10y
Relative yield spread of currencies of usd-basket VS the usdThis line charts gives an idea how a currencies 10yr yield develop, relatively, vs the usd 10 yr yield. This goes only back to 2012-ish since no earlier data was available via the tickerdata. Trying to acquire new ticker data so we can make it complete up until the 90's. It should provide a clue where the USD is going short/medium term. Considering the output of this graph we can say that we are bullish usd with a possible target of at least 95 when rate hike happens next wednesday. Also its likely we will put a new 6-year high on the t-note when next ratehike happens. This is a major event.
US 10Y T-NOTE -> COMING CLOSE TO A MAJOR TURNING POINT?Still cannot know whether the underlying asset will be turning from the 1.382 / .50 or the 1.618 / .618 but there is a strong confluence on both levels which makes me believe that one of them which prove to be a a key reversal point.
Also judging by the strong correlation between 10-Y yields and the DXY which is also nearing a major reversal point we could in effect anticipate a similar behavior on both, of one confirming the other.
For risk and money management purposes, always determine a max. of 2% risk on every trade.
For example on a $50,000 account, this would be equivalent to 1,25 Lots with an 80 pip stop loss.
Targets and closure of positions may be subject to alteration throughout the course of the trade. This is due to the ever-changing and unpredictable nature of the market.
This post is set to be used and serve as an example and in an educational manner and is not to be taken as direct investment advice.
LONG 10Y YIELD, LONG USD, SHORT BONDSFundamental idea that term premia should revert back to historic norms supports this trade.
Positioning | Net Non-Commercial US 10y T-NotesAt extreme levels, however, the data doesn't look correct... I'm certain it is the most extreme since 2005!
#Dollar Showing Weakness, Intermediately OverboughtThe U.S. dollar went bid following rhetoric from Federal Reserve officials that a potential rate hike could occur in June, following hotter than expected inflation data.
However, after posting on pending technical weakness here, the dollar has retreated slightly over the last few days. Price action as traded neatly within a descending channel on the daily chart, and potential signals of another move downward are pending:
The daily RSI has broken through an indicator support level, and the stochastic indicator is signaling a highly overbought condition. If price price action continues to falter, a sell signal below 80 could trigger selling pressure.
The DMI is about to form a bearish convergence, which would indicated bearish price action will take over.
In order to regain upward momentum, the DXY would have to close above channel resistance near 95.66; 96.55 will be key resistance point in order to challenge 98. If selling pressure does occur, DXY will likely seek out 93.80 (50% fib retracement from current minor uptrend)
The long-term macro dollar theme continues to be deflationary. It is important to note, a spike in inflation has been a late cycle occurrence. Every U.S. recession since the mid-1950s has seen an increase in inflation (after previously declining).
We must also include that as the global economy continues to slow, global central banks will look to continue monetary easing this will at least support the greenback. Furthermore, as the U.S. economy rolls over, a deflationary spiral is expected to occur.
MacroView is still expecting the U.S. economy to reach recession between Q2-3 once final data revisions occur.
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Gold Intraday TechnicalsGold has pulled back slightly, but still up almost 15 percent since 2016. Traders don't believe the current rally as they look hopeful of more central bank quantitative easing, which is exactly why gold has had its run this year; and it is why I have been saying fundamentals have been strengthening for gold for roughly 16 months.
After gold volatility hit multi-year highs, it is beginning to moderate a bit. I expect it to remain elevated:
Technically, gold downside may remain limited with minor trend and price support at $1,205 and dynamic support at the 72-4H EMA nearing $1,198. Deeper support levels are seen at $1,190 and $1,177.
Volume has tapered off since the Feb. 11 high, but positive bars still remain on top. Near-term resistance can be seen at $1,214, while stronger resistance is $1,220. If gold can retake these levels, price action would challenge the recent downtrend from the recent high. At that point, bulls can look toward $1,240.
What has been beneficial is that gold has been able to work off its highly overbought level while still remaining about key support.
This Friday, traders are anticipating the US preliminary GDP print. Consensus is at a nauseating .4 percent, following Q4 .7 percent that is likely to be revised lower. Even if the prelim data meets consensus, it would be over two percent lower than the Atlanta Fed's GDPNow model.
Not only is it ironic that the Federal Reserve's first rate high in seven years was in a corporate profits recession and sub-one percent growth, but it also could have been done going into a recession.
Way to go, Janet!
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Gold Surprises as Dollar Gets Monkey-Hammered LowerIn " Gold Leaps Higher as Worries Mount ," I briefly pointed out how those very same institutions that championed quantitative easing policies implemented by the Federal Reserve are now coming out to proclaim quantitative easing added no substantial benefit to the real economy .
