Get started

Inflation

GC: Gold Reaches Record High on Hope of Fed Rate CutsCOMEX: Gold Options ( COMEX:GC1! ) Gold prices rallied to an all-time high on Friday. Spot gold climbed 1.6% to $2,069 per ounce, up 3.4% for the week. Gold price rose to $2,075 mid-session to beat the previous record of $2,072 reached in 2020. U.S. gold futures also broke new ground. The February 2024 contract of COMEX gold futures settled at a record high of $2,089.7, up 1.6% for the week. On Friday, gold futures trade volume was 259,889 lots, with open interest standing at 498,685 contracts. Options on the COMEX gold futures also attracted investor attention. On Friday, total options volume was 92,906, up 112% from the prior day. Open interest was 806,297 lots. For the lead February 2024 contracts, investors bought 19,565 call options and 6,894 put options. A call-to-put ratio of 2.83:1 indicates that investors are very bullish on gold. Gold prices have been pumped up on investor hype that the Federal Reserve may have completed its monetary tightening policy and could start cutting rates as early as March. How high could gold price go? Since last year, I have written extensively about gold on TradingView. Let’s revisit the fundamental drivers of the global gold market. Gold as an Inflation Hedge Gold has historically been an excellent hedge against inflation because its price tends to rise when the cost-of-living increases. The US CPI Index has a base value of 100 set at 1982-1984. Its latest reading in October is 307.7. Over the last 40 years, the cost of US goods and services has tripled on average. The year-end gold price between 1982 and 1984 averaged $378. As of Friday, the bullion gained 447% for the same period. Over the long run, investing in gold does beat inflation. Gold as a Precious Metal As a commodity, gold is negatively correlated to the US dollar. Since gold is priced in dollar, a strong dollar raises the cost for foreign investors who must pay more with weakened foreign currency. This reduces the demand for gold. “Strong Dollar, Weak Commodities” is the general theme in global commodities market, gold included. A closely related theme is “Higher Rates, Lower Prices”. Higher interest rates and Treasury bond yields raise the opportunity cost of holding non-yielding gold. Unlike other commodities, gold is not consumed or used up every year. Therefore, gold mining output is not a major factor in the pricing of gold. Gold as a Safe Haven Investment Gold retains its value in times of both financial chaos and geopolitical crises. People flee to its relative safety when world tensions rise. During such times, gold often outperforms other investments. In the past two decades, gold price peaked during the 2008 financial crisis, the 2010 European debt crisis, the 2018-19 US-China trade conflict, the outbreak of COVID pandemic, the Russia-Ukraine conflict, and the March 2023 U.S. bank run. Gold as an Investment Class As an investment class, gold competes for investor money along with stocks, bonds, cryptos and money-market funds. Even at record high, gold gained only 13.2% year-to-date, underperforming S&P 500 (+19.6%), Nasdaq 100 (+46.4%) and Bitcoin (+136.0%). A False Narrative on Monetary Easing The recent rise in the stocks and gold is largely shaped by the changes in market sentiment. Investors believe that the Fed is shifting gears from restricted to easing policy. Looking back in the past two years, market sentiment might not be the most reliable gauge of the Fed’s next step of action. The market has called for the Fed Pivot prematurely and incorrectly multiple times. We will need to wait and see what’s happening next. In his speech at Spelman College in Atlanta on Friday, the Fed Chair said that “the risks of under- and over-tightening are becoming more balanced,” but the Fed is not thinking about lowering rates right now. Investors focus on the current rate well into restrictive territory, but pointedly ignore the warning that it was premature to speculate on easing rates. The confirmation bias is at work here. They hear what they want to hear and create a new narrative that rate cuts will come sooner. Pricing in 5-6 rate cuts in a year is very aggressive. The Fed Chair has been accused of being too late to act, seeing inflation transitory earlier on. When it comes to cutting rates, the Fed would be very cautious, and at a very slow and measured pace. Trading Opportunities with Gold Options Market fundamentals haven’t changed. Market sentiment, however, has shifted. The aggressive rate-cut assumption has the effect of lowering the expected interest rates. This helps raise the present value of future cash flows. Hence, stock value goes up. Lower bond yield reduces the disadvantage of holding the non-yielding gold, and the US dollar weakening makes gold more attractive to foreign buyers. This bull market is vulnerable. If investors adjust their rate-cut assumptions from 5-6 to 2-3 times, the market could turn nosediving. However, investors set their sight on rate cuts and will not abandon it until the fact rejects the false narrative. Gold has a so-called “Santa Claus rally” and could continue for a while. The Fed Chair’s statement could become more convincing if: • Nonfarm payroll stays strong (December 8th) • CPI stops falling (December 12th) • The Fed keeps rate unchanged and emphasizes on fighting inflation (December 13th) Options on COMEX Gold Futures (GC) could be a cost-efficient and risk-mitigated way to express one’s opinion on how quickly the Fed would cut rates. Each options contract is based on 1 futures contract and has a notional value of 100 troy ounces of gold. At $2,089.7, each contract is worth $208,970. For illustration purpose: For the February 2024 contract, an out-of-the-money (OTM) call at 2190 ($100 above futures price) is quoted at 18.80. To acquire 1 call options requires an upfront premium of $1,880 (= 18.80 x 100 ounces). An OTM put at 1990 ($100 below futures price) is quoted at 9.00. To acquire 1 put requires an upfront premium of $900 (= 9.00 x 100 ounces). Options premium is significantly lower than futures margin, which stands at $7,800 per contract. It’s a fraction of the cost if you were to buy 100 ounces of gold in the spot market. If the trader buys a call and gold futures goes up, his account will increase in value. Unlike investing in spot gold or gold futures, the payoff in options is nonlinear, determining by the Black-Scholes option model. Similarly, when the trader buys a put and gold futures declines, he would also make a profit. On the flip side, the trader could lose money if the market moves against him. But the maximum loss is capped at the upfront premium. 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
COMEX:GC1!
