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AUDJPY - Massive Breakdown Coming!AUDJPY setting up for a massive move lower. We are anticipating a move similar to wave W, which was over 1000pips. We are currently in a WXY correction. We've almost completed wave X. Looking for a rejection around the 618 fibonacci level. Trade Idea: - Watch for rejection or lower timeframe trendline break for a risk entry - For a safe entry, watch for a break of red trendline - Stops above price after red trendline breaks - Targets: 88 (600pips), 85 (900pips), 82.5 (1150pips) Goodluck and as always, trade safe!
by WicktatorFX
1
Canadian dollar calm ahead of BoC rate announcementThe Canadian dollar is unchanged, trading at 1.3400 in the North American session. The Bank of Canada meets later today, and the money markets are expecting another pause, which would leave the benchmark rate at 4.5%. The BoC's rate-tightening cycle has been on a "conditional pause", which is another way of saying that rate decisions are data-dependent, especially on inflation and employment reports. The Bank has kept rates on hold since March and is expected to follow suit today, but there have been signals that the rate-hike cycle may not be over. First, April inflation report surprised on the upside after it ticked upwards to 4.4%, up from 4.3% annually, and rose from 0.3% to 0.7% month-to-month. The upswing will be of concern to BoC policy makers, as the central bank is intent on wrestling inflation back to the 2% target. The second concern is GDP, which hit 3.1% y/y in the first quarter, beating the BoC's forecast of 2.3% growth. Consumer spending has been stronger than anticipated, as many households have sizeable savings from the pandemic which they are spending now that the economy has reopened. BoC policy makers are concerned about the rise in inflation and GDP, and we could see hints about future rate hikes even if the Bank opts to pause at today's meeting. The Fed meets next week and with a blackout period in place on Fed public engagements, the markets are hunting for clues. Market pricing has been on a roller-coaster as divisions within the Fed over rate policy have made it difficult to determine what the Fed has planned. Currently, the markets are predicting a 78% chance of a pause, which would mark the first hold in rates after 10 straight rate increases. 1.3375 is a weak support line, followed by 1.3250 1.3496 and 1.3585 are the next resistance lines
by OANDA
USDCAD Potential Forecast | 7th June 2023 Fundamental Backdrop BOC monetary policy statement today, expected to maintain. Potential bearish pressure coming into USDCAD if BOC hikes. Technical Confluences Near term resistance level at 1.36374. Near term support level 1.33166. Idea We believe that the BOC will maintain interest rates and this will solidify the notion that USDCAD will remain in a range-bound market. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
by OlympusLab
AUDUSD Potential Forecast | 6th June 2023 Fundamental Backdrop RBA hike rates by 0.25bps today, resulting in strong bullish momentum. RBA hiking rates highlights the stubborn level of inflation that AUD faces. Technical Confluences Near term resistance level at 0.67066 where price can potentially react to. 0.67066 will serve as a point of target. Idea Will wait for retracement before entering onto longs. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
Long
by OlympusLab
S&P500 and US stock marketThe medium- and long-term forecast of a serious fall remains in force , but so far there is no confirmation of its beginning, we are focusing on the above levels. Technically, we can still show a small increase, fundamentally the situation is unstable and the fall can begin at any moment. There are serious problems in the banking sector , the prospects of a recession . In previous reviews, the inversion of the yield curve (US government bonds) was mentioned more than once, at the moment the situation is only getting worse. Sooner or later, it will begin to return to a "normal state", which will be the beginning of an sharp phase of the crisis.
CME_MINI:ES1!Short
by Elliottwaveorg
US T-Bill issuance - measure the liquidity drain on TradingViewIn this video we look at the impending $800b T-bill issuance from the US Treasury to rebuild its cash levels at the TGA – will this lead to higher volatility in financial markets as reserves are taken out of the system? Will concerns on bank credit kick back up, or will this prove to be a non-event? We look at the indicators you need can use in TradingView to monitor this situation effectively.
