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US10Y A break below the 1D MA50 will trigger a 2nd sell-off.The U.S. Government Bonds 10YR Yield (US10Y) is approaching the 1D MA50 (blue trend-line) that has been supporting the price action since May 16. The long-term trend since the October 21 2022 market top has been bearish, guided downwards by a Lower Lows trend-line but since February it has transitioned into a Rectangle. The recent July 07 High was a direct hit at the top of the Rectangle, so this week's rejection comes as a very natural consequence. If the price closes a 1D candle below the 1D MA50, the 2nd part of the Rectangle's bearish leg will most likely be triggered. As you see during this long-term pattern, we've had two -19.70% decline sequences and if the current one turns out to be of that magnitude, we are looking at a 3.300% target. Note that 4 days ago we formed a 1D Golden Cross, technically a bullish pattern, but the previous 1D Death Cross (bearish pattern) turned out to be the Rectangle's bottom. On that notion, the Golden Cross may have formed the top. ------------------------------------------------------------------------------- ** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! ** ------------------------------------------------------------------------------- 💸💸💸💸💸💸 👇 👇 👇 👇 👇 👇
TVC:US10YShort
by TradingShot
3
US10Y: Excellent long term sell opportunity.The US10Y turned neutral on the 1D timeframe today (RSI = 51.795, MACD = 0.074, ADX = 33.857) after it got rejected on R1 two days ago. It is likely to see a sharp fall as on the March 2nd rejection, and in that case S1 and S2 won't pose any bullish pressure to the downtrend, nor should the 1D MA50 and 1D MA200, which in the past 12 months haven't had any such significance. Consequently, we consider the current level early enough for a low risk sell position on the long term, targeting the S3 (TP = 3.300%). As you see, the trading structure follows quite similar legs since November and right now we are most likely on a leg 2. ## If you like our free content follow our profile to get more daily ideas. ## ## Comments and likes are greatly appreciated. ##
TVC:US10YShort
by InvestingScope
9
Waiting on Inflation and Earnings Numbers - Day 2S&P 500 INDEX MODEL TRADING PLANS for TUE. 07/11 Markets are waiting to see and digest the inflation numbers and then the kick-off of earnings season. If early earnings show any unexpected weakness ("unexpected" is the key word there), then we might have seen an interim top; but, if the earnings appear to be on track or with a bias to the upside surprises then the next bull leg could get well entrenched. Until this clarity emerges, expect volatility and choppy markets ahead. The previously stated level of 4400-4410 continues to be in play as critical support. Positional Trading Models: Our positional models indicate staying out of the markets until otherwise stated. By definition, positional trading models may carry the positions overnight and over multiple days, and hence assume trading an index-tracking instrument that trades beyond the regular session, with the trailing stops - if any - being active in the overnight session. Aggressive/Intraday Models: Our aggressive, intraday models indicate the trading plans below for today. Aggressive, Intraday Trading Plans: For today, our aggressive intraday models indicate going long on a break above 4441, 4423, 4417, 4400, or 4375 with a 9-point trailing stop, and going short on a break below 4438, 4415, 4390, or 4372 with a 9-point trailing stop.  Models indicate explicit long exits on a break below 4420 or 4397, and short exits on a break above 4392. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 10:16am EST or later.
CBOE:SPX
by TradersAIDotCom
A traders’ playbook: looking to Japan for volatility With the US nonfarm payrolls behind us, we look to the US CPI report as the next big risk for markets. Ahead of this, we’ve seen USD sellers start to dominate with EURUSD eyeing a re-test of the 22 June high of 1.1012 and USDJPY 300 pips off its recent high. We also see GBPUSD looking poised to test the 1.2850 highs, so one for the breakout traders, especially with UK jobs/wages in play this week. Gyrations in the US (and DM) bond markets have started to impact equity sentiment, especially US 5-year real rates (DFII5 on TradingView) rising to the highest levels since 2008, at a time when the G4 central bank balance sheet is falling. We continue to watch this dynamic, while micro factors may start to play a role, with Q2 earnings rolling in. Commentaries from CEOs on expected demand, input prices and how the cost of capital is impacting are a few themes to focus on. The US500 rests on 4400 with the shorts eyeing a test of the 26 June low of 4329 – a break here, especially if it coincides with the VIX index rising above 18%, should get traders in front of the screens and taking down the timeframes. We also saw the return on the JPY, with shorts squaring as the carry trade was partly unwound - higher G3 bond and rates volatility a clear consideration here, with the MOVE index pushing to 130. We also saw Japan's data flow come in hot, notably in the TANKAN report which showed Japanese corporates expect inflation (in 5 years) to exceed 2% for the fourth quarter in a row. We see Japan's 10yr swaps rising to 60bp, and 10yr JGBs to 42.8bp and the fact funds are shorting Japanese bonds could be telling ahead of the BoJ meeting on 28 July. Japan takes centre focus – if the market genuinely believed the BoJ were to tweak its uber dovish monetary policy setting it could cause real gyrations through markets. We watch China data ahead of the July Politburo meeting, although, with elevated expectations of stimulus to be announced during this key event, one could easily feel that bad data could easily be forgiven. Central bank meetings in NZ and Canada may get some attention – although it’s the BoC meeting, which looks the far livelier affair. Rearview alpha plays - what worked best: • G10 and EM FX play of last week: short CADJPY (-1.5% last week), short USDHUF (-2.6% on the week) • Equity indices play of last week: Short FRA40 (-3.9%), short EU Stoxx 50 (-3.7%) • Commodity