by JimHuangChicago
7
EUR/USD drops ahead of eurozone CPIThe euro is in negative territory in Thursday trade. In the European session, EUR/USD is trading at 1.0940, down 0.27%. Germany's inflation rate declined sharply in November and the eurozone is up next, with the November inflation report later today. German inflation dropped to 3.2% y/y in November, down from 3.8% in October and below expectations. This was the lowest inflation rate since June 2021 and was driven by lower food and energy inflation. Will eurozone inflation follow suit? The markets are expecting a modest decline for November. Headline inflation is expected to fall to 2.7%, down from 2.9% in October, and the core is expected to ease to 3.9%, down from 4.2% in October. If inflation falls modestly as expected, it is unlikely to cause the ECB to reconsider its rate policy. The markets have priced in a rate cut in May 2024 and a softer-than-expected print would likely result in the odds of a rate cut being brought forward. The ECB has signalled a 'higher for longer policy', as have the Federal Reserve and other major central banks. Even though inflation has been dropping, it remains considerably higher than the ECB's 2% target and the central bank hasn't given any indications of a rate cut. Investors will be looking for hints about rate policy from ECB President Christine Lagarde, who will speak today at an ECB forum in Frankfurt after the eurozone inflation release. In the US, second-estimate GDP for the third quarter was revised to 5.2%, up from the initial estimate of 4.9%. The strong reading should ease fears of a recession but also provides the Fed with little reason to trim rates while inflation remains well above the 2% target. The Fed has signalled a 'higher for longer' stance on rates but the markets are more dovish and have priced in a rate hike in March 2024 at 45%, according to the CME's FedWatch tool. EUR/USD is putting pressure on support at 1.0920. Below, there is support at 1.0873 1.0986 and 1.1033 are the next resistance lines
by OANDA
EUR/USD dips as German inflation declinesThe euro is showing limited movement on Wednesday. In the North American session, EUR/USD is trading at 1.0984, down 0.11%. Gerrmany's inflation rate dropped more than expected, coming in at 3.2% y/y in November. This was down considerably from 3.8% in October and below the market consensus of 3.5%. This was the lowest inflation rate since June 2021 and was driven by lower food and energy inflation. Services inflation eased to 3.4%, down from 3.9%. Core inflation dropped to 3.8%, down from 4.3% in October. There's a lot to like in this inflation print and ECB policy makers will no doubt be pleased as German inflation continues to fall. The next text is on Thursday, with the release of eurozone inflation for November. Headline inflation is expected to fall to 2.7%, down from 2.9%, and the core is expected to ease to 3.9%, down from 4.2%. The ECB has signalled a 'higher for longer policy', as have the Federal Reserve and other major central banks. Even though inflation has been dropping, it remains higher than the ECB's 2% target, and the central bank hasn't given any indications of a rate cut. The markets are more dovish and have priced in a rate cut as early as May. If eurozone CPI follows the German release and declines more than expected, we could see the odds of a rate cut brought forward ahead of May. The US economy provided another reminder today that the economy is in strong shape. US GDP (second estimate) climbed an impressive 5.2% y/y in the third quarter, the strongest quarter since Q4 2021. The release beat the market consensus of 5.0% and was higher than the preliminary estimate of 4.9%. The economy showed marked improvement compared to the second quarter, which had growth of just 2.1%. EUR/USD is testing support at 1.0986. Below, there is support at 1.0920 1.1033 and 1.1099 are providing support
by OANDA
How the Grinch Stole Black FridayCME: E-Mini S&P 500 Options ( CME_MINI:ES1! ), E-Mini Nasdaq 100 Options ( CME_MINI:NQ1! ) Initial data from the biggest U.S. shopping day sends a mixed signal. • E-commerce sales on Friday increased by 8.5% year-over-year, while in-store sales grew by just 1.1%, according to MasterCard Spendingpulse. The aggregate Black Friday retail sales rose 2.5%, excluding automotive sales and not adjusted for inflation. • Adobe Analytics estimated that Black Friday shoppers spent a record $9.8 billion in U.S. online sales, up 7.5% from last year, according to Bloomberg. • Brokerage TD Cowen lowered its U.S. holiday spending estimate to 2-3% growth, from 4-5%, as it forecasts flat Black Friday traffic. On Friday, I toured a dozen stores in Alton, Illinois, a small midwestern town where the Illinois River and Missouri River merge and form the mighty Mississippi. My trip covers big box retailers Kohl and Target, discount retailer Walmart, home improvement store Home Depot, specialty store Big Lot, thrift stores Dollar Tree and Goodwill, and the Alton Square Mall. My unscientific survey reveals some common patterns: unfilled parking lot, low frequency of shoppers coming in and out, no crowd in the store, and a short wait line at the checkout counter. What’s missing this year are the deeply discounted and limited quantity Big Ticket merchandises that drive shoppers to the stores at 5:00 a.m. After taking the 4% core CPI into account, the real growth in Black Friday sales comes to