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Inflation

US inflation data is at multi year resistance..Us inflation is at multi year resistance.it shows inflation has already peaked. once it will start coming down markets will rally to the upside. Will markets makes new ath sooner or later ? Well who knows?? Ask yourself that question. Will fed stop rising rates for now? Very unlikely. Will fed could consider lowering the basis points ? Most likely. Will fed do it in upcoming meeting (23rd sep'22) this month? Unlikely.
ECONOMICS:USIRYYShort
by EsCApetHEmAtRiCS
1
So… how’s that deflation narrative looking?We’ve become so accustomed to headlines of ‘peak inflation’ and falling input prices that some have been throwing the wonderful ‘deflation’ word around. And we think most would enjoy a bit of deflation, as that would result in lower interest rates. However, with commodity prices (particularly oil) being a key driver of inflation, a lot of the softness can be tied back to the underperformance of commodities over the past 12 months. Supply chain disruptions have also been in the rear-view mirror and no longer a concern (or are they?) Over 30,000 UPS workers are vowing to strike if a new pay deal is not negotiated by 1 August, which should throw a nice spanner in the works of the US (and global) parcel delivery system. Russia has pulled out of a key grain deal and is bombing Ukraine ports to derail trade in the Black Sea. And India has banned rice exports (apart from Basmati) to fight domestic inflation, adding to fears of another round of food inflation. It is therefore worth noting that the Thomson Reuters CRB commodities index is seemingly breaking out of a 12-month retracement on the monthly chart. Furthermore, the retracement lasted 11 months before June’s small bullish candle, so the broad commodities index may have bottomed in May at -19.8% y/y. And assuming this is the breakout of a falling wedge, it projects a target around the 329.60 high. But if it were deemed a bull flag, the target sits around 365. And what do we think will happen to consumer prices further down the track? Of course, they will begin to rise again. And the worrying fact is that inflation tends to come and go in waves, so if commodities continue to rally then it looks like the next wave of rising y/y inflation is pending.
TVC:TRJEFFCRBLong
by CityIndex
Deciphering Divergent Signals The Complex Economic LandscapeThe global economy continues to face profound uncertainties in the wake of COVID-19's massive disruptions. For policymakers and business leaders, making sense of divergent signals on jobs, inflation, and growth remains imperative yet challenging. In the United States, inflation pressures appear to be moderately easing after surging to 40-year highs in 2022. The annual Consumer Price Index (CPI) declined to 3% in June from the prior peak of 9.1%. Plunging gasoline and used car prices provided some consumer relief, while housing and food costs remained worryingly elevated. Core CPI, excluding food and energy, dipped to 4.8% but persists well above the Fed’s 2% target. Supply chain improvements, waning pandemic demand spikes, and the strong dollar making imports cheaper all helped cool inflation. However, risks abound that high prices become entrenched with tight labor markets still buoying wages. Major central banks responded with substantial interest rate hikes to reduce demand, but the full economic drag likely remains unseen. Further supply shocks from geopolitics or weather could also reignite commodity inflation. While the direction seems promising, the Fed vows ongoing vigilance and further tightening until inflation durably falls to acceptable levels. The path back to price stability will be bumpy. Yet even amidst surging inflation, the US labor market showed resilience through 2022. Employers added over 4 million jobs, driving unemployment down to 3.5%, matching pre-pandemic lows. This simultaneous inflation and job growth confounds historical norms where Fed tightening swiftly slows hiring. Pandemic-era stimulus and savings initially cushioned households from rate hikes, sustaining consumer demand. Early retirements, long COVID disabilities, caregiving needs, and possibly a cultural rethinking of work also constricted labor supply. With fewer jobseekers available, businesses retained and attracted talent by lifting pay, leading to nominal wage growth even outpacing inflation for some months. However, the labor market's anomalous buoyancy shows growing fragility. Job openings plunged over 20% since March, tech and housing layoffs multiplied, and wage growth decelerated – all signals of softening demand as higher rates bite. Most economists expect outright job losses in coming months as the Fed induces a deliberate recession to conquer inflation. Outside the US, other economies show similar labor market resilience assisted by generous pandemic supports. But with emergency stimulus now depleted, Europe especially looks vulnerable. Energy and food inflation strain household budgets as rising rates threaten economies already flirting with recession. Surveys show consumer confidence nosediving across European markets. With less policy space, job losses may mount faster overseas if slowdowns worsen. Meanwhile, Mexico’s economy and currency proved surprisingly robust. Peso strength reflects Mexico’s expanding manufacturing exports, especially autos, amid US attempts to nearshore production and diversify from China reliance. Remittances from Mexican immigrants also reached new highs, supporting domestic demand. However, complex immigration issues continue challenging US-Mexico ties. The pandemic undoubtedly accelerated pre-existing workforce transformations. Millions older employees permanently retired. Younger cohorts increasingly spurn traditional career ladders, cobbling together gig work and passion projects. Remote technology facilitated this cultural shift toward customized careers and lifestyle priorities. Many posit these preferences will now permanently reshape labor markets. Employers clinging to old norms of in-office inflexibility may struggle to hire and retain talent, especially younger