plays of last week – Long SpotCrude (+4.6%), short XAUGBP (-0.8% on the week) – lower for four consecutive weeks. • Equity plays for the radar – CSL (AU) – shares have fallen in 9 of 10 trading sessions. RIVN (Rivian Auto US) – shares have gained in 8 consecutive trading sessions. JP Morgan – commence the US Q2 corp. earnings on Friday. Marquee events for traders to navigate: US Core CPI inflation (Wed 22:30 AEST) – the marquee event risk of the week. The consensus is weighted towards core CPI at 0.3% MoM / 5% YoY (from 5.3%), with the economist’s range of estimates seen between 5.1% to 4.8%. Headline CPI is expected to come in at 0.3% MoM / 3.1% YoY (from 4%). The Cleveland Fed Nowcast model sees core CPI running at 5.1% YoY. With risky assets sensitive to moves in US bond yields, a core CPI print at/above 5.3% is the ‘pain trade’ and would likely see US bond yields rise further and risk taken down. While it may lower the prospect of a hike from the Fed in the July FOMC meeting, it would take a truly weak number to see market pricing for a 25bp hike fall below 50%. UK jobs and wages report (Tues 16:00 AEST) – traders will recall the red-hot April wage data which contributed to the BoE hiking rates by 50bp (in the June BoE meeting), so GBP and UK100 traders will be watching this data point closely. The market expects weekly earnings (ex-bonus) 3M/YoY to come in at 7.1% (from 7.2%). Rates markets have priced a 76% chance of a 50bp hike at the 3 Aug BoE meeting, with peak bank rate expectations at 6.41%. We also see that GBPUSD has rallied in the last 10 consecutive wage reports. US 2Q corporate earnings – JPM, J&J, Citi and Wells Fargo get us going with earnings on Friday (14 July), with JPM’s numbers getting the full attention of traders – the implied move on the day of earnings for JPM (derived from options) is 1.3%, with the bulls looking for a firm break of the range highs of $147. While we watch the price action in the US big US money centres, keep an eye on the small end of town and the regional banks – the KRE ETF is a good proxy here. Bank of Canada meeting (Thurs 00:00 AEST) – this is a ‘live’ meeting that could result in some sharp movement in the CAD – after the recent Canadian jobs report, retail sales and core CPI report, the market is skewed to a 25bp hike to take rates to 5%, with the market pricing a hike at 68% chance. We also see 16 of 24 economists calling for the hike. CAD longs preferred, with USDCAD targeting 1.3200. RBA gov Lowe speaks (13:10 AEST) – there is little Aussie tier 1 data to trouble traders this week, so RBA gov Lowe and China data get the attention. Rates markets price a 62% chance of a 25bp hike at the 1 August RBA meeting, so Gov Lowe’s outlook may influence that pricing. The Aussie jobs report (20 July) and Q2 CPI (26 July) remain the big event risks for AUD traders that could decide a hike on 1 Aug. China June CPI/PPI (Mon 11:30 AEST) – the market sees CPI at +0.2% and PPI inflation at -5% (from -4.6%). USDCNH looks to consolidate between 7.2800 and 7.2185, where a break could influence G10 FX pairs, with a higher USDCNH likely acting as a headwind for AUD and NZD. China June trade data (Thurs no set time) – China’s trade data is hard to consider for one’s risk management as there is no set time and typically has a low initial impact on Chinese equity markets or the yuan. As we look for more stimulus to be announced at the July Politburo it feels as though the market will limit the reaction. The current consensus is for China’s June exports to fall -10%, while imports are called down -4.4%. We also get China new yuan loans/aggregate financing through the week (no set time or date), and while closely watched it is unlikely a market mover. US PPI inflation (Thurs 22:30 AEST) – the market looks for 0.4% YoY on headline PPI and 2.6% YoY on core PPI – it’s hard to see this being a big market mover unless we get an outlier print (vs consensus). The PPI print should shape our understanding of the important core PCE deflator (released 28 July). RBNZ meeting (Wed 12:00 AEST) – the market sees this as a low-risk event with all 15 economists (surveyed by Bloomberg) seeing NZ interest rates on hold, with the NZD swaps market pricing just 3bps. AUDNZD gets attention and looks to have put in a short-term bottom, with longs preferred for a move to the 200-day MA at 1.0850. University of Michigan sentiment – the market expects the sentiment survey to increase to 65.5 (from 64.4). We also look at the respondents’ views on US 1-year inflation expectations, with the consensus eyeing 3.1% (from 3.3%), while the 5-10yr inflation expectations are eyed to be unchanged at 3%. Fed speakers – Daly, Mester, Bostic, Barkin, Kashkari, Waller BoE speakers – Bailey (Tues 01:00 AEST and Wed 18:00 AEST) RBA speakers – Gov Lowe speaks (Wed 13:10 AEST) ECB speakers – Villeroy, de Cos, Vujcic, Lane
by Pepperstone
UNRATE Update | December 2021 - PresentThe US unemployment rate can double from here and still be within the long-term range and still below the extremes that have occurred during more recent recessions. Also worth point out that the only time we have been below this level of unemployment (higher employment) was during the Korean war in the early 1950s. Sure, we could see the rate of employment increase - that can happen. But it's unlikely, based on 75 years of data that spans everything from Post-Keynesianism, to Real Business Cycle (RBC), to Monetarism, to MMT. As such, it is safe to conclude that a lower UE rate, from "here", is unlikely. So unemployment has probably bottomed, stocks are yet to recover their December 2021 highs (19 months) and the interest rate on the US10Y is up roughly 200% (having gone as high as + 215%) over the same 19-month period and currently offering a yield of 4.049%; the US10Y maintains it's lag of the US02Y, which is currently offering a yield of 4.95%. In other words, bank lending is more constrained... Wow, even the banks are telling us there is significant risk in the market. Meanwhile a lot of folks are running around telling you how great fake-money crypto supposedly is. Maybe the banks are right about risk.... Oh! one more thing: the VIX has also reached a bottom of sorts.