a negative number. Shoppers are paying more for fewer merchandises. The Grinch who stole the show is inflation. While inflation rate has been in decline this year, it only means a slower rate of price increase. The absolute price level continues rising. CPI for All Urban Consumers is 307.7 in October 2023, up from 252.9 in October 2018. The cumulative price increase in the last five years is 21.7%. While online sales is very robust, in-store purchases are more subdued. However, even though Black Friday is not as exciting as it used to be, U.S. consumers are remarkedly resilient when it comes to holiday shopping. When cash saving is depleted, they tap into credit card borrowing. Once credit limit is maxed out, they opt for the “buy now pay later” option offered by many stores and payment apps. As long as the job market stays strong, the deterioration of consumer spending will be a slow process. In my writing last week, I hypothesized that the U.S. retail sector could collapse if holiday shopping falters. With a mixed signal from Black Friday, we need to monitor Cyber Monday and the rest of the holiday shopping season to validate this claim. Year-to-date Performance by Asset Class As we are fast approaching the end of 2023, I want to pause and compare how major market assets performed so far. Below are year-to-date returns, ranking from high to low, for eight financial instruments. They each represent a major asset class: 1. Bitcoin (Cryptocurrency): +132.2% 2. S&P 500 (Equity Index): +18.8% 3. Gold (Precious Metal): +8.5% 4. Euro (Forex): +3.1% 5. Copper (Base Metal): +0.6% 6. WTI (Energy): -1.8% 7. 10-Year Bond (Fixed Income): -9.0% 8. Corn (Agricultural): -30.9% The stock market has an above-average annual gain, while cryptocurrencies have out-of-the-chart extraordinary performance. The rest of the asset classes either have mediocre returns or lost money for investors. One may tend to think what’s flying high now will continue to fly high. Is that true? Back testing this using the 2022 annual return, we will see completely different ranking: 1. Corn (Agricultural): +13.8% 2. Gold (Precious Metal): +2.6% 3. WTI (Energy): -0.7% 4. Euro (Forex): -6.2% 5. Copper (Base Metal): -14.8% 6. S&P 500 (Equity Index): +19.6% 7. 10-Year Bond (Fixed Income): -20.0% 8. Bitcoin (Cryptocurrency): -63.8% Corn, the loss-leader in 2023, was the champion star performer in 2022. Bitcoin lost the most last year, then rebounded and climbed the highest this year. Past performance is no guarantee of future performance. We can’t emphasize enough this plain simple truth. The Battle between the Fed and Market Expectation The Fed’s rate decision remains the single most important factor that drives market direction. Currently, investors price in an aggressive rate-cutting schedule for the Fed, while the Fed adapts to a step-by-step approach to rate decision-making. As time goes by, market expectation and the Fed decision will have to converge. We may not know who will give in first, but jobs and inflation data released ahead of the Fed meeting could carry invaluable insight. In my writeup, “Fed Pivot Breathes Life into Markets”, published on November 6th, I explored the idea of using stock index options to trade the events of big reports. The November jobs report will be released on December 8th, and the November CPI data will be published on December 12th. These big reports, available to the Fed right before the December 15th FOMC, could have a major impact on its rate decision. Consider this: Stock market volatility is at a 3-year low. VIX is currently quoting 12.5, down from about 26 in March. You could find asset-specific volatility using CME Group’s CVOL data. We know that options value is positively correlated with volatility. A low volatility suppressed the premium of both call and put options. My theory: The cost of acquiring options is getting lower. If a big report comes in beyond market expectation, volatility could spike, making the options more valuable. What’s more: with stock indexes trending up, put options get even cheaper. Therefore, the time may be ripe to trade the options on CME E-Mini stock index futures. CME E-Mini S&P 500 index futures ( NYSE:ES ) has a notional value of $50 times the index. With the underlying December futures ESZ3 settled at 4568.25 last Friday, an out-of-the-money (OTM) put options with the strike price of 4500 is quoted 21.50. An OTC call with 4650-strike is quoted 13.00. To acquire one put options, a trader will pay a premium of $1,075 (= 50 x 21.50) up front. The cost of one call options is $650 (=50 x 13.00). CME E-Mini Nasdaq index futures ( SEED_ALEXDRAYM_SHORTINTEREST2:NQ ) has a notional value of $20 times the index. With the December futures NQZ3 settled at 16,011, an OTM put options with a 15,500-strike is quoted 66.75. An OTC call with a 16,500-strike is quoted 49.50. To acquire one put options, a trader will pay a premium of $1,335 (= 20 x 66.75) up front. The cost of one call options is $990 (=20 x 49.50). If ES and NQ rise, call options would become more valuable, while put options decline in value. When the market turns against the trader, he could lose money, up to but not beyond the upfront premium. Similarly, if ES and NQ fall, put options would gain while call options lose out. When the trader is wrong, he could lose money, up to but not beyond the upfront premium. 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
CME_MINI:NQ1!