workers. Tighter immigration restrictions also constrain domestic labor supply. At the same time, automation and artificial intelligence will transform productivity and skills demands. In this context, labor shortages could linger regardless of economic cycles. If realized, productivity enhancements from technology could support growth with fewer workers. But displacement risks require better policies around skills retraining, portable benefits, and income supports. Individuals must continually gain new capabilities to stay relevant. The days of lifelong stable employer relationships appear gone. For policymakers, balancing inflation control and labor health presents acute challenges. Achieving a soft landing that curtails price spikes without triggering mass unemployment hardly looks guaranteed. The Fed’s rapid tightening applies tremendous pressure to an economy still experiencing profound demographic, technological, and cultural realignments. With less room for stimulus, other central banks face even more daunting dilemmas. Premature efforts to rein in inflation could induce deep recessions and lasting scars. But failure to act also risks runaway prices that erode living standards and stability. There are no easy solutions with both scenarios carrying grave consequences. For business leaders, adjusting to emerging realities in workforce priorities and automation capabilities remains imperative. Companies that embrace flexible work options, prioritize pay equity, and intelligently integrate technologies will gain a competitive edge in accessing skills and talent. But transitions will inevitably be turbulent. On the whole, the global economy's trajectory looks cloudy. While the inflation fever appears to be modestly breaking, risks of resurgence remain as long as labor markets show tightness. But just as rising prices moderate, the delayed impacts from massive rate hikes threaten to extinguish job growth and demand. For workers, maintaining adaptability and skills development is mandatory to navigate gathering storms. Any Coming downturn may well play out differently than past recessions due to demographic shifts, cultural evolution, and automation. But with debt levels still stretched thin across sectors, the turbulence could yet prove intense. The path forward promises to be volatile and uneven amidst the lingering pandemic aftershocks. Navigating uncertainty remains imperative but challenging.
TVC:US10YEducation
by BitcoinMacro
5
Inflation vs Innovation Can the Markets Handle the HeatGlobal markets face contradictory forces in 2023. Inflation still simmers as central banks tighten money supply worldwide. Geopolitical friction continues while economic growth likely slows ahead. Yet technological transformation charges ahead, with artificial intelligence poised for explosive improvements. Investors and policymakers must stay nimble in this uncertain environment. After plunging painfully in 2022, stocks have rebounded with vigor so far this year. This despite raging inflation and the Federal Reserve's hawkish stance on interest rates. Hefty liquidity efforts in China likely buoyed prices. Investors may also have grown too pessimistic amid still-sturdy corporate profits. But sentiment could sour again if supply chain snarls resurface. In bond markets, yields continue reflecting dreary growth expectations after last year's surge. The inverted yield curve especially screams pessimism on the near-term economy. Meanwhile, the Fed's bond portfolio shrinkage has yet to rattle markets. This implies the Fed's quantitative easing and tightening have limited impact on actual money supply, defying popular perception. On inflation, early 2023 figures show it easing from 40-year heights but still well above the Fed's 2% bullseye. The Fed remains leery of declaring victory prematurely. Taming inflation sans triggering severe recession is an epic challenge. Geopolitical wild cards like the Russia-Ukraine war that evade the Fed's grasp will shape the outcome. Amidst these crosscurrents, technological forces advance relentlessly. The frantic digitization around COVID-19 now gives way to even more seismic innovations. The meteoric success of AI like ChatGPT provides a mere glimpse of the transformations coming for healthcare, transportation, customer service and virtually every industry. The promise appears gargantuan, with AI generating solutions and ideas no human could alone conceive. But the warp-speed pace also carries perils if ethics and safeguards fail to keep up. Mass job destruction and wealth hoarding by Big Tech could ensue absent mitigating policies. But wisely harnessed AI also holds potential to uplift living standards globally. For investors, AI has already jet-propelled leaders like Google, Microsoft, Nvidia and Amazon powering this tech revolution. But smaller firms wielding these tools may also see jackpot gains, as costs plunge and new opportunities emerge across sectors. That's why non-US and smaller stocks may provide superior opportunities versus overvalued big US tech. In conclusion, the global economic and financial landscape simmers with familiar threats and novel technological promise. Inflation may moderate but seems unlikely to vanish given lingering supply dysfunction and distortions from massive stimulus. Stocks navigate shifting sentiment amid rising rates and demand doubts. And machine learning progresses rapidly into a future we can now scarcely envision. Nimbly navigating such turbulence requires flexibility, tech savviness and philosophical courage. Responsibly steering AI's development is a herculean challenge, to maximize benefits and minimize pitfalls. Individuals need to stay skilled while advocating protections against job disruption. Policymakers face wrenching tradeoffs between growth, inflation and financial stability - all compounded by geopolitics. Yet within uncertainty lies opportunity for those poised to seize it. The future remains ours to shape, if we summon the wisdom and will to guide technology toward enriching human life rather than eroding it. The road ahead will be arduous but need not be hopeless, if compassion and conscience inform our creations.