Editors' picks
FRED:RRPONTSYD
by Pepperstone
12
EURUSD Potential Forecast | 5th June 2023 Fundamental Backdrop ISM Services PMI forecast at 52.6 with 51.9 previous. EUR Services PMI along with ECB Lagarde speaking may induce volatility in the market. Hawkish tone will result in bullish momentum in EURUSD, vice versa. Technical Confluences Resistance level at 1.0765 where price has rejected. Support level at 1.0533 which could be a potential target. Price is currently on a downtrend and we will be looking for shorts. Idea Will wait for retracement before entering onto shorts. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
Short
by OlympusLab
XAUUSD Potential Forecast | 5th June 2023 Fundamental Backdrop ISM Services PMI forecast at 52.6 with 51.9 previous. Technical Confluences Resistance level at 1983 Support level at 1946 Price is currently hovering around the support level and we could potentially see rejection off this level Idea Monday asian session, hence will wait for price to stabilise before entering onto any trade. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
OANDA:XAUUSDLong
by OlympusLab
USDCAD -1000pip Move Coming! ✅USDCAD is currently in wave 4, which is a WXY correction. Wave W = 535 ZigZag Correction Wave X = 335 Flat Correction Wave Y = 535 ZigZag correction We are currently in wave Y = Zigzag. We can see that wave A had 5 waves, wave B had 3 waves and now we're in wave C. We've see subwaves 1, 2 and 3. We are waiting for subwave 4 to appear and one final move lower to complete the 5th subwave for wave C. We will then look for an entry to catch the next massive impulse higher which will likely be 1000+ pip. Trade Idea: - watch for subwave 4 to appear and catch the final move lower - once 5th subwave lower appears, look for reversal patterns to indicate strength - Targets: 1.385 (650pips), 1.4 (780pips), 1.42 (1000pips) See linked charts for our previous analysis. Goodluck and as always, trade safe!
by WicktatorFX
1
SPY Analysis - Market Breadth, Fed Rate Cycles, and InflationI measure the breadth in the S&P as the SPY (market cap weighted S&P) divided by RSP (equal weighted S&P ETF). The higher the ratio, the more concentrated the market, and therefore less market breadth. As can be seen, nearly every time the ratio has neared 3.0, the Fed has ensued with an easy money policy, and the SPY subsequently turned bullish. During these times, Fed rates, as well as inflation, were relatively low. There are several exceptions. in November and December 2021, the ratio neared 3.0 at 2.97, and the Fed ensued in early 2022 with an historic rate tightening cycle, on the heals of persistent inflation of 4.7 percent in 2021 which had resulted (and continues today) from the massive COVID stimulus program. The end result was the selloff in we experienced in 2022. Another exception was the period from 2015 to 2019, when rates were gradually raised, but maxed out at 2.40 in a relatively low inflation environment. This is not the environment that we are in today. Today, we have already had a 50 - 61% retrace from the low posted in October, 2022, and the market breadth is again at a low (SPY/RSP=3.00) . The Fed now has the option of pausing/easing and in effect pump a bull, but by doing so it will face a huge dilemma: with an annual inflation rate of 8 percent, and the largest budget deficit in modern history, a return to easy money will further fuel inflation. The other option would be to continue the rate hikes, and promote an economic collapse (starting with the banking sector), which will effectively bring the breadth issue to rest (along with the entire market). Neither of these are good options. Bitter pill...
