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Interestrates

Global bonds rout put central banks on the spot What a crazy market,” said Priya Misra, global head of rates strategy at TD Securities. “The 20s-30s curve is just reflecting the overall flattening theme in the market -- where central banks are forced to respond to inflation, which slows growth significantly.” Yield-curve flattening has gained momentum across global bond markets this week as traders scrambled to price in more aggressive central-bank actions to fend off inflation. The Bank of Canada surprised investors Wednesday by abruptly ending its bond-buying stimulus program and accelerated the potential timing of future interest rate increases; the Canadian yield curve flattened sharply in response. While declining oil prices account for some of the pullback in breakevens, “profit-taking after a very strong run over the past several weeks” was also a likely factor, said Michael Pond, head of inflation market strategy at Barclays Capital Inc. “We might be seeing de-risking ahead of the Fed,” which has been mindful of inflation expectations and doesn’t want to appear to be behind the curve, Pond said.
TVC:US10YLong
by GrizzlyBearBee
Bond market volatility rocks the EuroData released Thursday showed that U.S. GDP growth slowed sharply to a 2% annualized rate in the third quarter. Meanwhile, investors continued to price in rate increases by the European Central Bank, while dismissing President Christine Lagarde’s effort to push back against such expectations. Market expectations of higher interest rates has brought out bears, with Danske Bank strategists expecting the euro to fall to $1.10 over the next 12 months.
Short
by GrizzlyBearBee
Double Hawkish Tone From The BOC (28 October 2021)QE has ended. During the monetary policy meeting yesterday, the Bank of Canada (BoC) carried out a hawkish move. The initial expectation from the market was for the central bank to taper its quantitative easing (QE) from C$2 billion per week to C$1 billion per week. However, the BoC surprised the market by bringing its QE to a halt. Rate hike timeline carried forward. Back in September’s meeting, the BoC mentioned in the rate statement that interest rate will be held at its current level until its 2% inflation target is sustainably achieved. The central bank projected this target to be met during the second half of 2022. However, in the released rate statement yesterday, the BoC revised its projection and is now expecting the target to be met in the middle quarters of 2022. This directly translates to an earlier timeline for the central bank to hike interest rate. Quarterly economic projections. The BoC revised its economic growth projections for 2021 and 2022 downwards while revising upwards for 2023. The downwards revision comes as the central bank is expecting global supply chain disruptions and shipping bottlenecks to carry on into next year, having a negative impact on economic growth. As for inflation, the BoC revised its projections upwards for all three years, explaining that higher energy prices and supply bottlenecks are now “stronger and more persistent then expected”. Hence, the central bank is expecting inflation to be elevated into 2022. For year 2021, GDP: 5.1% (6.0%) CPI Inflation: 3.4% (3.0%) For year 2022, GDP: 4.3% (4.6%) CPI Inflation: 3.4% (2.4%) For year 2023, GDP: 3.7% (3.3%) CPI Inflation: 2.3% (2.2%) *Figures shown in parentheses refers to projections from July 2021 What’s next for the BoC? With the conclusion of QE, the BoC is now moving into the reinvestment phase. In this phase, the central bank will offset bonds maturities by purchasing new bonds to replace those that are maturing in order to maintain the overall bond holdings at around the same level. The targeted range of purchase will be from C$4 billion to C$5 billion per month. With that, the duration of the reinvestment phase has become a future monetary policy decision and will depend on the economic recovery and how inflation plays out in the future.
by GH_Lee
QCOM probably good for at least a short-term swingWith today's weak inflation data, treasury yields are falling, which should be at least short-term bullish for tech. Qualcomm has an additional news catalyst from yesterday's announcement that they authorized a $10 B buyback plan. Qualcomm looks to be exiting oversold territory on the daily RSI. It's just under 15 forward P/E right now, with PEG under 0.5 and dividend yield at 2.2%. We may get some positive analyst coverage over the next week as an upside catalyst. I took a gamble on October 22 calls at the 128 strike.