NASDAQ:NDXEducation
by BitcoinMacro
Harmonically, US Interest Rates are Headed Toward 35%The US Interest Rate chart has been trading within a Descending Broadening Wedge and has recently broken out of the wedge. The target for a pattern like this is typically back to the inception of the pattern, which in this case would be 20%; but we also have an additional variable here, and that's the Potential Logscale Harmonic Formation we've made here. If we are to treat the action of this chart as we'd treat any other chart, then we'd expect that once B gets broken, we'd get an accelerated move all the way up to the Harmonic Completion of a Bearish Shark, which would land us at the 1.13/1.618 Harmonic Confluence Zone up at around 34-35% There have been previous instances where Harmonics have had a predictive quality over data like this, such as the accelerated liquidity exit out of the reverse repo facility, the bond yield charts on multiple occasions, and the US Inflation Rate Charts. Which can all be seen in the related ideas tab if you are skeptical of my use of Harmonic Patterns in this context.
ECONOMICS:USINTRLong
by RizeSenpai
Japanese yen sinks as inflation risesThe US dollar continues to rally as the Japanese yen is down for a fourth straight day. In Friday's European session, USD/JPY is trading at 141.93, up 1.33%. The yen has taken investors on a roller-coaster ride. The Japanese currency surged 2.37% last week against the greenback but has reversed directions and dropped 2.15% this week. Japan’s core inflation (excluding fresh food) ticked higher to 3.3% y/y in June, up from 3.2% in May and matching the consensus estimate. Core core inflation (excluding fresh food & energy) dipped lower to 4.2% y/y, down from 4.3% in May and matching the consensus. The readings indicated that the inflation picture barely changed in June, but that's not really good news for the Bank of Japan. The core CPI has now stayed above the BoJ's 2% target for the 15th straight month. BoJ Governor Ueda has continued the Bank's ultra-loose policy despite high inflation, insisting that inflationary pressures are temporary. This stance, however, is becoming increasingly untenable as inflation has been persistently high and is not showing any signs of falling. Friday's inflation numbers come just a week before the BoJ's meeting, and there is speculation that the central bank could phase out its yield curve control (YCC) policy that has been distorting bond pricing. A change to YCC would almost certainly send the yen sharply higher, which was the case late last year when the BoJ stunned the markets and widened the target band for 10-year government bonds. Earlier this week, Governor Ueda poured cold water on any change in policy, but this could be an effort to scare off speculators looking for a tweak to YCC. It seems more likely than not that the BoJ will maintain policy settings at next week's meeting, but a shift is certainly on the table, especially with the yen floundering near the 142 line. USD/JPY has pushed past resistance at 1.4067 and 141.28. There is weak resistance at 142.12, followed by 142.62 There is support at 139.68 and 138.52
by OANDA
ETHUSD Is Bullish While Above 1625, Support Is At 1800Hey all. In this video I will look on the ETHUSd which asha nice upwside potenial after current pause that can find a support and new buyers new 1800. One of the main reasons why Ethereum could stay in the uptrend is US Dollar which came down recently after inflation cooled down to 3% as reported last week, which can easily cause a bigger recovery for the cryptocurrencies in general as speculators can be looking for more dollar weakness and limited upside on US yields, as they believe that FED is very close to end the hiking cylce. Hope you will enjoy the video, and dont forget to click the like button. Grega
BITSTAMP:ETHUSDLong
by ew-forecast
GBP/USD edges lower ahead of UK inflationThe British pound has edged lower on Tuesday. In the North American session, GBP/USD is trading at 1.3038, down 0.27%. The UK is lagging behind other major economies in the fight to curb inflation. Will Wednesday's inflation report bring some good news? In May, CPI remained stuck at 8.7% y/y but is expected to ease to 8.2% in June. The core rate is expected to remain steady at 7.1%. On a monthly basis, headline CPI is expected to fall from 0.7% to 0.4% and the core rate is projected to slow to 0.4%, down from 0.8%. The inflation report could be a game-changer with regard to the Bank of  England's meeting on August 3rd. The BoE delivered an oversize 50-basis point hike in June and will have to decide between a modest 25-bp hike or another 50-bp increase at the August meeting. Last week's employment report pointed to wage growth picking up, which moved the dial in favour of a 50-bp increase. US retail sales for June provided a mixed spending picture. Headline retail sales rose just 0.2% m/m, below the 0.5% consensus estimate and the upwardly revised May reading of 0.5%. Core retail sales were much stronger at 0.6%, above the 0.3% consensus and the upwardly revised May release of 0.3%. The data points to resilience in consumer spending although momentum has slowed. The retail sales report did not change expectations with regard to rate policy, with the Fed expected to raise rates in July and take a pause in September. The Fed has tightened by some 500 basis points in the current rate-hike cycle and this has curbed inflation, which has fallen to 3%. Nevertheless, the Fed remains concerned that the solid US economy and a tight labour market will make it difficult to hit the 2% inflation target, and the Fed hasn't given any hints that it will wrap up its tightening in July, although the money markets appear to think this is the case. GBP/USD has support at 1.2995 and 1.2906 There is resistance at 1.3077 and 1.3116
by OANDA
1
Smart money bear trap thesis?Tags: Blackrock Bitcoin ETF, Inflation, PCE, FED, Wage-price spiral, BTC.D, ETH/BTC Could we be mimicking 1970's market? So last PCI reading came 3% but core CPI is still high and Core PCE (FED's preferred inflation measure) has been sticky in 4.5% area for past several months. Whilst inflation expectations have been tamed by FEDs continued "We remain focused on getting inflation back to 2%." This message must be maintained and a recession is inevitable. Look at 10Y3M yields and 10Y2Y bond yields. We have real pain yet to come. So headline inflation is being curved down and celebrated however the next step is the risk of a wage-price spiral which is being priced in and expected to also not become a threat once unemployment rises but the job markets are remaining resilient. Therefore, the FED will hold interest rates at 5.25-5.50 bps until inflation is confidently curbed. We have not yet seen fear in markets from recessionary risks. Everyone is thinking it will be a mild one however the future is hard to foresee and there are underlying financial risks not in the limelight yet. Now, you have the market context we shall dive into the charts!