AMEX:SPY
by UnknownUnicorn13101
Pivoting to Jobs, Inflation, and Interest Rates?S&P 500 INDEX MODEL TRADING PLANS for FRI. 06/02 We started last trading week with our trading plans on Monday titled: "Debt Ceiling Deadline Likely to Whipsaw the Markets", and these words: "Expect the approaching debt ceiling deadline to attract both bulls and bears to heightened speculation, resulting in some whipsaw movements until the deadline passes and the dust settles". With the Senate passing the debt ceiling bill, the curtains are now drawn on that drama. With the much hotter than expected NFP numbers, the markets could soon be pivoting to a focus on the macroeconomic factors again. Currently, our directional models indicate no bias and are in an indeterminate state. Positional Trading Models: Following the trading plans published yesterday, our positional models went short at 4225.83 with a hard stop at 4242. If the stop is hit, the models indicate staying flat for the rest of the session. 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 FRI. 06/02: For today, our aggressive intraday models indicate going long on a break above 4250, 4231, 4206, or 4197 with a 9-point trailing stop, and going short on a break below 4247, 4227, 4194, or 4184 with a 9-point trailing stop.  Models indicate explicit short exits on a break above 4189. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 09:46am 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, #regionalbanks, #debtceiling, #china, #nfp, #jobs
CBOE:SPX
by TradersAIDotCom
Swiss franc higher as markets eye US jobs reportThe Swiss franc has moved higher on Thursday and is trading at 0.9068  in the North American session, down 0.41%. On Wednesday, the Swiss franc fell as low as 0.9147, its lowest level in two months. The Swiss National Bank meets on June 22nd and SNB President Jordan had a warning today for the markets. Jordan said that the central bank would not allow inflation to become entrenched, adding that if core inflation remained above 2% for too long, it would be difficult to bring it back down below 2%. Inflation remains above the Bank's 0-2% target, and Jordan has repeatedly warned that the Bank could continue tightening rates to curb inflation. The Bank is expected to raise rates by 25 basis points at the June meeting, which would bring the cash rate to 1.75%. The Federal Reserve meets on June 14th and members appear divided as to what action the Fed will take. Fed member Mester supports another rate hike and said on Wednesday that she did not see a “compelling reason to pause”, saying there was a more compelling case to 'hike and hold' rates. On the opposite side, members Jefferson and Harker said on Wednesday that they supported a pause in June and making future rate decisions based on the data. Jefferson warned that the effects of tightening had not been fully processed by the economy and higher rates could increase stress on the banking sector. The markets had widely expected a rate pause just a few weeks ago, but have now priced in a 25-basis point hike at 67%. US economic data has been solid, making it more difficult for the Fed to take a pause. Unless Friday's nonfarm payrolls are woefully below the forecast, it's looking likely that the Fed will be forced to hike again in June. The US House of Representatives has approved the debt ceiling deal by a resounding vote of 314-117. The Senate will have to quickly vote on the bill, as the government could reach its spending limit as early as June 5. The debt ceiling crisis sapped risk appetite and has helped the US dollar post broad gains against the majors. Fed member Loretta said that the deal removes a “big piece of uncertainty” about the economy. The US dollar has posted strong gains against the majors due to the debt crisis ceiling, which sapped risk sentiment. Once the debt ceiling is out of the way, it will be interesting to see if the US dollar loses some steam. USD/CHF is testing support at 0.9103. Below, there is support at 0.9022 0.9156 and 0.9237 are the next resistance lines
by OANDA
EUR/USD Bounces off Two-Month Lows as Fed Expectations FlipThe EUR/USD pair recovered ground on Thursday after touching its lowest level in over two months the previous day as expectations surrounding the Federal Reserve decision shifted to dovish while investors cheered with optimism the US House of Representatives passing the debt-ceiling bill. At the time of writing, the EUR/USD pair is trading at the 1.0750 zone, up 0.6% on the day and more than 100 pips above Wednesday's two-month low of 1.0635. Market sentiment improved after the US House of Representatives passed the debt-ceiling bill on Wednesday, which now needs the Senate's green light. However, the dollar took the hardest hit from dovish comments from Fed officials. Fed's Governor Philip Jefferson said a pause before more hikes later might allow the economy time to digest current tightening and avoid bank stress. His comments were echoed by Philadelphia Fed President Patrick Harker but defied by Cleveland Fed President, Loretta Mester, who said she saw no "compelling reason" to pause. According to the CME FedWatch Tool, the probability of future rate hikes has flipped from previously showing odds favoring a 25 bps hike in June to over 70% odds the Fed will leave rates unchanged on June 14. On Friday, investors will be watching the US nonfarm payroll report to assess the state of the labor market. From a technical perspective, the EUR/USD pair maintains a negative short-term bias according to indicators on the daily chart, although the bearish momentum has eased a tad. The pair faces the next relevant resistance at the 1.0810-20 area, where the 20-day simple moving average (SMA) converges with the 100-day SMA, threatening to complete a death cross. Beyond that level, the EUR/USD perspective could improve, putting the 1.0900 area back on the radar. On the other hand, the 1.0635 low stands as immediate support, followed by the 1.0600 psychological level.