Gold was pushed lower on the assumption that central banking policy would all pan out and that the U.S. would finally achieve escape velocity; but the exact opposite is occurring. Despite the near 12 to 16 months of absolutely horrendous, even recessionary data, market participants believed that if the Fed began to tighten monetary policy then the economy must be alright.
Central bankers,misguided by classroom academics and abhorrent to real world economic dynamics, believe that if you tinker with interest rates that somehow inflation will magically begin to rise. Not so because it is real, meaningful growth that produces inflation; and it is more evident now that the these policies do not produce meaningful growth.
I mapped out the dollar's downward trajectory, which was largely based on the floundering economy and the inability for the Fed to take action that will pop asset inflation. I still believe this is based on the above factors and that the dollar will likely gather strength as the US slips into deflation.
Traders and CNBC pundits think that if deflation takes hold then gold will surely decline into the abyss. And just like their "lower gas prices equal booming consumer spending" myth, gold falling off a cliff during deflation is just as preposterous.
Gold is unique in that if can act like an insurance policy against both sides of tail risk (inflation and deflation). It is well-known that gold had a massive bull run when stagflation took hold of the US during the 1970s. Inflation ran amok.
However, nobody mentions that gold tripled, in inflation-adjusted dollar terms, during the early 1930s (the Great Depression) prior to President Roosevelt outlawing the private ownership of gold.
As I wrote last April:
" There is an assumption that the dollar and gold’s performance is strictly inverse of one another, but that is not so. The WGC (World Gold Council) indicates that between early 2014 and March 20, 2015, the dollar has gained over 20 percent while gold only fell 1.2 percent.
Historically, gold prices more than double on a weak dollar than it falls on a stronger dollar. Thus, a stronger dollar is not indicative of massive gold depreciation.
When the dollar declines, gold has appreciated 14.9 percent. Yet, when the dollar strengthens, gold has only fallen by 6.5 percent, according to the WGC. "
If you look at this chart, you will notice one thing: gold sure looks to trend with the SPX. There is an argument that this due to simple asset inflation.
Notice the massive divergence began when gold began to top in 2011. The divergence is what I call the "perception" gap.
I expect that divergence to close. It's no secret that I was right about the volatility of 2015, along with other key macro trends. I believe by the end of 2016 and 2017 is when the real fireworks begin.
Gold's recent move has been huge, and, of course, there will be profit taking. But those who follow me know that the underlying fundamentals for gold has been strengthening for some time.
(Note: the gold chart is the same I used in the above mentioned gold idea, but the minor uptrend (along with new resistance) were added).
Please follow me @lemieux_26 and check out my other ideas, which have links to previous writings.
U.S. Dollar Awaits FOMC DecisionSome say this week's FOMC decision will be of historical proportions and be the first time the Federal Reserve will increase the Fed funds rate in almost a decade.
The U.S. dollar index is in a descending trend. Price action is floating above the minor trend created by the top on April 13.
The dollar has not been able to see any significant support higher, likely due to the uncertainty about the Fed's policy. The economy is clearly slowing down, and the Fed has never hiked rates into a slowing economy.
Furthermore, financial conditions are already tightening in the wake of a potential boost - if we can call it that -in interested rates.
According to Goldman Sachs' financial conditions index, which incorporates equity prices, exchange rates, credit spreads and a slew of other factors, hit the highest level in five years.
In regards to what is already occurring with a stronger dollar, increase in borrowing costs and declining asset prices, the market is already undergoing what feels like a 75 bps increase; a 25 bps hike from the Fed would only add insult to injury.
Technically, rallies in the dollar have been sold. Price action did see significant pressure in late August and broke key technical support. There was support near 92.50, but the mere close below signals the potential for further weakness.
If the Fed remains dovish this weak, and the FOMC minutes continue to be vague and confusing, the dollar could very well retest this year's lows.
Momentum on the longer-dated charts are suggesting that upward movement is challenged, and the trend could be changing.
Of course, if the Fed did come out and increased rates, the dollar would significantly strengthen. The idea that the Fed would allow that is flaw because they are begging for any sign of inflation in a deflationary world.
Multinational corporations have been greatly hurt with the dollar rising against nearly all currencies, and emerging market currencies collapsing. A $3 trillion debt crisis could also occur if the Fed embarks on a path towards monetary tightening.
The idea that the Fed can just tighten once and be done with it is foolish. That's not monetary normalcy, and the Fed would only prolong the inevitable.
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