INDEX:BTCUSDShort
by Muri001
1
The end of the tightening cycle is nighThe decline in the US inflation rate to more than a two-year low, marks a major step towards the end of the Fed’s historic monetary tightening cycle1. We believe key deflationary forces are in play – (1) weaker commodity prices (2) improvement in global supply chains (3) moderation in demand (4) lower inflation expectations. Therefore, the June decline in inflation is just the start of a series of decreases. Softer than expected inflation report As highlighted in the chart below, the details for June were also better than expected with key measures of underlying inflation coming in below forecasts. The inflation report suggests that some of the stickier components of inflation such as used cars and airline fares are also moderating. It’s important to note that most of the rise in the June CPI can be attributed to housing, however because of the way it is calculated it tends to lag current conditions. The S&P Case Shiller Home Price Index which tends to lead CPI shelter by roughly a year, is already flat which highlights US inflation is likely headed lower. Inflation for labour intensive services such as restaurants, recreation and personal care remained higher in June reflecting the pass -through of higher wages and robust services demand2. Potential further softening in the labour market could bring these categories back to target consistent levels. Softening in the labour market was evident in June’s employment report (nonfarm payrolls rose by 209k versus consensus 230k) which was weaker than expected for the first time in 15 months3. US Producer Prices confirmed a similar deflationary theme. The US Producer Price Index (PPI) inflation for June was softer than expected with headline and core PPI advancing 0.1% over the prior month4. Business surveys are also pointing to weakening pricing power, such as the Institute of Supply Management (ISM) services index which ties in with a lower inflation backdrop. US inflation can’t prevent the July rate hike While expectations for the July rate hike of 25Bps remain firmly in place, the market has scaled back expectations for a second hike – with 21bps / 3bps / 3bps of hikes priced for the July / September / November FOMC meetings5. The disinflation trend increases our belief that the Fed is close to, or will be, at the end of the current rate hike cycle. Earnings take centre stage for the next leg of the rally The key question now remains whether the market continues to trade off expectations of an easing narrative. Central bank policy has been the biggest drag for equities last year. The timing of the easing narrative comes at the heels of a volatile Q2 2023 earnings season. The S&P 500 Index earnings in the Q2 2023 are expected to decline 6.8% y/y, worse than the decline of 3.9% in the Q1 20233. This would be the largest earnings decline since the pandemic-fuelled 31.6% y/y decline in the Q2 2020. Earnings will be the key deciding factor for an extension in the current rally. Investors will be keen to hear from management whether they are looking to adopt a leaner cost structure and ways they are looking to remove excess capacity. Investors will be looking for guidance on productivity and efficiency gains rather than the financial engineering we have witnessed over the past decade. This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
FRED:DFF
by aneekaguptaWTE
1
The Powell meme bomb & pivotThe fed and Powell have tried everything to dismiss inflation . First ignoring it then saying transitory then changing the perimeters as to how it's calculated. Even Sleepy Joe then chimed in at one point by saying hotdogs are actually cheaper for your red white and blue lies. How about awards... Let's give Ben Bernanke the noble economics prize during this all of this insanity! How about an Oscar to a president? (Sean Penn to Zelensky) yeah why not?? Giving Bernanke an award like "Noble Economics" is like calling Dahmer chef of the year! What the heck is going on? People are so broke they can't even pay attention! Has reality become the twilight zone? or was it always? Who are these people that rule us? Can they really be this incompetent? If so why is there no accountability? Now to Powell and gang. Last year they were caught for insider trading, what was their punishment? They were forced to sell their stock, at record gains mind you. Really... that's a punishment now? No one even batted an eye. The west has become a bunch of zombie filled degenerate nations with it's citizens consuming filth at record pace even Usain Bolt would be envious of. For this charade to keep going, you need to print more zombie snacks (dollars) there is no other way. I do believe the market is pricing in an inevitable Fed pivot at the moment which could turn out to be a sell the news moment next year at some point (not Financial advice). Psychological warfare. The Psy-op being played has been ramped up to new levels the past couple years and it is being reflected in the market due to technology with access to investing now easier than ever with a device sitting in your pocket, just add a little emotion with degenerative news and voila. The Pivot will eventually come, but will be the long term effects of it? Anyone can assume but simple 101 Noble Bernanke economics will tell you it ain't good. Anyway, this is my rant for the day. Actually, I have a question. What effect do SEC (crypto) rulings have past American borders? Here is my opinion, (crypto specifically) They have no jurisdiction past American borders so the effect is limited if any. In my opinion these negative rulings will only stifle any American innovation and growth of the sector. It actually just opens doors for other countries to take advantage of it as crypto is global. Please give me your thoughts on this down bellow. Special Guest Appearance George Carlin Thanks WeAreSat0shi Stay Blessed!