FRED:UNRATEShort
by ChiefMacro
22% bond yields was the bottom for stocksin 2008, high yield b rated bonds went as high 22% in the peak of panic. This also coincided with the peak of panic for stocks. Quality high growth potential stocks sold for fantastic prices and valuations. And it makes sense to not make sense this way. Bonds are debt, and must get paid first as part of normal business operation. Equity gets the excess profits later as potential dividends or stock buybacks. Debt and equity and the 2 main funding sources for business. Stock investors cannot ignore interest rates and the funding markets. SP:SPX NASDAQ:BND NASDAQ:TLT NASDAQ:IEF NASDAQ:QQQ AMEX:DIA AMEX:VTI
NASDAQ:MBB
by optionfarmers
8
It might be the right time to buy 10 year TreasuriesI see a big opportunity on treasuries with the rates that the treasauries are trading at. Why? Inflation has been going down consistently from 9.1% to 4% and the PPI (which is the Producer Price Index) from 11.1% to 1.1%. These indicators usually draw near the core CPI which has been sticky above 5% and has been the aim for the FED. Rents and some services have been raised this year and are not going down or stabilizing 12 year compared until next year. There is a lag effect in the economy regarding the rate hikes of about 12 to 18 months and we are still to see many of the effects noting that they have been restrictive for just 9 months. Another nice data is the base, 12 month old prices. May and June are the top of the prices from last year due to the supply chain issues and the Russia Ucranie war. Oil went up to 130 dollar a barrel and most of commodities topped last year. So the CPI next week should be a 14 year high real yield high when a 3.2 to 3.5% print on the CPI should show more inflation loosening. Economy is stil in a tight spot, with a strong labor market which made the last rate decisión of the FED a prediction of two more rate hikes this year. Eventhough since then 2 voting members have seen the posible mistake of keep hiking and have said that they should still see the effects of the 500 rate increase and not hike more for at least this year. This alone should drive a big buy througout the curve. Economy is not that strong to see a 14 year high in real yield for a 10 year high with much analysts, including the FED are expecting at least a mild recesión. So rates are very high taking into account the análisis made. A 3.50% on the 10 year and a 4.30% on the 2 year are the aims. But the market has been frightened and selling due to the losses they took from anticipating this move too early. The recent debt limit helped a lot recently for those losses, but its an issue that has been dealt with. A frightened market ussually is an opportunity and I think this is one of them. We still need to see the other 7 memebers of the FED agree, but in an educated guess the next week CPI data must do the job.
TVC:US02YLong
by acrispino
1
Key Drivers of the Market - A Deep DiveHello everyone! Today we will talk about five different important concepts. Many things are happening in markets, so I will create similar reports to help people understand why things are how they are. This will be my first report, so it might be a bit harder to go through, especially because on Tradingview, I can't easily share economic data or random non-Tradingview charts, so I will try to make each concept as simple as possible. Positioning 1) Positioning in markets appears to be quite extreme. Looking at the CoT long/short data for hedge fund positioning, we can get a pretty good sense of whether speculators are long or short. Overall, the market remains short on stocks and bonds. Regarding bond data, it is possible that the positioning is like this for other reasons, which doesn't mean they are bullish. As contrarians, we usually want to go against most speculators, but sometimes the speculators take one position for reasons other than making a directional bet (maybe they are hedged). Another significant market to look at is the energy market, and more specifically, oil, which in my opinion, is very close to transitioning back into a bull market. I am expecting one more shakeout here, with a dip toward 55-60$. I think one more shakeout for oil to take out all the lows (hunt stop loss), and speculators will fully turn short. Speculators have been cutting their longs for a year and are almost about to turn short for the first time in many years. Inflation 2) Expected inflation in the next CPI print is around 3% YoY and 0.3% MoM, potentially influenced by recent commodity spikes. These short-lived spikes could affect June's print, as some food-related commodities had a little rally. I believe inflation could come back with a vengeance, as there are too many potential issues with producing several materials and products. These issues could be exacerbated due to deglobalization and climate change (not the climate getting hotter, but colder). Truflation shows 2.3% YoY inflation, inflation expectations are at 2.3%, and interest rates are between 3.7% and 5.25% across the yield curve. My main view is that inflation will trend lower for a little longer, and its downtrend could end with a deflationary spike, as current real rates are substantially positive. It's even possible that we will get negative CPI MoM prints in Q3-Q4, but inflationary pressures will probably resume once we are done with that. Many argue that core inflation is sticky and too high, and I believe it might stay elevated for a while, but eventually, I think it will start falling. My view on inflation mainly has to do with outright shortages and not with money printing. The current disinflationary trend seen across most countries will probably continue for a little longer as we haven't seen substantial money printing for a while, while interest rate hikes are starting to affect consumers negatively. The biggest issue I see is that commodity producers are struggling and face severe problems due to green policies, deglobalization, and climate change. Another important point is that OPEC+ is about to cut 1-2m barrels/day of production, which means oil could spike as demand remains relatively strong. One of the reasons I think the biggest inflationary threat comes from the supply side (goods/services) is that Japan has had lower inflation than the US, despite keeping rates at 0. China didn't raise rates either and has