by Alex_Boltyan_FXAnalyst
Weak Euro - War between central banks!FOREXCOM:EURUSD is under sell pressure. Germany is officially in recession. Inflation numbers came short in both Spain and Germany. These are signs for interest rates in eurozone is slowing down the economy and at some point ECB needs to stop increasing interest rates, which would make euro weaker. In contrast to this, job openings and GDP numbers came positive for the US economy. This is increasing the hand of FED for further rate hikes. All these fundamentals are pushing FOREXCOM:EURUSD lower. TA shows that the price is following the down channel. The channel support and pivotal point supports (both monthly and quarterly) are around 1.05-1.053 zone. We will watch if that area holds or not for a long opportunity. Disclaimer – WhaleGambit. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
by WhaleGambit
Are you dripping into your 401k yet?Are you dripping into your 401k yet? Not bad area to start dripping in imo for longer term positioning. Dovish powell, in reality it was all stated before and thats why we've had the market really for weeks/months softening rate hikes - the real question is when they will actually STOP! Now, we are at key resistance area, I like the next area of resistance 4200-4300. I'd appreciate any pull back for ES & NQ key tip: The market is forward looking Trade your own plan TJ
CME_MINI:ES1!
by Trade_Journal
The Debt Ceiling AgreementThe debt ceiling is a limit set by the U.S. Congress on the amount of debt that the federal government can have outstanding. This debt is primarily made up of two components: debt held by the public (like U.S. Treasury bonds held by investors) and intragovernmental holdings (like those in the Social Security Trust Fund). From a financial perspective, the debt ceiling is significant for several reasons: 1. Creditworthiness of the United States: The U.S. government is seen worldwide as an issuer of risk-free assets, primarily because it has never defaulted on its debt. If the debt ceiling is not raised in time, it could potentially lead to a default, shaking the world's confidence in U.S. government securities. This could increase the interest rates that the U.S. has to pay to borrow money in the future. 2. Global Financial Markets Stability: U.S. Treasury securities are used as a benchmark for many other types of credit and are widely held by financial institutions around the world. A default could cause significant upheaval in these markets and potentially lead to a financial crisis. 3. Economic Recession : A default could lead to severe economic consequences. It could cause a sharp decrease in government spending (since the government couldn't borrow to finance its operations), which could in turn lead to job losses and potentially a recession. Treasury Secretary Janet Yellen warned of this risk in the case of the 2023 debt ceiling negotiations. 4. Budgeting and Planning: The debt ceiling also has implications for how the government budgets and plans its finances. When the debt ceiling is reached, the Treasury Department has to use "extraordinary measures" to keep the government funded, which can create uncertainty and inefficiency. 5. Political Tool: While not strictly a financial point, it's worth noting that the debt ceiling has often been used as a political tool. Lawmakers may refuse to increase the debt ceiling without certain concessions, such as spending cuts or policy changes. This can lead to financial uncertainty, as was the case during the 2023 debt ceiling negotiations. The negotiations that led to the agreement were marked by considerable compromise. President Biden, for instance, noted that the agreement represented a compromise where not everyone got what they wanted but was nonetheless an important step forward1. House Speaker Kevin McCarthy, despite opposition within his own party, committed to passing the bill within 72 hours of its introduction on the House floor. This commitment was a testament to the urgency felt by lawmakers due to the looming threat of a potential default on the U.S. debt obligations. The agreement was a product of compromise and necessity, driven by the urgent need to avoid a default on U.S. debt obligations. It included a two-year budget deal holding spending flat for 2024 and imposing limits for 2025, effectively reducing spending as Republicans had insisted. This was in exchange for raising the debt limit for two years, until after the next election. The deal would boost spending on the military and veterans' care and cap spending for many discretionary domestic programs. However, the specifics of these spending caps remained subject to further debate between Republicans and Democrats. Conclusion The 2023 U.S. debt ceiling negotiations showcase the intricate dynamics of American politics and its intersection with economic policy. They underscore the importance of compromise in a divided government and the challenges that ideological divergences within parties can pose to such compromise. These negotiations and their outcome also highlight the potential economic implications, such as the risk of default, that can arise when political disagreements hinder prompt fiscal decisions.