NASDAQ:QCOMLong
by ChristopherCarrollSmith
11
US 10 YEARS -W1/D1 - DB TARGET @ 1.6500WEEKLY : Double bottom (@1.1270) gives a technical target @ 1.65 %; it has nearly been filled with a high so far @ 1.6150 Interesting to note that current level coincides with the former congestion top seen early this year between April and May. Therefore, this 1.6000/1.6500 area may this time trigger the second top and should be watch at very carefully ! DAILY : The upside breakout of the triangle pattern around 1.3900 which also coincided roughly with the daily top clouds triggered an upside acceleration with a small consolidation. Note the RSI which is currently in a bearish divergence mode (wait for confirmation) As long as the US 10 Y stays and hold above TS, it is fine for further upside towards former March high @ 1.774 (50 % Fib ret @ 1.8060) ... but a failure to do it, would directly put the focus on the next support level around 1.35/1.45 former resistance area which becomes now the new support zone. As usual, watch an monitor closely price action on shorter intraday time frames to get intermediate clues for the upcoming trading sessions. Have a nice week All the best Ironman8848
TVC:US10Y
by Ironman8848
US GOV BONDS 10 YR YIELD - M1 ---> D1Good morning, today we are going to look at 3 time frames, beginning with : MONTHLY September monthly closing level is showing a failure to close above the ongoing downtrend line resistance.(1.5570). Interesting to note that the September intramonth high (1.56) was slighly higher than the 61.8% Fib ret @ 1.5270 (1.7740-1.1270 move). So for the time being recent price action was only a corrective move. October monthly closing level will validate or invalidate a potential breakout of this important downtrend line resistance. WEEKLY This week ongoing price action is, for the time being, showing also, a failure to clearly breakout the W1 downtrend line resistance. Important support levels on a weekly basis @ 1.4360 ahead of 1.3950; a failure to hold above this area would open the door for lower levels, towards 1.3440 (W1 top clouds) ahead of 1.25 Wait the weekly closing level for confirmation. DAILY Recent price action seen over the last couple of days, is also showing, for the time being, a breakout failure to crossover the daily downtrend line resistance and hold above it ! Looking forwards, I strongly suggest to look at the following levels : Support area : 1.43 - 1.38 A failure to hold above this zone would put the focus on the daily clouds support 1.35-1.27 Resistance area : On the upside, as above mentioned, a breakout and daily closing level above the ongoing downtrend line resistance (currently around 1.52), would be the first significant warning signal for a trend change (from a SELL on rally to a buy on dips) in watching carefully the following price action, if the breakout occurs. Be careful, on pullback (bull "yield" trap !!) Have a nice day All the best If you like my analysis, please do not forget to like it and me on your following list. Many thanks in advance Best regards Ironman8848
TVC:US10Y
by Ironman8848
ČNB massively increases interest ratesČeská národní banka (Czech National Bank) has increased interest rates from 0.75 to 1.5 This was not expected at all and is likely to have continuous impact on the markets. I started shorting both USD and EUR against CZK. Support on EUR Support on USD There is far more room to go for Crown against Dollar, but I expect the support to be broken unless FED and ECB also increase the rates. I will be updating my indicators this weekend with a new value.
Short
by OrcChieftain
US Dollar and the macro landscapeThe USD is currently looking pretty strong, with 96 looking very likely the first key target and resistance zone. It looks like it has formed a major based and has potentially bottomed for real... The US compared to other countries can raise rates a lot more and therefore the dollar could strengthen more, but the key is that raising rates will create all sorts of issues. There is too much US denominated debt and as rates go higher people struggle to pay debts and therefore sell real assets to buy USD. As inflation is going higher, people are already struggling to pay certain things and this is just the cherry on top. I seriously don't understand how raising rates will stop energy prices going higher, especially when the way the system is currently set and in its current state raising rates even to 3% would blow up the entire US junk bond market. There is too much leverage and malinvestment at this stage that can only be washed out violently. However I am not as bearish for now, especially on US stocks. I believe we will get a dip, and a strong dip but it is a great opportunity. I truly believe stocks have much higher to go and this is just an ordinary correction. We haven't had a 10% correction in the S&P 500 for about a year and in the meantime stock prices have risen tremendously. Yes there is more upside, but corrections are part of the game regardless of whether there is a narrative behind them or not. That could be high inflation, Fed raising rates, Evergrande or whatever... but the truth is that it was time. Based on my analysis stocks could fall another 5-10% before they bottom, but this doesn't mean it is going to happen in one candle. Expect chop for some time and a potential bottom when we get really high volatility with the VIX around 40. In the short term US rates could go up (bonds going down) and that move was building up for quite some time, but I don't think it will be a moonshot for rates and it won't be a long lasting move. At some point growth will slow down and many of the structural issues will be solved, so inflation will come down and we will be stuck in the same disinflationary environment... Lots of things will start breaking, lots of people will be trapped on the inflationary trade and rates will go negative next time around. So what do I see? Rates up to 1.5-2% and then back down again. What I find most interesting here is how the Russell 2000 looks like distribution, but as rates go up it could be the biggest beneficiary as people exit large caps to enter into small caps. Maybe that's a key rotation to pay attention to as it has shown quite a lot of strength recently. Not only that, but the lows on RUT could be broken violently and then we could see an even more violent come back with new highs shortly after (essentially that range being re-accumulation). Personally I really don't like the way the VIX has bottomed and I feel a big move is coming and that we will have a very volatile environment for quite some time. Things aren't going well globally and nothing has been done to fix all the issues going on. What worries me the most is how relentless Oil and Natural gas look like, which could do a lot of damage on huge parts of the economy as inequality keeps growing. We are stuck in a trap and we can't escape... a vicious loop that only makes things worse. So who knows... maybe my expectation for a small correction is small and a much larger one will come. It is clear that the main trend has broken and I have spoken about it quite a bit over the last few weeks. I have no idea how bad things could get, but for now being patient and waiting to buy the dip is what I think is best. Buy dips on Oil and Stocks. Forget metals and bonds for sure.