been pumping liquidity into the system, as well as cutting rates, and yet inflation there is almost 0%. It shows that inflation has come down independently, with markets slowly shorting through various imbalances, not because interest rates increased. At this stage, higher rates might actually have the opposite effect than the one intended. Why? Because of the massive debts at the government level, which are being inflated even further as governments borrow at higher rates. Housing 3) The housing market remains strong, and a deficit exists. More supply will be coming online over time, but there are no signs of weakness or that the supply won't be able to be absorbed by the market. Many people are still waiting for rates and prices to drop in order to buy a house, while those with a mortgage are not selling their houses because they don't want to get a more expensive loan. Therefore we essentially have a balance in the market, with new houses and defaults being absorbed by those with cash and those willing to get an expensive mortgage. Rents have not gone up YoY but seem to be about to trend higher again. As there is still a lot of cash in the market and the US government keeps spending, it's reasonable to expect rents to stay flat or slowly tick higher, even if interest rate hikes are starting to affect the economy. Some countries are really suffering from higher interest rates, as most people have variable-rate mortgages; however, the US is in a better situation as most had their mortgages fixed at low rates. So far, it looks like banks and central banks are taking a loss on all the mortgages issued or refinanced during 2020 and 2021, and this effect won't be reverted any time soon. GDP 4) Q1 GDP growth was revised higher at 2% (from 1.4%), showing resilience in the US economy amidst recession fears. Despite growth in the US markets, concerns over a recession remain. As the US government keeps spending at a high pace, a recession will probably be delayed; without that meaning, it will never arrive. Interest rates have been rising, and the Fed wants to hike rates once or twice again. The Fed will likely intervene to support the economy in 1-2 years. As the deficit grows and rates increase, within the next few years, the government will have absorbed all excess liquidity trapped in the RRP or banks. That means that the Fed will then be forced to start buying bonds. The Fed is currently losing over 50B annually because it has to pay high rates to those that deposit at the Fed, which is effectively direct money printing. With so much government debt, the Fed can't raise rates much higher without adding this inflationary component. Although unemployment and bankruptcies are trending higher, the market is showing resilience. As stated above, the US economy is the most resilient, while many other countries are suffering heavily. What has been very helpful is that so far, we had strong oil production despite the war in Ukraine, while the US was releasing a lot of barrels from SPR. This strengthened consumption and boosted the economy. One important data point that proves that the US hasn't been in a recession is that the Travel Numbers of people flying in the US are at ATHs. How could someone call for a recession with these numbers? It's possible that interest rate hikes and all the printing in the US, along with a strong dollar, helped the US consumer to stay in relatively good shape. How bad do bankruptcies and unemployment get, and when? I don't know. I believe that the yield curve will eventually be right, and we will get a recession, but it's hard to call for one. Although lots of data points to the US being in a recession or close to getting into one, we haven't had proper confirmation for a downturn. Maybe we have been in a mild recession, and that's why the market is rallying so much, as people feared something awful, and this hasn't played out. Stocks 5) Stocks seem to remain in a bull market. After hitting the targets that I mentioned in some of my previous ideas, they had a mini-correction. I never turned fully bearish, but I thought at once, the SPX got at 4450 and the NDX at 15200, the market might have topped. This hasn't played out, and I must admit that the market looks bullish here. I can't say anything with certainty yet, but I'd avoid shorting or being all out. There are still many signals that point to higher stock prices. Apple just had a massive breakout and looks strong. Now at a 3T valuation, which seems too much, but when someone thinks that Apple is one of those companies that are essentially powering a 500T financial system, along with its growth potential with AI, then 3T doesn't seem that much. Although stocks seem expensive relative to the current GDP, let's not forget that AI will boost global GDP massively over the next few years. That means that tech companies like Microsoft and Google will keep expanding. Also, let's not forget that unprofitable tech deflated last year and hasn't recovered yet, so a lot of garbage got washed out and isn't a drag on the market. Finally, many people are missing something important: leverage didn't fuel this rally. The market deleveraged massively in 2022 and is now free from excess leverage. If this rally was driven by leverage, it would be fragile, and a reversal could occur at any moment. Summary To sum things up and add a few final touches... The main things leading the market are: NDX is a monopoly, AI, stock buybacks, passive investing, and government spending. It's improbable that these factors will cease to exist, and things will turn ugly immediately after the best first half the Nasdaq 100 has ever had. Sentiment might be changing and leaning toward bullish, but I am not seeing anything that's seriously worth paying attention to. Sure, maybe we get another little correction, but nothing more than that. The market looks very strong. Some leading indicators even show that liquidity and financial conditions will improve from here. I believe that too many people are stuck looking at interest rates but forget how bad the government deficits are and that the only way to keep moving forward is to print more money and accelerate growth and consumption. The NDX (Nasdaq 100) has broken above its double top in Q1 2022 and could easily sweep its Q4 2021 double top next. The index is just 11% away from new ATHs, which it could achieve in 2023.