by JimHuangChicago
GOLD - Short Squeeze Similar to 2008 ?Hi Traders, Investors and Speculators of the Charts 📈📉 Ev here. Been trading crypto since 2017 and later got into stocks. I have 3 board exams on financial markets and studied economics from a top tier university for a year. In today's analysis, let's discuss the recent surge in gold. Have we seen this before or is it dejavu? In light of the recent fears concerning the banking system, gold has been increasing rapidly. Bitcoin follows on it's heels as many investors diversify into crypto. (Please check out related ideas below, I did a comprehensive update on the SVB collapse). Now let's get call it what it is - a short squeeze. A short squeeze is a situation that can occur in the trading of commodities, stocks or other financial assets where investors who have bet against a particular asset (by shorting) are forced to buy back the asset at a higher price than they initially sold it for. This can happen when there is a sudden surge in demand for the asset, causing its price to rise sharply, which then triggers a chain reaction of buying by short sellers who need to cover their positions. To understand how a short squeeze works, let's start with a brief overview of short selling. Short selling is a trading strategy in which investors sell borrowed shares of an asset, hoping to buy them back at a lower price in the future. The idea is to profit from a decline in the asset's price, as the short seller can buy back the shares at a lower price than they sold them for, pocketing the difference as profit. However, short selling is inherently risky, as there is no limit to how much the asset's price can rise. If the price of the asset increases, short sellers may be forced to buy back the shares at a higher price than they sold them for, resulting in a loss. Now, let's assume that a large number of investors have sold a particular asset short, betting that its price will fall. If the asset's price starts to rise instead, these short sellers may start to feel pressure to buy back the shares to cover their positions, as they do not want to incur further losses. As more and more short sellers start to buy back the asset, its price may continue to rise even further, which can create a feedback loop. This, in turn, can trigger more short sellers to buy back the asset, creating a self-reinforcing cycle of buying that can drive the price up even higher. At some point, the short sellers may become desperate to cover their positions, as they fear the asset's price will continue to rise. This can lead to a sudden surge in demand for the asset, which can cause its price to skyrocket. This sudden increase in demand for the asset, driven by short sellers trying to cover their positions, is what is known as a short squeeze. The short sellers are "squeezed" out of their positions, as they are forced to buy back the asset at a higher price than they initially sold it for. A short squeeze can happen after a strong bullish surge because gold is a popular asset for short sellers to bet against. Short sellers often sell gold futures contracts or exchange-traded funds (ETFs) with the expectation that the price of gold will fall, allowing them to buy back the contracts or ETFs at a lower price and pocket the difference as profit. However, if the price of gold starts to rise unexpectedly, these short sellers may become nervous and begin to buy back their positions to limit their losses. As more and more short sellers buy back their positions, this creates additional buying pressure, which can push the price of gold even higher. If the price of gold continues to rise, some short sellers may become desperate to cover their positions, as they fear that the price will continue to increase and their losses will mount. This can lead to a short squeeze, as short sellers compete with each other to buy back gold contracts or ETFs, driving the price even higher. Additionally, a short squeeze in the gold market can be exacerbated by the fact that gold is often seen as a safe-haven asset , particularly during times of economic uncertainty or geopolitical tension. During such periods, demand for gold can surge, leading to a sharp rise in its price. This can create a situation where short sellers are caught off guard and forced to cover their positions at a loss, which in turn can drive the price of gold even higher. One notable example of a short squeeze in the gold market occurred in the early 1980s. In the late 1970s, gold prices had surged due to high inflation, political uncertainty, and a weak US dollar. However, by the early 1980s, inflation had begun to decline and the US dollar had strengthened, leading many investors to believe that gold prices would fall. As a result, a large number of investors began to sell gold short, betting that prices would decline. However, in January 1980, the Soviet Union invaded Afghanistan, leading to a spike in geopolitical tensions and a surge in gold prices. This caused some short sellers to begin buying back gold in order to limit their losses, which in turn led to further price increases. As the short sellers continued to buy back gold, other investors began to take notice and also started buying, leading to a widespread short squeeze that caused gold prices to soar to an all-time high of $850 per ounce in January 1980. This short squeeze ultimately led to significant losses for many investors who had bet against gold, while those who had held long positions in the metal enjoyed substantial profits. During past short squeezes in the gold market, prices have risen significantly, sometimes reaching all-time highs. For example, as I mentioned earlier, in January 1980, gold prices reached an all-time high of $850 per ounce during a short squeeze. Another example occurred during the global financial crisis of 2008-2009, when investors flocked to gold as a safe-haven asset amid market turmoil. In March 2008, gold was trading around $900 per ounce, but by September 2011, it had reached an all-time high of $1,920 per ounce. Can it be possible to see something similar to this over the next few months ? In other words, be careful to short gold at resistance. This is exactly what would seems like a logical scenario after a period of upward trading, but we're trading at ATH's and in uncharted territory, so who can say where the next resistance zone is? It's important to note that short squeezes are unpredictable events and can be influenced by various market conditions and factors. Additionally, historical price movements may not necessarily indicate future price movements. Therefore, it's always important to conduct thorough research and seek professional financial advice before making any investment decisions. _______________________ 📢Follow us here on TradingView for daily updates and trade ideas on crypto , stocks and commodities 💎Hit like & Follow 👍 We thank you for your support ! CryptoCheck
TVC:GOLDLong
by CryptoCheck-
39