TVC:DXYEducation
by WeAreSat0shi
2
PPI Good News on Inflation Bad News on Recession?S&P 500 INDEX MODEL TRADING PLANS for THU. 07/13 The softer than expected PPI on the top of yesterday's softer inflation numbers are likely going to stoke the "Half Full, Half Empty" debate to a higher pitch. The die-hard bulls would like to see it as an indication of the coveted "soft landing", while the die-hard bears would like to cast this as an indication of potential recession ahead. The next question that needs to be answered to resolve this debate in one way or another: is the softening inflation going to impact earnings numbers? We will start getting a glimpse into this starting from tomorrow. If early earnings show any unexpected weakness ("unexpected" is the key word there), then we might have seen an interim top; but, if the earnings appear to be on track or with a bias to the upside surprises then the next bull leg could get well entrenched. The previously stated level of 4500-4505 is the next area of resistance. Positional Trading Models: Our positional models indicate staying out of the markets until otherwise stated. By definition, positional trading models may carry the positions overnight and over multiple days, and hence assume trading an index-tracking instrument that trades beyond the regular session, with the trailing stops - if any - being active in the overnight session. Aggressive/Intraday Models: Our aggressive, intraday models indicate the trading plans below for today. Aggressive, Intraday Trading Plans: For today, our aggressive intraday models indicate going long on a break above 4507, 4491, 4467, or 4454 with a 8-point trailing stop, and going short on a break below 4497, 4486, 4478, or 4448 with a 9-point trailing stop.  Models indicate explicit long exits on a break below 4463, 4483, or 4504, and short exits on a break above 4483 or 4500. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 09:41am EST 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, #earnings, #ppi
SP:SPX
by TradersAICorp
AUD/USD remains red hot and is trading at 3-week highThe Australian dollar continues to sizzle and has climbed 1.04% on Thursday, after rising 1.56% a day earlier. In the European session, AUD/USD is trading at 0.6857, close to a 3-week high. Inflation remains the Reserve Bank of Australia's number one priority and Thursday's inflation expectations release vindicated the RBA's concern that inflation expectations are well anchored. The Melbourne Institute Inflation Expectations for July were unchanged at 5.2% and a notch higher than the consensus estimate of 5.1%. High inflation expectations can translate into inflation rising, which would force the RBA to continue raising interest rates. RBA Governor Lowe spoke on Wednesday. The speech dealt with RBA policy but any investors looking for insights into rate policy walked away disappointed. Lowe said that the full effects of high rates were yet to be felt and it remained to be seen if more hikes would be required. US inflation dropped lower than the estimate and that sent the US dollar broadly lower on Wednesday. Headline inflation fell from 4.0% y/y to 3.0%, and critically, the core rate dropped to 4.8%, down from 5.3%. Both readings were lower than the forecast and point to inflation continuing to move in the right direction. The inflation numbers were good, but likely not good enough to convince the Fed to pause at the July 27th meeting. The Fed is widely expected to raise rates at the July meeting but the positive inflation data has also raised the likelihood of a pause at the September meeting. There is a possibility that the Fed's rate-tightening cycle is finally over, but that will depend on economic data, particularly employment and inflation reports in the coming months. AUD/USD put pressure on resistance at 0.6878 earlier. This is followed by resistance at 0.6944 0.6772 and 0.6682 are providing support
by OANDA
EURUSD:Did the fed win the battle against inflation?Hey Traders, In today's trading session, our focus is on monitoring EURUSD for a potential buying opportunity around the 1.1100 zone. From a technical standpoint, EURUSD has successfully breached a significant resistance level at 1.1100. As a result, we are now observing the possibility of a retracement of this breakout, which could potentially lead to further upward movement and new highs. From a fundamental perspective, the recent release of soft CPI data has important implications. The softer CPI data suggests that inflationary pressures may be easing, which, in turn, could prompt the monetary policy to become less restrictive. When monetary policy becomes less restrictive, it typically leads to a weaker USD. Therefore, based on this fundamental analysis, there is a potential for USD weakness, further supporting the case for a potential buying opportunity in EURUSD around the 1.1100 zone. Trade safe, Joe.