FX:NAS100Long
by BitcoinMacro
CoCos: Quirky yet intriguing ‘hybrid’ instruments with a twistThere are a variety of risks to consider when investing in AT1 Contingent Convertible bonds (affectionately known as ‘CoCos’). These financial instruments, issued by financial institutions, may appear peculiar on first inspection but, once you get to know these quirky financial instruments better, you will better appreciate their unique risk/return profile. CoCos stand out as hybrid instruments, blending the characteristics of bonds and equity. They possess a fascinating duality: on one hand, they behave like fixed income products, offering investors regular interest payments; on the other hand, they can convert into equity under specific predefined conditions or can be written down under specific circumstances. This unique combination allows CoCos to dance between the worlds of debt and equity. CoCos are high yield instruments, and this high yield comes from a variety of risk compensations. We focus here on three of them: conversion risk, extension risk and viability risk. Conversion risk: the dramatic metamorphosis One of the key risks associated with CoCos is conversion risk or write-down risk. These instruments typically have a predetermined conversion trigger, such as a decline in the issuer's capital ratio, like Common Equity Tier 1 (CET1), or a specific regulatory event. When the trigger is hit, the CoCos undergo a dramatic metamorphosis, transforming from debt into equity or can become virtually worthless. In the waterfall structure, they sit between equity and subordinated debt. Conversion risk is, therefore, higher than default risk on the subordinated bonds of the same issuer. That is already something! Extension risk: when time tests your patience Imagine waiting for a bus that keeps getting delayed, leaving you unsure of when it will finally arrive. That's the feeling of extension risk in the world of CoCos, since these instruments come with a feature that allows the issuer to extend the maturity date without a penalty (step-up). As an investor, this can make it challenging to predict the exact timing of cash flows, adding an element of uncertainty to your investment horizon. Rising interest rates can be a double-edged sword. On the one hand, they are typically good for the financial sector and, therefore, reduce the conversion risk. On the other hand, they can have a significant negative impact on CoCos, especially in terms of their call features. Unlike traditional bonds that often feature step-ups, which progressively increase the spreads over time in case the bonds are not called at the given call dates, CoCos lacks such provisions. This absence of step-ups makes it economically beneficial for the issuer not to call the CoCos bond early, particularly in a rising interest rate environment. By allowing the bond to remain outstanding, the issuer can take advantage of the higher prevailing interest rates and continue paying the existing coupon, potentially saving on borrowing costs. However, from an investor's perspective, this prolonged maturity can present challenges. As interest rates rise, the market value of fixed-rate instruments tends to decline. Investors may find themselves holding CoCos with coupons that are comparatively less attractive in the prevailing interest rate environment. Moreover, the extended maturity period can delay the return of principal, affecting investment liquidity and potentially tying up capital for a longer period than anticipated. To call a bond or not is the decision of the issuer. Besides economic arguments, reputational arguments also come into play. Some issuers, although it may be economically reasonable not to call, will not want to snub their investors base and prefer, for reputational matters, to call anyway. Quantifying the exact risk is not an exact science. Recently, all bonds that come at their first call dates have been called. Regulatory risk: the viability trigger As we have learned in the Credit Suisse case, this is another crucial aspect to consider. The viability trigger represents the point at which the issuer's financial health is deemed to be at risk by the regulator, even in cases where capital ratios like CET1 are well above their trigger levels. Hence, CoCos can also be triggered by regulatory intervention. If the viability trigger is activated, the CoCos might undergo conversion or be written off altogether. It is important to note that the ‘permanent write-down’ is unique to Swiss issuances. This risk factor underscores the importance of staying abreast of regulatory developments and their potential impact on the investment. As illustrated by the Credit Suisse case, the classic waterfall structure was not respected, wherein CoCos were written down to zero while keeping equity alive. The EU/UK regulators have been almost screaming that this is not possible under their framework. And indeed, the EU point of non-viability (PONV) powers are written into statutory law within the Bank Resolution and Recovery Directive (BRRD), that clearly stipulates that instruments can only be written down to zero if shareholders have been fully wiped out and, hence, respecting the bankruptcy waterfall. Note that in contrast to Switzerland, where it is relatively easy to use the emergency law and pass an ordinance (or add clarifications) over a weekend (as happened during the recent Credit Suisse rescue operation), the complexity of the EU, where all EU countries must agree (and in addition a valuation exercise must be carried out), makes this virtually impossible to do over a weekend or short periods of time. The CoCo coupon conundrum Given the assortment of risks CoCos bring to the table, it's no surprise that these quirky instruments tend to offer high coupons. Investors demand compensation for taking on the additional uncertainties associated with conversion risk, extension risk and regulatory risk. While these higher coupon rates can be alluring, it's essential to thoroughly assess the underlying risks and evaluate whether the potential rewards are worth the rollercoaster ride. CoCos offer a blend of fixed income stability with the tantalising potential for equity-like gains. Conversion risk, extension risk and regulatory risk are the hurdles that come with this unique territory. By diligently understanding these risks, CoCos are, perhaps, the quirky kid one starts to like. This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
AMEX:DHY
by aneekaguptaWTE
$TNX in range and a comparison of Yields around 2008#Yield is moving well today. 1Yr is bouncing back better than 2 and 10Yr. $TNX is not bouncing as much but has not sold off as much as the others. The 10Yr is trading between 3.80 - 4.08. Did we see the top in short term #yields a few days ago? 10Yr on the other hand did not break the most recent high. Interesting to say the least. The last picture shows the highs of the 2 yr and 10 yr right before the crash of 2008. Interesting that almost everything happened in the month of June. Even when it was 3 different years! Hmmm. *** Now let's compare what yields did around the 2008 crash. *** The 2yr yield peaked @ 5.28% and it did it much earlier. It was almost 2 years before the 10Yr yield did. The 2yr also formed a lower higher in 2007 (5.13%) & peaked in June 2008, much lower @ 3%, before the real crash happened. The 10yr didn't peak until June 2008. way after short term rates peaked. We also see that the peak was around 4.3%. Stocks peaked in Oct 07 and the lower high was May 2008. *** We are seeing something similar today. However, IMO everything happens faster today. We're keeping a close eye on lower highs in short term yields and we could be seeing this now. Time will tell. This data is just like other data. Just past info to help weather the current & future storms.