EUR/USD steady as German GDP contractsThe euro is almost unchanged on Friday. In the European session, EUR/USD is trading at 1.0903, down 0.03%. German GDP posted a minor drop in the third quarter, coming in at -0.1% q/q. This was down slightly from -0.1% in the second quarter and matched the market consensus. On an annualized basis, GDP declined by 0.4%, down from a revised o.1% gain in Q2 and missing the market consensus of -0.3%. The consumer spending component of GDP decelerated in the third quarter and was a key driver of the decline in GDP. German consumers remain in a sour mood and are being squeezed by rising interest rates and a high inflation rate of 3.8%. The German business sector is also pessimistic about economic conditions. The Ifo Business Climate index managed to climb to 87.3 in November, up from 86.9 in October but below the market consensus of 87.5. A reading below 100 indicates that a majority of the companies surveyed expect business conditions to deteriorate in the next six months. Earlier this week, German services and manufacturing PMIs pointed came in below 50, which points to contraction. The manufacturing sector is particularly weak and has been in decline since June 2022. It has been a relatively light week for US releases, with markets back in action after the Thanksgiving holiday. Later today, the US releases manufacturing and services PMIs, with little change expected. Still, the markets will be watching carefully, as the data will provide insights into the strength of the US economy. The consensus estimates for November are 49.8 for manufacturing (Oct: 50.0) and 50.4 for services (Oct. 49.8). If the readings diverge significantly from the estimates, we could see some strong movement from the US dollar before the weekend. There is resistance at 1.0943 and 1.0997 1.0831 and 1.0748 are providing support
by OANDA
GBP/USD rises after Bailey's hawkish remarksThe British pound continues to rally on Tuesday after recording back-to-back winning days. In the North American session, GBP/USD is trading at 1.2544, up 0.33%. Earlier, the pound touched a high of 1.2559, its highest level since September 6th. Bank of England Governor Bailey testified before the Parliament's Treasury Committee earlier today. Bailey had a clear message for the markets, warning that they were underestimating inflation and "putting too much weight" on the fact that headline inflation is in decline. Headline CPI dropped to 4.6% in October, down sharply from 6.7% in September. However, much of that slide is due to falling energy prices. The BoE is more concerned with core CPI and services prices which remain stubbornly high - core CPI dropped from 6.1% to 5.7% in October. With the battle against inflation clearly not over, Bailey is pushing back hard against market speculation of a rate cut in mid-2024 and has said that cuts remain a long way off. The BoE is still concerned about inflation risks, such as the Israel-Hamas war and a possible spike in energy or food costs. The markets, which have priced in three rate cuts in 2024, are focused on the poor economic outlook and the risk of a recession, which should dampen any appetite in the BoE to raise interest rates. The Federal Reserve releases the minutes of the November meeting later today. At the meeting, the Fed maintained rates at 5.25%-5.50% for a second straight time and the markets are confident that the Fed is done with tightening and will trim rates in mid-2024. However, the Fed is in no mood to talk rate cuts, with inflation still well above the 2% target. At the meeting, Powell sounded hawkish, saying that inflation was still too high and that the Fed was prepared to raise rates if necessary. The minutes will likely bear a  similar hawkish message and that could provide a boost to the US dollar. GBP/USD is testing resistance at 1.2476. Above, there is resistance at 1.2575 1.2394 and 1.2312 are the next support levels
by OANDA
US CPI UpdateUS CPI US Headline and Core CPI for October both came in lower than expected (decrease). US Headline CPI: YoY – Actual 3.24% / Exp. 3.3% / Prev. 3.7% (Green on cha rt) US Core CPI: YoY – Actual 4.02% / Exp. 4.2% / Prev. 4.13% (Blue on chart) The chart below illustrates the direction of the current YoY down trend for both Headline and Core CPI however we are still not at the historical moderate levels of inflation desired. You can see these moderate levels of inflation between 1 – 3% from 2002 – 2020 below. Nice to see the Core CPI come down, almost down, into the moderate historical averages PUKA
ECONOMICS:USIRYY
by PukaCharts
Market Update - November 17th 2023 Bitcoin and ether dip early, but recoup some gains later in the week: Bitcoin and ether had a sudden drop on Tuesday as equity markets roared following a favorable inflation report. Both cryptos, however, retraced losses quickly. Ether was also boosted on Thursday as BlackRock filed its S-1 for a spot ether ETF with the SEC. Solana’s upward trajectory continues as Cathie Wood touts the network: Solana gained ~8% this week as ARK Invest CEO Cathie Wood praised the network’s speed and cost-effectiveness in a CNBC interview. Solana has rallied ~150% over the past 30 days and is up more than ~325% over the past year. Equity markets soar as inflation cooled in October: Lower-than-expected inflation data released on Tuesday fueled a strong rally across equities, with the S&P 500 and Nasdaq both gaining over 2% on the day. The favorable inflation data suggests we may be nearing the end of the Fed's interest rate hiking cycle, which has brought rates to a 22-year high. Avalanche partners with JPMorgan and Apollo to bring blockchain to portfolio management: Avalanche announced a partnership with J.P. Morgan and Apollo Global Management during this week’s Singapore Fintech Festival to use blockchain technology in portfolio management. The initiative, overseen by the Singapore Monetary Authority’s (MAS) Project Guardian, plans to leverage blockchain smart contracts and tokenization to automate and simplify portfolio management. 📜 Topic of the Week: Private and Consortium Blockchains 🫱 Read more here
GEMINI:BTCUSD
by Gemini
USDX - BULLISH SCENARIOThe US Dollar index is currently positioned near crucial support levels, including the 38% retracement from July 2023 lows to October 2023 highs, alongside the previous descending channel trend line and support from the 50% retracement, 200-day moving average (DMA), and a potential bull flag pattern. Despite recent declines due to factors like a slightly weaker Consumer Price Index (CPI), reduced yields, and a general stock market rally, these support levels might prove stronger than anticipated. With the stock market vulnerable to a near-term pullback and upcoming European Purchasing Managers' Index (PMI) releases, the narrative of "USA exceptionalism" could persist. A significant bullish signal for the US Dollar index would be a rally above the 50-day moving average (DMA) at approximately the 105.75 level.