FRED:GFDEGDQ188SEducation
by financialflagship
6
EURUSD BULLISH REVERSALThe dollar index fell 0.41% to 103.93, with the highest since March 20 at 104.54, after rising 0.1% yesterday, the sixth profit in a row, marking the longest such streak of daily gains this year amid high pricing for another Fed rate hike in June. Following such data and bullish remarks by Fed officials, chances of a 0.25% Fed rate hike in June rose from 40% to 62%. Still 15 days ahead of the rate decision. Risk Disclosure: Trading Foreign Exchange (Forex) and Contracts of Difference (CFD's) carries a high level of risk. By registering and signing up, any client affirms their understanding of their own personal accountability for all transactions performed within their account and recognizes the risks associated with trading on such markets and on such sites. Furthermore, one understands that the company carries zero influence over transactions, markets, and trading signals, therefore, cannot be held liable nor guarantee any profits or losses.
Long
by legacyFXofficial
More Rate Hikes on the MenuCBOT: Micro 30-Year Treasury Yield ( CBOT_MINI:30Y1! ) President Biden and House Speaker Kevin McCarthy reached an agreement in principle late Saturday to raise the nation’s debt limit and cut federal spending, ending a rollercoaster round of negotiations. The current national debt ceiling is $31.4 trillion. The tentative deal would raise it by $4 trillion through the end of 2024. In return, it would cap annual discretionary spending for two years, keeping non-defense spending levels flat. Future Fed Rate Actions With a US default and potential economic disaster being averted, the Federal Reserve (Fed) would likely stay on its course of fighting inflation. On May 26th, the Bureau of Economic Analysis (BEA) reported the Personal Consumption Expenditures Price Index (PCE) up by 0.4% in April to an annual rate of 4.4%. This surpassed both the market consensus of 3.9% and the March PCE of 4.2%. The Core PCE excluding food and energy is 4.7%, exceeding March level by 0.1%. The surprising rebound in inflation indicates that the Fed’s job is not done, even after it hiked the Fed Funds rate seven times last year and three more times in 2023. CME FedWatch Tool gauges the probabilities of rate hikes based on 30-Day Fed Funds futures pricing data. It shows that, on May 28th, the odds of a 25-bp hike in June FOMC meeting at 64.2%. The probability of raising another 25 bps in July is 27.1%. The futures market does not expect the Fed to cut interest rates before the end of the year. The interest rate market is in disarray, and this may present new trading opportunities. Mortgage Rate Tops 7% On Sunday, May 28th, the average 30-year fixed mortgage interest rate is 7.15%, rising 16 basis points from last week, according to Bankrate.com. This is an annual increase of 1.61%: the 30-year fixed was 5.54% on May 26th, 2022; Prior to the Fed rate hikes, it was only 3.65%-3.85% in February 2022. MORTGAGE30US, the mortgage rate data tracked by the Federal Reserve Bank of St. Louis, records 6.57% on May 25th. Meanwhile, CBOT 30-Year Micro Yield Futures is quoted 3.988% for its May contract last Friday. What does this mean? The 30-year duration interest rate spread between the riskless Treasury rate and a risky mortgage rate is now 258 basis points. For comparison, in September 2021, the same spread was only 80 bps with a 2.1% Treasury yield and a 2.9% mortgage rate. The spread has more than tripled in the past two years. When the Fed started raising rates last year, both Treasury yield and mortgage rate rose. The trends diverged in October. In the mortgage market, banks continued to raise lending rates in response to the actual increases in the cost of capital. In the financial market, “Fed Pivot” expectations weighed on Treasury prices. As the Fed lowered the rate increases from 75 bps to 50 bps and then 25 bps, 10- and 30-Year bond yields fell, while 1-Month and 2-Year yields rose, creating a negative yield curve, or the so-called inverted yield curve. Why Treasury Yield Needs to Catch Up In hindsight, mortgage bankers are proven to be right, while the rate cut forecast by bond investors is premature. With the new twist in inflation data, both bond yield and mortgage rate have the potential to go up further in the coming months. Treasury bond yield has some “catching up” to do as investors adjust their expectations. Here is my logic: Firstly, raising the debt ceiling opens up trillions of dollars of new government borrowing. By the rule of supply and demand, a high demand of money will raise its price, all else constant. Treasury bond yield is the price the government paid to