Long
by JoeChampion
10
USD/CAD slips after BoC rate hikeThe Canadian dollar has posted strong gains in Wednesday's North American session. In the North American session, USD/CAD is trading at 1.3146, down 0.63%. On the economic calendar, it has been a busy day, with the Bank of Canada raising interest rates and US inflation falling lower than expected. The Bank of Canada raised rates by 0.25% on Wednesday, bringing the cash rate to 5.0%. The BoC has delivered 475 basis points in hikes since March 2022 and the aggressive tightening has sent inflation lower. Still, the BoC's rate statement noted that it remains concerned that progress towards the 2% target could stall and that it does not expect to hit the target before mid-2025. This can be considered a hawkish hike and the Canadian dollar has responded with strong gains on Wednesday. Wednesday's US inflation report should please the Federal Reserve, which has circled high inflation has enemy number one. The June release showed headline inflation falling to 3.0%, down from 4.0% in May. This beat the consensus estimate of 3.1% and was the lowest level since March 2021. Even more importantly, the core rate fell from 5.3% to 4.8%, below the consensus estimate of 5.0%. On a monthly basis, both the headline and core rate came in at 0.2%, below the consensus estimate. The inflation release was excellent news, but isn't expected to change the Fed's plans to raise rates at the July 27th meeting. The inflation data didn't change market pricing for the July meeting (92% chance of a hike), but did raise the chances of a September hike from 72% prior to the inflation release to 80% after the release. Although the jobs report on Friday showed nonfarm payrolls declining considerably, wage growth was higher than expected and likely convinced the Fed to raise rates at the July meeting before taking a pause. There is resistance at 1.3191 and 1.3289 1.3105 and 1.3049 are providing support
by OANDA
Dollar EXACTLY on Target as Predicted!Traders, It is always amazing to see properly researched TA play out as it indicates it will. In this case, the target seems to be following precisely the previously drawn arrows. Now, we will be testing that neckline on our H&S pattern again. My expectation is that we may incur another slight bounce there before finally breaking our long-held strong support, that neckline. Continued pause by the FED could help the dollar incur this crash. Inflation will be on and the stocks will continue the blow-off top I have been predicting for over a year! Take advantage of this dollar weakness for the intermediate time because once the dollar disintegrates to a certain point of future unknown weakness, the market will absorb the gravity of our economic predicament and could turn down, dropping fast and hard. We have some time before the latter occurs in my view (if it occurs) but only so much. Remain alert or follow me and I will attempt to keep you all up to date on the broader economic outlooks from the charts. Remember, this all helps us to make better trades in both the stock market and in crypto! Best, Stew SPY Chart
TVC:DXYShort
by stewdamus
NZD/USD dips ahead of RBNZ rate decisionThe New Zealand dollar is lower on Tuesday. In the European session, NZD/USD is trading at 0.6189, down 0.35%. The Reserve Bank of New Zealand will be in the spotlight on Wednesday. The central bank holds its policy meeting and is expected to leave the official cash rate unchanged at 5.5%. The RBNZ has raised rates 12 consecutive times since August 2021 but has signalled that it's time for a breather. Shortly after the May hike, Deputy Governor Hawkesby said that there would be a "high bar" for the RBNZ to continue raising rates.  The RBNZ won't be issuing a rate statement and there may not be much for the markets to digest other than the expected pause. The decision to pause is certainly not a no-brainer, given current economic conditions. Inflation is running at 6.7%, more than triple the Bank's target of 2% and the labour market remains tight. At the same time, demand has slowed and economic activity has cooled as the RBNZ's relentless rate hikes filter through the New Zealand economy. RBNZ policymakers are confident that the economy has cooled and inflation, although high, is on the right path. If inflation continues to fall, there is a good chance that the pause could be extended - the central bank would clearly like to wrap up the current rate-tightening cycle, and unlike what we saw when the Fed took a pause, there are no signals to the markets that this pause will be a one-time occurrence. New Zealand releases Manufacturing PMI for June on Wednesday after the rate decision. The manufacturing sector has contracted for three straight months, with readings below the 50.0 line, which separates contraction from expansion. The PMI is expected to rise from 48.9 to 49.8, which would point to almost no change. NZD/USD tested support at 0.6184 earlier. Below, there is support at 0.6126 0.6260 and 0.6383 are the next resistance lines
by OANDA