Editors' picks
TVC:TNX
by ROYAL_OAK_INC
8
Why did I know that bond yields were going to fall?To obtain this information, we need to look at four things: -Fed Rates: The Federal Reserve's interest rates decisions can have a significant impact on financial markets and the overall economy. -US5Y (US 5-year Treasury bonds): Yields on US 5-year Treasury bonds are an important measure to assess market expectations for short-term interest rates and investor sentiment regarding the economy. -US10Y (US 10-year Treasury bonds): Yields on US 10-year Treasury bonds are also a key benchmark to evaluate investor expectations for medium-term interest rates and market risk perception. -US30Y (US 30-year Treasury bonds): Yields on US 30-year Treasury bonds provide insight into investors' long-term expectations for interest rates and confidence in long-term economic stability. Monitoring these indicators can provide valuable information about the direction of interest rates, market sentiment, and the overall health of the economy. If we observe these three together, we can see that the maximum point marked with a red rectangle, the US5Y, is the only one that violated that high. This suggests that the movement in the US5Y was a manipulation (liquidity pool), as none of the other bonds violated the high. Also, the DXY (US Dollar Index) did not violate it and has already created a lower low. This indicates that we can expect the completion of this move in the DXY and a more aggressive decline in bonds.
TVC:US10YShort
by Wiiso
2
Yields are Yelling: Recession is comingIt looks like we are turning over. Coupled with gigantic short positioning of speculators on bonds (highest in history bsed on the COT Data), the chart indicates that yields will fall again. Why would they fall? Because of a flight to saftey and/or a recession. I am keeping it very simple, I just buy Bonds via ETF. I am long TLT, IEF and SHY. With that trade, I am also long USD, since my native currency is EUR. If we have a weekly close above 3,5% on the US10Y, I will exit my positions. It might also be lucrative to go short stocks now, but I wont do that too much. This might be a great trade, but I am viewing it as a set up for an even better one. We might get a great opportunity to buy stocks soon.
TVC:US10YShort
by Cyranus
2
FOMC REPORT : Stocks, Bonds, BTC & GoldHi Traders, Investors and Speculators of Charts 📈📉 Did you miss the 2023 June 13/14 FOMC meeting? No worries, CryptoChecks' got you covered. Here's a summary of what happened and how the outcome of this meeting may affect the respective markets. First, let's clearly understand the FOMC meeting and it's importance to investors. The Federal Reserve, also known as the Fed, is the central banking system of the United States. It guides the country's monetary policy and influences the economy. The Fed's announcements and statements are closely watched by traders and investors because they can have a significant impact on financial markets. The Federal Open Market Committee (FOMC) is a committee within the Fed that makes decisions on monetary policy. It consists of twelve members, including the seven members of the Board of Governors and five Reserve Bank presidents. They meet eight times a year to discuss and set policies. FOMC meetings are important events for traders because any changes in interest rates can affect various economic factors, such as employment, inflation, and exchange rates. The meetings occur every six weeks, and some include a Summary of Economic Projections (SEP) and a press conference by the Fed Chair. Traders pay close attention to the Fed's decisions and statements because they provide valuable information about the state of the economy and future policy changes. Now, let's look at what was said in this FOMC meeting: The Federal Reserve decided to pause its series of interest rate hikes at its June meeting, following ten consecutive increases. While the central bank expressed optimism about curbing inflation, the battle is not yet over, and further rate hikes may be on the horizon. Important facts: 🏛 The Federal Open Markets Committee (FOMC) announced that the federal funds target rate would remain unchanged within a range of 5.0% to 5.25% during the June meeting. This marks the first policy meeting since the start of the Fed's tightening cycle in March 2022 in which interest rates were not raised. 🏛 The Fed confirmed its plan to continue reducing its balance sheet by allowing up to $60 billion in Treasury securities and $35 billion in agency mortgage-backed securities (MBS) to roll off each month, employing quantitative tightening to combat inflation. 🏛 Fed Chair Jerome Powell acknowledged the challenges during the press conference and highlighted the uncertainties surrounding the effects of monetary policy on the economy and potential credit tightening headwinds. Despite the pause, it does not indicate the completion of the Fed's interest rate hike cycle, and further increases may be necessary. 🏛 The Fed has been attempting to navigate the challenge of curbing inflation without causing a recession by gradually raising interest rates. Higher rates increase borrowing costs for businesses and consumers, slowing down economic activity. 🏛 The consumer price index (CPI) rose by 4.1% annually in May, down from the 4.9% gain in April, which was the highest in 40 years. The core personal consumption expenditures price index, the Fed's preferred measure of inflation, increased by 4.7% in April, slightly up from March but lower than the 2022 peak of 5.3%. The long-term target for core PCE inflation is 2%. 🏛 The tight U.S. labor market has posed challenges in the fight against inflation. In May, the U.S. economy added 339,000 jobs, surpassing expectations, and wages increased by 4.3% year-over-year. The unemployment rate rose to 3.7% but remained near historic lows. 