TVC:DXY
by BitcoinMacro
USDJPY Breaking Out Of A Triangle USDJPY finally breaks out of a triangle as both SP and US yields rally. Keep in mind that higher Yields are positive for the currency, while risk-on means depreciation of JPY, especially now when BOJ is not ready to take any action on interest rates. Based on their recent statement, they will most likely maintain stimulus in the next few years. Technically I expect USDJPY to see more upside after a completed triangle, so looking for a retest of the 2021, maybe even 2020 highs. JPY crosses are also looking interesting, GBPJPY in particular.
by ew-forecast
GOLD before FEDAs expected GOLD has reached the resistance zone at 1780. Now we are looking for the next move. It all comes down to the FED interest rate decision. Technically speaking it looks like price will continue lower and below the previous lows. However, DO NOT use big lot size before the news! Entries a little after the news will be more confirmed. In case of a downside continuation the first target will be 1735. If price goes to the upside, then the level to look out for is 1810. The best time to enter will be after the news and a close below 1770.
FX_IDC:XAUUSD
by ForexTrendline
30
EURUSD before FED The sideways moves on EURUSD are still there. That's something usual before such an important events. Today we will see if this downtrend will continue or there will be a reversal. That's why a big portion of the players are stepping aside and not getting involved in any positions. We do not recommend to enter any long term trade ideas before the events today. Once we see what happens after the news, that's when we want to look for entries. Any entries before that are based on expectations and carry more risk. There is a higher probability for a downside continuation, but also a big chance for spikes during the news.
by ForexTrendline
10
EURUSD awaiting the FED The most important news for this month are due tomorrow - the FED interest rate decision. Usually, before such a news price is trading sideways and we shouldn't be entering trades with a lot of risk. That's what we're expecting now as well - slow price action which should find it's direction after the news. We are currently looking at a downside direction and that's what we would expect after the news as well. After the news we will have confirmed trading ideas and a confirmed trend as well.
by ForexTrendline
28
EURJPY: a pinbar where you need one!Yesterday price dropped down below 200 EMA to the support zone. Later, it moved back up again closing above EMA and within the previous candle's range. This pinbar has three supportive factors making it more significant than any other. ► It breached 200 EMA, yet it closed above it confirming the dynamic level to be a support. ► Opened and closed within the previous candle's range => the whole downside momentum was completely absorbed within a single candle. ► Interest rates support the bullish narrative although it is 5 years since they were changed. There is also one contrarian point that should be weighed in. Japanese Yen is usually a currency relied upon in times of uncertainty. I think we've got a lot of that lately. Good luck!
Long
by OrcChieftain
Dovish Tapering Locks In QE (08 September 2021)The dovish tapering decision. During its monetary policy decision yesterday, the Reserve Bank of Australia (RBA) kept its cash rate unchanged at 0.10%. As promised, the central bank proceeded with its quantitative easing (QE) tapering plan announced back in the July’s meeting. What came as a surprise is the duration of the new round of QE. Previously, the RBA opted for a two-month QE duration. But during the announcement yesterday, the central bank decided to extend the duration by five months instead. Thus, the tapered A$4 billion QE will run from September until at least February 2022. As a result, the Australian dollar strengthened for a brief period of time before weakening across the board, reflecting the dovishness as a result of the extension of the QE duration. Delta variant still a concern to the RBA. Despite RBA Governor Lowe saying previously that fiscal policy will prove to be more effective than monetary policy in providing aid at the moment, this does not deter the central bank from making a more cautious decision. As explained in the rate statement, the RBA’s decision to extend the QE duration “reflects the delay in the economic recovery and the increased uncertainty associated with the Delta outbreak”. Rate hike remains out of sight. As with the previous meetings, the RBA continues to reiterate that its cash rate will not be increased until inflation falls within the 2-3% target range and this condition will not be met before 2024 based on their current projection.
by GH_Lee