PEPPERSTONE:USDXLong
by legacyFXofficial
GBP/USD edges lower, eyes retail salesThe British pound has extended its losses on Thursday. In the European session, GBP/USD is trading at 1.2401, down 0.11%. The pound is having a roller-coaster week. GBP/USD surged 1.8% on Tuesday following the soft US inflation print and climbed to a two-month high. However, the pound has since coughed up about half those gains and is trading at the 1.24 line. The UK releases retail sales on Friday, which could result in further volatility. UK retail sales had a dreadful September, coming in at -0.9% m/m and missing the forecast of 0.2%. The markets are expecting a rebound in October, with a forecast of 0.3%. September was unseasonably hot, which led to fewer purchases of autumn clothing. Consumers remain deeply pessimistic about the economy and are being squeezed by higher heating and fuel costs, elevated borrowing costs and a softer job market. On the inflation front, there was good news on Wednesday as inflation dropped to 4.6%, down sharply from 6.7% and below the forecast of 4.8%. This was the lowest level since October 2021 and inflation has finally dropped below 5%. However, the BoE has been stressing that the battle against inflation is far from over, and has projected that inflation won't fall to the 2% target until late 2025. In the US, producer prices fell 0.5% m/m in October, its largest drop since April 2020 and below expectations. The decline in gasoline prices was a major factor in the soft release. Retail sales for October dipped 0.1%, missing the estimate of 0.3% and snapping a six-month streak of gains. The weak numbers are further evidence that the US economy is cooling down. GBP/USD is putting pressure on support at 1.2374. Below, there is support at 1.2312 1.2476 and 1.2522 are the next resistance lines
by OANDA
US yields looking "toppy"; more weakness after rallyThe US CPI came down more than expected yesterday at 3.2% y/y, and as a result the USD fell sharply with US yeilds, while stocks and metals are on the rise. For now, this seems to be a very important data as it causes also a very important breakdown on USD index and US yeilds. Looking at the US yeilds, we have five waves down, so it means that top is in place, and suggests that speculators believe that FED is done with hiking. But road map to lower yields/higher bonds will be a bit "bumpy", so be aware of some rally, especially if we consider five waves down on 10 year US yields. So A-B-C rally can cause some pullbacks on XXX/Dollar pairs, which will eventually see more upside after pullbacks. Grega
TVC:US10Y
by ew-forecast
AUD/USD soars on US inflation, Aussie employment nextThe Australian dollar is unchanged on Wednesday, after massive gains a day earlier. In the European session, AUD/USD is trading at 0.6505. Australian wage growth climbed 1.3% q/q in the third quarter, matching the consensus estimate and above an upwardly revised 0.9% gain in Q2. This was the highest gain since records started in 1997, but the spike was largely due to an increase in minimum wage and a pay rise for elderly care workers. The unusual confluence of factors behind the strong wage growth print meant that it had little effect on market pricing of a rate hike. The markets have priced in a pause above 90% at the Reserve Bank of Australia's next meeting on December 5th. The RBA raised rates earlier this month after four straight pauses but the hike was considered dovish by the markets and the Australian dollar took a tumble following the decision. Australia releases employment data on Thursday, with the labour market continuing to show resilience. The economy is expected to have added 20,000 jobs in October, compared to 6,700 in September. The RBA will be keeping a close eye on consumer inflation expectations, which is expected to fall in October from 4.8% to 4.1%. The US inflation report was only a bit lower than expected, but the US dollar was pummelled on Tuesday with sharp losses against the major currencies. The Australian dollar soared, gaining 2% against the greenback. Monthly, headline inflation was unchanged in October for the first time in 15 months, with lower gasoline prices helping to push inflation lower. On an annual basis, headline inflation fell from 3.7% to 3.2%, below the market consensus of 3.3%. Core inflation inched lower to 4.0%, down from the September reading of 4.1% which was also the market consensus. AUD/USD is putting pressure on resistance at 0.6526. Above, there is resistance at 0.6592 0.6476 and 0.6408 are providing support
by OANDA
EUR/USD Pullback before 1.10!The EUR/USD pair holds above 1.0850 but faces resistance below the 1.0900 threshold during the early European trading hours on Wednesday. Weaker-than-expected US inflation data exerts some bearish pressure on the US Dollar (USD) and supports the EUR/USD pair. That being said, the markets anticipate that the Federal Reserve (Fed) has concluded the hiking cycle this year and expects rate cuts in the early second quarter of 2024. The region between 1.0895 and 1.0900 represents an immediate resistance level for the pair. Further north, the next barrier is at 1.0933 (high of August 22). Additional resistance is observed at 1.0947 (high of August 30), with the final destination at 1.102 (a round figure and high of August 11). On the flip side, the initial support level is near the psychological round figure of 1.0800. The next contention level will emerge at the November high of 1.0756, followed by 1.0713 and 1.0672. The market overnight experienced a false breakout of the swing high, which could lead the price to react during the London session, initially gaining liquidity above the Asia high and subsequently pulling back towards the 38% Fibonacci level. Let me know what you think, comment, and leave a like. Happy trading to everyone from Nicola, the CEO of Forex48 Trading Academy.
Short
by Forex48_TradingAcademy
37
GBP/USD Pullback before of 1.27!On Tuesday, the GBP/USD experienced a significant surge following the release of a US inflation report, which increased the likelihood that the Federal Reserve has concluded its interest rate hikes. The US Bureau of Labor Statistics reported a more pronounced decrease in October's inflation than expected, with the Consumer Price Index (CPI) dropping to 3.2% annually from 3.7%, and the core CPI falling from 4.1% to 4%, missing estimates. These data triggered a dollar collapse, with the US Dollar Index falling over 1.40% to 104.13, and the yield on the US 10-year benchmark note dropping to 4.45%, a level last seen in September 2023. In the US, the Producer Price Index, Retail Sales, New York Fed Empire State Manufacturing Index, and Federal Reserve speakers are anticipated. Additionally, I note a price in supply zones in H4 and the break of some swing highs, suggesting a potential pullback before a continued bullish run towards 1.27. Comment and leave a like, greetings from Nicola, the CEO of Forex48 Trading Academy.
