our Brent crude price has been $89.68 – hit at midday – but while our clients are long of crude (65% of open interest is held long), we’re seeing better sellers in the broader market, as we roll towards EU trade. The early rally felt reasonably orderly, but a lot of questions were being asked and without many immediate answers to obtain the certainty...
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!