🏛 Powell indicated that further rate increases might be necessary to gradually bring inflation down to the 2% target. _____________________________ Overall, the potential impact on stocks, commodities, and bonds could look as follow: Stocks: The impact on stocks can be more nuanced. In general, a steady interest rate environment can be positive for stocks. Lower rates can make equities more attractive as an investment option compared to bonds or other fixed-income assets. It can encourage borrowing for business expansion and investment, potentially boosting corporate earnings and stock prices. However, if the market was anticipating a rate cut or an increase, a decision to keep rates unchanged might cause some short-term volatility or adjustments in stock prices as investors reassess their expectations. This could positively impact stock prices, especially in sectors that are sensitive to interest rates, such as technology, consumer discretionary, and housing. Commodities: When interest rates remain steady, it can provide stability and potentially support commodity prices. Lower interest rates generally make borrowing cheaper, which can stimulate economic activity and increase demand for commodities. Conversely, higher interest rates can have the opposite effect, potentially dampening demand and putting downward pressure on commodity prices. Bonds: The pause in interest rate hikes may be favorable for bond prices in the short term. When interest rates remain stable or decline, existing bonds with higher coupon rates become relatively more attractive, leading to increased demand and potentially higher bond prices. Lower interest rates also reduce borrowing costs for companies, which may improve their creditworthiness and decrease the risk of default, making corporate bonds more appealing to investors. Now, you may be wondering to yourself... despite the above; why is Gold (and BTC) falling instead of rising? 💭💭💭 EXTRA for EXPERTS: The fact that the US House of Representatives have passed US debt ceiling bill five days ahead of the deadline could be a reason behind the falling price of Gold. With this in mind, it becomes easier to see why the gold market could have slipped. Still, rampant inflation will probably keep a floor under the gold market and as such; a short term drop to next immediate support zone is the most probable. While the true utility of the metal as a hedge against rising prices is a subject of endless economic debate, many investors insist that it is. It’s notable that prices remain close to historic high levels despite much higher interest rates more or less everywhere. The backdrop of war in Ukraine, tensions in the South China Sea, and the durability of post-covid recovery are also clearly supportive of perceived ‘haven assets’ like gold, silver and bitcoin. Is it possible that the large, corporate investors are just countertrading the bullish retail investors in the commodities market at this point? The odds of a July rate hike are at about 61%, according to CME FedWatch Tool. Investors anticipate a 61.5% chance of the Federal Reserve hiking rates by a quarter point at its July 25-26 meeting, according to the CME FedWatch Tool. The metric hasn’t moved much since Tuesday, even as the central bank indicated in its dot plot on Wednesday that two more rate hikes are coming up. To understand the relationship between commodities, cryptocurrencies, bonds, and stocks can help you clearly plan your next move after the FOMC meeting. Commodities and Stocks: Inverse Relationship: Historically, there has been an inverse relationship between commodity prices and stock prices. When commodity prices rise, it can lead to higher production costs for companies, affecting profit margins and potentially dampening stock performance. Conversely, when commodity prices decline, it can lower input costs for companies, potentially benefiting their profitability and supporting stock prices. Cryptocurrencies and Stocks: Limited Relationship: Cryptocurrencies, such as Bitcoin and Ethereum, have gained prominence as a separate asset class and are not directly tied to traditional stock markets. As such, the relationship between cryptocurrencies and stocks is generally limited. However, during periods of market volatility or significant news events, there can be some short-term correlations as investors seek alternative assets or sentiment spills over from one market to another. But in terms of long-term correlations, the two asset classes have shown relatively independent behavior. Bonds and Stocks: Inverse Relationship: Bonds and stocks typically exhibit an inverse relationship. When interest rates rise, bond yields increase, making fixed-income investments more attractive relative to stocks. This can lead to a shift in investor preferences from stocks to bonds, potentially putting downward pressure on stock prices. Conversely, when interest rates decline, bond yields decrease, making stocks relatively more attractive, which can contribute to higher stock prices. The relationship between bonds and commodities is typically more complex and can be influenced by several factors: Inflation Expectations: Commodities are often considered an inflation hedge because their prices tend to rise during inflationary periods. When inflation expectations increase, commodity prices may go up, which can lead to higher inflation-adjusted yields on bonds. In this case, there may be a positive correlation between commodities and bond yields. Economic Growth: Commodities, especially those related to industrial sectors like energy and metals, are sensitive to economic growth. When the economy is booming, demand for commodities tends to rise, potentially leading to higher prices. This can be associated with higher inflation expectations and upward pressure on bond yields. Hence, there can be a positive correlation between commodities and bond yields during periods of economic expansion. Safe-Haven Demand : Bonds, especially government bonds, are considered safe-haven assets that investors flock to during times of uncertainty or market turbulence. In contrast, commodities, which are more directly influenced by supply and demand dynamics, may not exhibit the same safe-haven characteristics. Therefore, during risk-off periods when investors seek safety, there can be an inverse relationship between commodities and bond yields. Interest Rates and Opportunity Cost: Changes in interest rates can impact both bonds and commodities. When interest rates rise, the opportunity cost of holding commodities, which do not pay interest or dividends, increases. This can potentially lead to downward pressure on commodity prices. Conversely, when interest rates decline, the opportunity cost of holding commodities decreases, which can be supportive of commodity prices. In this case, there can be an inverse relationship between bond yields and commodity prices. _______________________ 📢Follow us here on TradingView for daily updates and trade ideas on crypto , stocks and commodities 💎Hit like & Follow 👍 We appreciate your support ! CryptoCheck _____________________ AMEX:SPY TVC:US10Y TVC:GOLD INDEX:BTCUSD COINBASE:BTCUSD BINANCE:BTCUSDT NYSE:GOLD CURRENCYCOM:GOLD