Short
by Forex48_TradingAcademy
7
USD/JPY slips on soft US inflationThe Japanese yen has rebounded on Tuesday with strong gains. In the North American session, USD/JPY is trading at 150.70, down 0.67%. The yen has snapped a nasty six-day losing streak which saw the currency lose 1.5%. The US dollar is broadly lower today after the October inflation report was weaker than expected. US inflation was softer than expected in October. Headline CPI eased to 3.2% in October, down from 3.7% in September and August and lower than the market consensus of 3.3%. Much of the downswing can be attributed to lower gasoline prices. On a monthly basis, headline CPI was unchanged, compared to a 0.4% gain in September and a market consensus of 0.1%. The core rate, which excludes food and energy prices, showed a more moderate decline. Core CPI fell from 4.1% to 4.0%, shy of the market consensus of 4.1%. Monthly, core CPI dropped from 0.3% to 0.2%, below the market consensus of 0.3%. The markets have responded to the soft inflation print by repricing in a pause in December at 94%, compared to 85% a day earlier. Japan's GDP is expected to have contracted in the third quarter, with a consensus of -0.4% y/y. This would be a huge downturn from the 4.8% gain in the second quarter and could have significant ramifications on monetary policy. If the economy experienced negative growth as expected, the Bank of Japan will find support for its argument that the economy is too fragile to exit negative interest rates. There has been growing speculation that the central bank will tighten policy in the near term due to persistently high inflation and signs of wage growth. A weak GDP print will provide the BoJ with a reason to continue its ultra-loose policy until there is evidence that growth is strengthening. USD/JPY pushed below support at 151.61 and is testing support at 150.82 There is support at 150.05 and 149.29
by OANDA
$GEO Border Detention Facilities - Profiting off of incompetenceGood morning everyone, Today I am evaluating a stock I have legitimately found valuable for a few months. With the escalation at our border (Record numbers of crossings in October) It is time to consider how we can profit from such a tragic situation. I've been invested in stocks like NYSE:GEO and NYSE:CXW for the past year or so, however, I think right now might be the most bullish I've been on them in a while. In this video, I lay out potential price targets for NYSE:GEO and show some of the methodology behind my trading strategy. Here are my outlined Targets / Resistances and supports Strong Support Level: $8.30 Strong Resistance Level: $9.95 Resistance 2: $12.35 Target 1: $14.31 Target 2 / Resistance 3: $17.58 Target 3: $19.82 Remember, both targets and resistances represent solid points to take profit. Don't get greedy The GEO Group (GEO) operates special-purpose, state-of-the-art residential centers on behalf of U.S. Immigration and Customs Enforcement (ICE). All ICE Processing Centers operated by GEO have a long-standing record of providing high-quality, culturally responsive services in safe, secure, and humane environments that meet the needs of the individuals in the care and custody of federal immigration authorities.
NYSE:GEOLong
by Helios_Capital_Investment
1
SR3: Trading Opportunities in a Disrupted Treasury MarketCBOT: Three-MO SOFR Futures ( CME:SR31! ) Breaking News: The US Treasury bonds are risk-free No Longer ! Last Friday, top credit ratings agency Moody's lowered its credit outlook on the U.S. to "negative" from "stable", citing large fiscal deficits and a decline in debt affordability. It has so far maintained the AAA credit rating for U.S. sovereign bonds. This move follows a rating downgrade by Fitch, another major ratings agency. On August 1st this year, Fitch cut U.S. credit rating from AAA to AA+, a decision made following months of political brinkmanship around the U.S. debt ceiling. Going back, the S&P was the first credit agency to give Uncle Sam a bad grade. It cut the U.S. credit rating from AAA to AA+ in August 2011 and has maintained it ever since. U.S. credit rating is now lower than that of Australia, Canada, Denmark, Germany, Luxemburg, Netherlands, Norway, Singapore, Sweden, Switzerland, and the European Union. These countries all enjoy AAA ratings from the top-3 major ratings agencies. The risk-free assumption on US Treasury bonds has long been the foundation of the global credit market. It typically measures the riskiness of a debt issue by adding risk premium(s) on top of a risk-free interest rate, which by default is the Fed Funds rate. If the U.S. bonds are no longer deemed risk-free, should we change “the mother of all reference rates” with a new risk-free rate? It would be like cracking the foundation of the Empire State Building and will bring chaos to the $133-trillion global bond market. In my opinion, this Doomsday scenario is very unlikely to occur. ‘A revisit of the following high-profile credit market events helps us understand why. August 2011: the S&P downgraded U.S. credit rating On August 5, 2011, the S&P announced its decision to give its first-ever downgrade to U.S. sovereign debt, lowering the rating by one notch to "AA+", with a negative outlook. S&P was direct in its criticism of the governance and policy-making process, which took the U.S. to the brink of default as part of the 2011 U.S. debt-ceiling crisis. This unprecedented downgrade drew sharp criticism from the Obama administration and the U.S. Congress, but the S&P refused to budge. What did the investors think? • The 10-Year Note with a par value of 100 traded at around 130 before the downgrade. A month later, its price hardly moved. By year end 2011, the 10Y note rose to 132. • The 30-Year Bond was quoted at 136. It reached 145 by year end, up 6.6%. • Following the downgrade, the S&P 500 lost 7.6% in August. But it quickly rebounded. The S&P ended the year at 1,258, up 3.3% from before the downgrade. I rephrase a famous quote to explain what happened: “When the U.S. sneezes, the World