borrow money; Secondly, the last-minute deal on debt ceiling helps avoid a potential economic crisis. The housing market is cooling but unlikely to crash any time soon. This ensures that the higher mortgage rates are here to stay; Thirdly, the large interest rate spread created an arbitrage opportunity for lenders by borrowing from the bond market to fund the mortgage operations with the same maturity; Therefore, the 30-year Mortgage-to-Treasury spread could narrow in the future. Since mortgage rate is not likely to fall, the gap could be closed by a higher Treasury yield. We could express the view of high Treasury yield expectation by establishing a long position in CBOT 30-Year Micro Yield Futures. The June contract 30YM3 is quoted 4.000% last Friday. Each contract has a notional value of 1,000 index points, which equates to $4,000 at current quote. CME Group requires an initial margin of $300 per contract. Current Fed Funds target rate is 500-525 bps. Hypothetically, if the Fed raises 25 bps in June, and 30-Year Treasury Yield goes up by the same amount, a long futures position could gain $250. This would be equivalent to an 83% return, excluding commissions. Long Futures would lose money if the yield falls, by $10 for each basis point movement. The July contract 30YN3 will begin trading this week. I would monitor the opening price to determine if it is still quoted at a discount - below short-term Treasury rate and mortgage rate. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CBOT_MINI:30Y1!Long
by JimHuangChicago
Debt ceiling aside, watch the dollar and central bank meetings!As the debt ceiling discussions draw to a close, the dollar's rally indicates that markets have largely priced in this event. The focus now returns to the Federal Reserve (Fed) and its notably hawkish stance. Fed officials' recent statements and fed fund futures, which are pricing in another rate hike in the upcoming meeting, suggest it might be the right time to reassess the dollar pairs. Two weeks ago, we discussed the USDCNH pair, which made a swift upward move. Interestingly, the correlation between USDCNH and USDAUD has been increasing, and USDCNH has been a leading indicator for the last few moves, with USDAUD following its trend shortly after. To understand why, let's look at the AUDCNH as well as the USD. The moves in these pairs seem to be largely driven by the USD, as the AUDCNH has remained range-bound since 2022. The Reserve Bank of Australia (RBA) is scheduled to meet on June 6th and is expected to maintain its policy, while the Fed will meet on June 13th and is expected to hike rates. This divergence in monetary policies could further strengthen the case for a USDAUD rally. Current yield differentials continue to favour the USD carry trade and this trend appears set to continue as the Fed is expected to raise rates while the RBA remains on hold, widening the yield differentials. With the Fed poised for another rate hike and the RBA expected to maintain its policy stance, along with the dollar's strengthening and the USDCNH leading the AUDUSD pair, we could express our market views via a risk-managed trade long on the USD and short on the AUD. To set up this position, we can take a short position on the Micro AUD/USD futures, with stop-loss orders placed at 0.673 and take-profit orders at 0.627. A Micro AUD/USD futures contract represents 10,000 AUD, with each point move in AUD equalling USD 10,000. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.cmegroup.com www.cmegroup.com
Short
by inspirante
3
Macro Catalysts Looming over BTCThere are several macro catalysts looming that are expected to play out in the next days and next couple of weeks. - DEBT Ceiling - FEDNOW launch - SEC vs Ripple FED and US TREASURY - DEBT Ceiling The United States Treasury is going broke, the FED is broke and banks are crumbling. The market crash actually started back in September 2019 when the yield curve inverted (www.investopedia.com). The "Debt ceiling" cannot be raised indefinetly and at some point US will most likely have to default unless they reach a deal like they did in 2011. Image 1: fred.stlouisfed.org The FED is basically a bank that has assets and liabilities. Their profits are funnelled into the US government. Since August 2022 they have recorded over $60 billion in losses. Image 2: Image 2 The balance sheet of the Treasury shows how much money the US government has. After the COVID printer went crazy the balance sheet reached $1.8 trillion and has now plummeted to $100 billion. The US government is the ultimate PONZI, in order to pay their debts they need to keep borrowing. To make it worse the borrow estimates for Q1 2023 where