AMEX:SPY
by CryptoCheck-
29
US10Y - INMINENT SELL OFF US10Y - 10 YEAR BOND WEEKLY TENDENCY ANALYSIS THE 10 Year Bond Started Buying from Weekly Demand (green) Then reached Monthly Supply that generated a new/fresh weekly Supply to start reversing the price Destiny: Weekly demand (green) Stages/Weekly tendency - Stan Weistein - STAGE I: Price consolidate Between SMA 30 @ Weekly TF - STAGE II: Price break consolidation and make highs above SMA 30 @ Weekly TF - STAGE III: Price consolidate Between SMA 30 @ Weekly TF - STAGE IV: Price break consolidation and make lows below SMA 30 @ Weekly TF
TVC:US10YShort
by imktads
9
Inflation, Yields, and FOMC in Focus This WeekS&P 500 INDEX MODEL TRADING PLANS for MON. 06/12 The precarious rally of the last month has been baffling many with its lack of the breadth - the rally concentrated in just a handful of big-tech names. In the last trading plan - published on Thursday, 06/08 - we wrote: "If the rally does not dissipate this week, then it could be indicative of yet another leg up that could obliterate the shorts". The rally did NOT dissipate last week, but rather accelerated. With heavy economic calendar this week culminating in the FOMC rate decision on Wednesday, the focus will be back to the inflation and interest rates (potentially being confirmed as not a concern anymore, IF the FOMC pauses rate hikes as widely expected). Any concerns of potential recession seem to be not on the market radar for now. As can be expected, our models are flashing heightened probabilities for spikes in both directions, with no clear directional bias yet. As we first stated to start this week, if you are a bull, it may be prudent to take some profits off the table; if you are a bear, you might want to wait for confirmation of downside bias. Positional Trading Models: Our positional models indicate no trading plans for today, as they are in an indeterminate state. By definition, positional trading models may carry the positions overnight and over multiple days, and hence assume trading an instrument that trades beyond the regular session, with the trailing stops - if any - being active in the overnight session. Aggressive/Intraday Models: Our aggressive, intraday models indicate the trading plans below for today. Aggressive, Intraday Trading Plans for MON. 06/12: For today, our aggressive intraday models indicate going long on a break above 4323, 4305, or 4275 with a 9-point trailing stop, and going short on a break below 4320, 4302, 4297, 4290, or 4270 with a 9-point trailing stop.  Models indicate explicit short exits on a break above 4314, 4299, or 4293. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 10:46am ET or later. By definition the intraday models do not hold any positions overnight - the models exit any open position at the close of the last bar (3:59pm bar or 4:00pm bar, depending on your platform's bar timing convention). To avoid getting whipsawed, use at least a 5-minute closing or a higher time frame (a 1-minute if you know what you are doing) - depending on your risk tolerance and trading style - to determine the signals. (WHAT IS THE CREDIBILITY and the PERFORMANCE OF OUR MODEL TRADING PLANS over the LAST WEEK, LAST MONTH, LAST YEAR? Please check for yourself how our pre-published model trades have performed so far! Seeing is believing!)  NOTES - HOW TO INTERPRET/USE THESE TRADING PLANS: (i) The trading levels identified are derived from our A.I. Powered Quant Models. Depending on the market conditions, these may or may not correspond to any specific indicator(s). (ii) These trading plans may be used to trade in any instrument that tracks the S&P 500 Index (e.g., ETFs such as SPY, derivatives such as futures and options on futures, and SPX options), triggered by the price levels in the Index. The results of these indicated trades would vary widely depending on the timeframe you use (tick chart, 1 minute, or 5 minute, or 15 minute or 60 minute etc.), the quality of your broker's execution, any slippages, your trading commissions and many other factors. (iii) These are NOT trading recommendations for any individual(s) and may or may not be suitable to your own financial objectives and risk tolerance - USE these ONLY as educational tools to inform and educate your own trading decisions, at your own risk. #spx, #spx500, #spy, #sp500, #esmini, #indextrading, #daytrading, #models, #tradingplans, #outlook, #economy, #bear, #yields, #stocks, #futures, #inflation, #recession, #fomc, #fed, #fedspeak, #softlanding
SP:SPX
by TradersAIDotCom
$DXY - A Big Range (100.8 - 105.9) - The Dollar Index TVC:DXY has a very interesting short to mid term time frame ahead regarding its Price Action and Decision Making Time ticking . Currently TVC:DXY is bouncing around a Big Middline S/R area of 100-106 Range. Both 'ANIMALS' have their fair share of Case, while for now, Bulls are more dominant on medium term while Bears have taken total control of short term *Hourly Time Frames by CHoCH impulsively and having a realif bounce (completion of Wave (Bulls) - - -> Break out & Retest + Bull Flag formation pattern post break-out (Bears) - - - > Fakeout ; Wave C Headed Lower
TVC:DXY
by Mr_J__fx
US10Y: Prepare for a long term sell.The US10Y continues to trade inside the long term Channel Down since the October 21st High and has now formed the same peak formation as then. With the 1D time frame neutral (RSI = 45.126, MACD = 58.593, MACD = -0.280), the conditions have emerged for a new long term sell. If the previous -20% decline is repeated, then target the bottom of the Channel Down on a TP = 3.100. Prior idea: ## If you like our free content follow our profile to get more daily ideas. ## ## Comments and likes are greatly appreciated. ##
TVC:US10YShort
by InvestingScope
7