catches a cold.” The U.S. downgrade created a bigger chao in global markets. Investors pulled money out of emerging markets, which were considered even riskier. They put money back in the U.S. stocks and bonds, which, ironically, are deemed safer. There has not been any long-term impact from the S&P downgrade, or from its decision to keep U.S. rating at the less-than-perfect rating: • The S&P settled at 4,415 last Friday, up 260% since the downgrade in 2011; • US GDP has grown from $15.6 trillion in 2011 to $25.5 trillion in 2022, up 63%; • In 2011, US national debt totaled $14.8 trillion, a level the S&P considered as “unsustainable”. It has now mushroomed to $33.7 trillion, up 128%. The U.S. government has not defaulted on any debt or missed any interest payment. August 2023: Fitch downgraded U.S. credit rating In a surprise move on August 1st, Fitch downgraded U.S. Treasuries to AA+ from AAA. The U.S. markets were already in decline following the July 25th Fed decision to raise interest rates by 25 bps to 5.25-5.50%. Markets were clearly driven by the Fed, and the Fitch downgrade was merely a footnote. • The 10-Year Note traded at around 112 at the time of the downgrade. It fell as much as 6% to 105. The 10Y note has recovered somewhat to 107 by Monday. • The 30-Year Bond was quoted at 136. It dipped to 108 (-20%) by October, and it’s now quoted at 113, a rebound of nearly 5%. • Following the July rate hike, the S&P 500 has dropped from 4,588 to 4,117, a sharp 10% drawdown. However, it has since staged ten winning streaks, pushing the index back to 4,415, an impressive 300-point rebound (+7.2%). November 2023: Moody’s lowered U.S. credit outlook Last Friday November 10th, Moody's kept U.S. credit rating at AAA, but lowered its outlook to "negative" from "stable", citing large fiscal deficits and a decline in debt affordability. • The 10-Year Note ended the day at 4.646%, a modest gain of 0.016%. • The 30-Year Bond was settled 4.756%, down 0.011%. • The S&P 500 closed at 4,415, up 68 points or +1.6%. The U.S. hardly moved on Monday, as investors waited for the new inflation data. Today, the BLS reports that October CPI was unchanged from previous month, with the annual headline CPI dropping to 3.0%, below market expectations. The S&P pushed up 2% to reach 4,500 in morning trading. There you see how little the impact from a downgrade. Trading with CBOT SOFR Futures In “SOFR: Farewell to LIBOR”, published on July 3rd, I explained that the Securitized Overnight Funding Rate (SOFR) has already replaced the London Interbank Offering Rate (LIBOR) as the leading global credit market benchmark. If you are curious about what this means to you, check out your credit card agreement. You would find that the bank interest rate calculation usually consists of a “prime rate” and a markup, where the prime rate is defined as the sum of SOFR and a fixed rate. CBOT 3-Month SOFR Futures ( FWB:SR3 ) lists 40 quarterly contracts. It shows what the SOFR would be, quarter by quarter, ten years down to road. Based on Friday settlement prices and volume, here is the market consensus on SOFR through the end of 2024: • Current Fed Funds rate: 5.25-5.50% • December 2023 SOFR: 5.415%, volume: 265,153 • March 2024 SOFR: 5.350%, volume: 283,053 • June 2024 SOFR: 5.140%, volume: 324,902 • September 2024 SOFR: 4.880%, volume: 469,238 • December 2024: SOFR: 4.605%, volume: 402,005 SOFR futures are the most liquid futures contracts in the world. On Friday, 2,787,432 lots changed hands. Open interest was 10,655,832 contracts. The contracts showed here each traded over a quarter million lots in a single day. We could assume that market prices reflect best investor consensus on interest rate level at any given time in the future. Here are my observations: • The lead December contract is quoted at 5.415%, in line with the current Fed Funds range of 5.25-5.50%. It dropped to 5.3675% Tuesday after the CPI data. • The September 2024 quote of 4.635% on Tuesday, is 62-87 bps below range, indicating 2-3 rate cuts of 25 bps within the next ten months. • The December 2024 quote of 4.330% is 92-107 bps below range, indicating three to four rate cuts by the end of next year. In my opinion, the Fed decision, the Fed Chair statement and the latest data on payrolls and inflation, sent conflicting signals to the market, creating confusion among investors. Market prices are temporarily dislocated, which may present trading opportunities. The September 2024 quote indicates two or three rate cuts. I think that this assumption is too aggressive. The Fed, in both its statements and the Fed Chair public comments, repeatedly stressed that it never raised the issue of if or when to cut rates. If a trader holds the view that the September SOFR rate shall rise, he could express it with a short position in SOFR futures. The quoting convention of SOFR future is 100-R, where R is the effective interest rate. If the rate goes up, futures price will go down. SOFR contracts have a notional value of $2,500 x contract-grade IMM Index. Each 1 basis-point move would result in a gain or loss of $25 per contract. The minimum margins are $850 for the September contract. Hypothetically, if the trader is correct and the rates turn out to be 25 bps high, he would have a theoretical return of $625 per contract (= 25 X 25). The trader would lose money if the Fed cut rates faster than anticipated. 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
CME:SR3Z2023Short
by JimHuangChicago
SPX And The CPI WeekThe S&P500 index SPX surged by +1.31% last week to close above 4400 resistance level. The index is showing that there's more potential is yet to come, to hit 4520 next. The week ahead: The meeting between US President Biden and China President Xi is the highlight; there is also US CPI and retail sales, the former being a key input into the Fed's policy deliberations; China activity data will also be released. Sectors that may witness higher volatility are; Big techs, EVs, Oil & Gas and Semiconductors stocks.
SP:SPXLong
by AlyaAkram