12. A lesson on Macro
Updated
Dear traders,
The real deal since 12/2021 is still the EURODOLLAR futures getting inverted sometime in first week of December 2021. This itself has put a stop to the uninterrupted rise of the dollar. EURUSD went into a prolong horizontal channel until a breakout to the top on 12 Jan 2022. Yes, you may say that the FED is accelerating tapering and will hike rates soon.
The news about the 4Q21 GDP print at 6.9% was indeed spectacular until we realized that 5% of it was made up of gain in 'INVENTORY'. The economy is indeed fragile and in decline. That is 2 weak quarters in a row (3Q & 4Q). With so much unsold inventory amid a slowing down economy, the future does not look good.
The US10Y-US02Y is now collapsing with 02Y RISING at a much faster rate than 10Y. The Fed is increasingly resolute as to its tapering and rate hikes based on the (already shown to be faulty) unemployment rate while inventory and persistent economic weakness of all kinds only further enflames “growth scare.”
In summary, money conditions are getting tighter, economic growth is slowing, inflation will not last, and a potential recession is on the horizon.
The real deal since 12/2021 is still the EURODOLLAR futures getting inverted sometime in first week of December 2021. This itself has put a stop to the uninterrupted rise of the dollar. EURUSD went into a prolong horizontal channel until a breakout to the top on 12 Jan 2022. Yes, you may say that the FED is accelerating tapering and will hike rates soon.
The news about the 4Q21 GDP print at 6.9% was indeed spectacular until we realized that 5% of it was made up of gain in 'INVENTORY'. The economy is indeed fragile and in decline. That is 2 weak quarters in a row (3Q & 4Q). With so much unsold inventory amid a slowing down economy, the future does not look good.
The US10Y-US02Y is now collapsing with 02Y RISING at a much faster rate than 10Y. The Fed is increasingly resolute as to its tapering and rate hikes based on the (already shown to be faulty) unemployment rate while inventory and persistent economic weakness of all kinds only further enflames “growth scare.”
In summary, money conditions are getting tighter, economic growth is slowing, inflation will not last, and a potential recession is on the horizon.
Trade closed: target reached
Hope you all profited :)
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