- S&P500 has broken higher, which is great for the broader markets
- DJIA is up 2.57% already in 2023, if January closes higher, that bodes well for the rest of the year
- FTSE100 is racing ahead of everyone and everything that I follow, apart from the DAX(Ger40), mostly due to the weighting of the index towards Oil majors
- DAX is up >7%
- VIX is trading near April 2022 lows, now volatility or fear in the markets according to this asset
- US dollar is getting crushed
- Bitcoin is pushing back towards 20k
All risk indicators are pointing to a push higher in equities as the headline US CPI print today came in as expected and lower than the previous month. Core CPI notched up 0.1% so it isn't crystal clear that inflation is coming down due to the Fed's monetary policy. We also have a weakening US dollar as traders move into the safety of the US Treasuries, which in turn drops the yield of the 10-year note. US10Y is about to test the December 2022 low, and a close below would signal further downside potential. The eurodollar curve is massively inverted as are the US yield curves, signaling that the larger money markets are expecting something is up and that the Fed will have to change policy sooner rather than later.
The US has a new speaker and part of the concessions made was along the lines of not lifting the debt ceiling. This could have negative consequences before the new fiscal year starts in October, but is more likely to be a problem in Biden's final year, should we not get a bigger Federal Budget spending program.
For now, inflation is waning, which is obviously good news for any asset that was suffering under the rate hike cycle. eg. risk assets like Bitcoin and Nasdaq.
Levels on the Nasdaq I am watching include: TP2 = 12570 TP1 = 12221 Resistance at 11605 With a hard stop at 11080
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