about $500 billion but ended up being double that at about $1 trillion. This goes to show how the US is no longer in control and cannot predict what is to come. Image 3: www.bloomberg.com Bloomberg did a piece on Gold and assets that according to their survey will do well if US defaults. Data is based on 670 participants. Interesting to see that Bitcoin is considered to be a good BUY in that event. During a financial crisis, commodities such as Gold, Silver and Platinum have been the "go to" assets along with the YEN and Swiss Franc. It seems like Bitcoin is moving from a Risk-On asset to more of a commodity. FEDNOW Launching www.federalreserve.gov Another important upcoming catalyst is the FEDNOW banking system which goes live July 1st. This is kind of a precursor to CBDC. The question here is, how well will this function and is there any risk of bugs? All software is vulnerable, and a small bug can lead to huge implications because banks will not be able to move money if a bug happens. It is important that the system runs smoothly because on the same date another major catalyst is at play. - LIBOR to SOFR transition. LIBOR (London Inter Bank. Overnight Rate) is a group of banks that determines the interest rate on loans, this has been done in London as per the LIBOR The US wants to move to SOFR (Secured Overnight Financing Rate) , they want to have more control. We are talking about approximately $650 trillion worth of assets that will have to migrate. The rate on the SOFR is set by the Overnight Rates. Taking the FEDNOW and SOFR together, if a bug happens with the FEDNOW software, banks will not be able to move money. This would mean that the Rates will skyrocket. SEC vs RIPPLE - Hinman documents cointelegraph.com Another potential catalyst is the 2.5 year long case between SEC and Ripple. Recently Ripple convinced the court to force the SEC to reveal the Hinman documents. Hinman is a former SEC director who reportedly stated that ETH is not a security because "it is sufficiently decentralized." But since the documents are sealed it is uncertain what is exactly ment by this statement. Ripple believes revealing this document can help them win their case. Ripple winning this case could potentially be one of the most bullish catalysts to have impacted the crypto market. The public release was supposed to be June 6 but is now set for June 13. Important Dates: JUNE 1 Yellen states that it is likely that the treasury will not be able to satisfy all obligations as early as June 1 JUNE 13 - Hinman Documents made public - Inflation figures for May released JUNE 14 - FED announcement on interest rates decision JULY 1 - LIDOR to SOFR migration - FEDNOW launches
by Suneater69
U.S. National Debt U.S. default A topic that has been stirring people's minds in recent months is the U.S. debt ceiling. The general public is asking the question: "Will the national debt ceiling be raised or will the U.S. default?" The national debt is the result of the government's financial borrowing to cover the budget deficit. And, as you might have guessed, these borrowings must be paid for. For the last ~100 years, the U.S. has existed on borrowed capital by placing Treasury bonds. And there is a purely nominal borrowing limit, which in fact America has raised 45 times in the last 40 years so that it can borrow more and more and more. And if they don't, the Treasury will no longer be able to issue debt securities and will only have to cover their expenses with cash balances from their balance sheet. Spoiler: no money to pay off your own debt 💡Logical conclusion. The national debt ceiling will be raised anyway, and all the current discussions have only political overtones and have nothing to do with the real economic model of the states. Consequently, no teeth-grinding default and collapse of the global financial system should be expected How will the increase in state debt affect the cryptocurrency market? -If you're interested, put + www.usdebtclock.org Best regards EXCAVO
FRED:GFDEBTNLong
by EXCAVO
29
Gold to test $1950 supportXAUUSD remains vulnerable around intraday low of near $1960 as it drops for the second consecutive day while reversing Friday’s corrective bounce to $1980. The immediate resistance near $1965 suggests further downside of the gold price. A strong break below $1950 major support opens a path to March swing low of $1935. The resistance close to $1977 can challenge the XAUUSD upside. Overall, Gold is bearish below $1900 and $2000 and the rest of $1950 is highly expected. Gold may consolidate before a move to the downside. FOMC, high US data news and the Fed will also influence the next move.
OANDA:XAUUSDShort
by GOLDPIPSMAKER