Preparing for the Earnings Season Kick Off Later this WeekS&P 500 INDEX MODEL TRADING PLANS for MON. 07/10 Markets seem to be searching for a direction, getting ready for the earnings season to kick off later this week. If early earnings show any unexpected weakness ("unexpected" is the key word there), then we might have seen an interim top; but, if the earnings appear to be on track or with a bias to the upside surprises then the next bull leg could get well entrenched. Until this clarity emerges, expect volatility and choppy markets ahead. The previously stated resistance level of 4400-4410 continues to be in play as critical for the next directional leg. Positional Trading Models: Our positional models indicate staying out of the markets until otherwise stated. By definition, positional trading models may carry the positions overnight and over multiple days, and hence assume trading an index-tracking instrument that trades beyond the regular session, with the trailing stops - if any - being active in the overnight session. Aggressive/Intraday Models: Our aggressive, intraday models indicate the trading plans below for today. Aggressive, Intraday Trading Plans: For today, our aggressive intraday models indicate going long on a break above 4432, 4417, or 4402 with a 9-point trailing stop, and going short on a break below 4409, 4397, or 4385 with a 9-point trailing stop.  Models indicate explicit long exits on a break below 4428 or 4414, and short exits on a break above 4388 or 4411. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 02:01pm EST 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, #earnings
SP:SPX
by TradersAICorp
GBP/USD eyes UK employment reportThe British pound has drifted lower on Monday. GBP/USD is trading at 1.2827 in the European session, down 0.09%. The UK labour market remains resilient despite a cooling economy and high interest rates. Tuesday's June jobs report is expected to show strong numbers. The economy is expected to produce 158,000 jobs in June, after a banner reading of 250,000 in May. The unemployment rate is projected to remain at a low 3.8% and unemployment claims are expected to continue declining. Wage growth is expected to rise to 6.8%, up from 6.5%. That sounds like great news, but not when you're the Bank of England and need the labour market to show some cracks and wage growth to slow down. A tight labor market and strong wage growth have hampered efforts by the central bank to lower inflation and the OECD said last week that the UK was the only major economy where inflation is still rising. The May inflation report was a disappointment, with headline inflation remaining at 8.7% and the core rate rising from 6.8% to 7.1%. BoE Governor Bailey will likely comment on the job numbers and investors will be looking for clues about the BoE's plans at the August 3rd meeting. The BoE has raised rates to 5.0%, but more tightening will be needed in order to curb inflation and the money markets have fully priced in a peak rate of 6.5% by February. The US dollar was broadly lower against the major currencies on Friday, after nonfarm payrolls slid to 209,000, below from the downwardly revised reading of 306,000 in May but not far from the 225,000 consensus estimate. The downturn may have surprised many investors who were caught up in the hype of a massive ADP employment release which showed a gain of 497,000. There was speculation of a blowout nonfarm payroll reading but in the end, the consensus estimate was close and the US dollar was broadly lower on expectations that the Fed could be close to winding up its rate-tightening cycle. GBP/USD tested support at 1.2782 earlier today. The next support level is 1.2716 There is resistance at 1.2906 and 1.2972
by OANDA
30Y: Housing Cost Jumps Amid Falling Headline InflationCBOT: 30-Year Micro Yield Futures ( CBOT_MINI:30Y1! ), Treasury Bond Futures ( CBOT:ZB1! ) As a result of runaway inflation and rising interest rates, US home buyers are confronted by high home prices, high down payments, and high monthly mortgage payments. A sneak peek into official housing market data between 2021 and 2023: • Median sales price of houses sold in the US ( FRED:MSPUS ) was $436,800 in the first quarter of 2023, per Federal Reserve Economic Data (FRED); • The median home price was $433,100 in Q1 2022 and $369,800 in Q1 2021. In the span of merely two years, home price jumped 18.1%; • Thirty-year fixed rate mortgage averaged 6.81% on July 6th ( FRED:MORTGAGE30US ); • The same mortgage was quoted at 5.30% a year ago and only 2.90% in July 2021. A typical family of four living in the State of Illinois earned a median income of $113,649 in 2022, according to the U.S. Census Bureau’s survey data. The example cited below illustrates the dramatic rise in housing cost from a family perspective: • If a 30-year-fixed mortgage is taken with a 20% down payment, the upfront cost is $87,360 (20% of FRED:MSPUS at $436,800), which is up $13,400 or 18.1% from two years ago; • Assuming the family’s take-home pay is 75% of gross income, their after-tax income would be $85,237 per year, or $7,103 per month; • Down payment already exceeded annual income. Adding in closing fees, moving cost, appliances and new furniture, upfront home investment could be well over $100K; • Using a mortgage calculator, we find that monthly mortgage payments were $1,724 if the home was bought two years ago; this equates to 24.3% of take-home pay; • New monthly payments would be $2,682, up sharply by 55.6%; mortgage expense now takes up 40.3% of the family’s after-tax income! This shows that an average US family these days can’t afford a median-price new home. A Tale of Two Cities The sharp increase in housing cost flies in the face of official US inflation data. June CPI report will be released on Wednesday. Economists forecast headline inflation to fall to 3.0% from 4.0% and core CPI to be lowered to 5.0% from 5.3% in May. The subset of inflation data shows Shelter cost growing at 8.0% annual rate in May. This doubles the headline CPI but is still a vast understatement for the soaring housing cost. So, where is the disconnection? Here is my theory. High mortgage rates have a bigger impact on mortgage payments than home price appreciation. Based on my calculation, each 1% increase in interest rate would translate into 9% more in monthly mortgage payments. In our example, mortgage rate grew about 4% from 2021 to 2023, and a mortgage is taken on a home priced at 18% higher. The resulting monthly payments jumped 55.6%. The compounding effect of higher prices and higher rates is fatal. I do not foresee either dropping in a meaningful way by next year. Therefore, do not expect the lower inflation to provide immediate relief to home buyers. Housing Market is not likely to crash US new home sales ( ECONOMICS:USNHS ) peaked at 1 million units in October 2021. Since then, it has nosedived and almost cut in half to 550K units by September 2022. Existing home sales ( ECONOMICS:USEHS ) followed a similar trend. It topped out at 6.6 million units in August 2020, and dropped to 4.0 million units in January 2023. Despite the hurdles facing home buyers, the US housing market appears to have recovered. New home sales reached 763K units in May, up nearly 12% from April. Existing home sales were 4.3 million units, up 300K from the beginning of the year. How could the housing market hold up? Isn’t homeownership already beyond reach? According to the National Association of Realtors, 65.5% of US families are homeowners. We could say that those with a “lock-in” rate are insulated from rising housing costs. Homeowners are “trapped” in their home in a rising interest rate environment. If they sell their houses and buy new ones, they will forfeit their 3% mortgage. This explains why existing home sales recovers at a much slower pace than new home sales. Low inventory and fewer sellers relative to buyers, together keep the housing market going strong. Prospective home buyers are not so lucky. But they have options. First is to lower their expectation and buy a smaller home; Second is to downgrade from single family home to townhouse or condominium. Finally, postpone home purchases and continue to rent. Several Economists predicting a housing market crash as big as the 2008 Subprime crisis. I think the Big Shorts would be disappointed this time. Prior to 2008, up to one third of homeowners had adjustable-rate mortgages. They survived rate-reset only because their house value went up. When it didn’t, they couldn’t refinance and defaulted on their loan. These days, adjustable-rate accounts for just 5% of all mortgages. The housing market is healthier now. FRED data shows the mortgage delinquency rate at 1.73% in Q1 2023, and the rate has been declining consistently for seven quarters. How Is This Relevant for Trading? I hold the view that the US housing market is very resilient. As long as the job market does not deteriorate, it could weather significant challenges including higher interest rates, indicating that the demand for home mortgages would stay strong. Whether you buy a new home or an existing one, a single-family home, a townhouse, a condo, or a trailer home, chances are you need a mortgage. The 30-year fixed rate mortgage is the most popular type of home loans in the US. Hence, this is where we should find solutions to manage interest rate risk. Interest rate data shows that the 30-year fixed rate is not closely correlated to the Fed’s interest rate decisions. In the past 12 months, the Fed Funds rate gained 130%, while the 30-year Fixed only moved up 28%. Since last November, the Fed raised interest rates five times, but the 30-year Fixed stayed relatively unchanged. My theory is that the decline in home sales countered the effect of rising funding cost, putting the mortgage rates in sideway moves. Now that the housing market recovers, 30-year Fixed could be on the way up. The July FOMC meeting could provide a boost if the Fed raises 25 bp as the market predicts. There is no liquid financial instrument on the 30-year fixed rate mortgage. However, it is closely correlated to the 30-year Treasury yield. The mortgage rate currently is priced at 2.8% above the Treasury yield. The spread appears to be stable over time. If we are bullish on the 30-year fixed mortgage rate, we could consider the following: One, to set up a short position on CBOT Treasury Bond Futures ( $ZB ). Remember that bond price and yield are inversely related. Rising yield would cause the bond to lose value. Each Treasury Bond futures contract has a face value of $100,000. The price quotation is based on $100 par value. The minimum tick is 1/32 of one point (0.03125), or 1,000/32 = $31.25. SEP contract (ZBU3) is quoted $123 and 22/32 on Monday July 10th. Two, to set up a long position on CBOT 30-Year Micro Yield Futures ( $30Y ). On July 10th, the August contract is quoted 4.029%. Each 30Y contract has a notional value of interest rate times 1000 index points. A move by a minimum tick of 0.001 index point would result in a gain or loss of $1 per contract. What’s the difference between these two? Treasury bond futures are very liquid. It traded 387,170 contracts and had an Open Interest of 1.25 million on July 7th. Micro Yield Futures are more intuitive. If yield goes up, futures price goes up too. The contract is catered to individual investors. Its margin requirement is $290, compared to $4,200 for the bond futures. 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