TLT + Rate CutsTLT bullish trend into 100 resistance with major Fed decisions coming in the next weeks/months. Has a gap to fill on the way to highest pt
Pts are 98.30, 98.70, and 100+
- Shifted narrative from inflation to labor market
- Data suggests Fed is very behind the curve
- Jackson Hole
- FOMC
Bonds
Inverse Head & Shoulders $TLT ETF Weekly ChartInverse Head & Shoulders NASDAQ:TLT ETF Weekly Chart The NASDAQ:TLT ETF weekly chart, which tracks 20-year+ Treasuries, shows an inverse head & shoulders pattern still intact. 📊 U.S. Treasury funds have attracted billions in inflows over the past couple of weeks, fueled by rising expectations of rate cuts and growing investor confidence in long-term government bonds. 💵 However, there's resistance at the $100 level— NASDAQ:TLT needs to break this level before heading higher. 📈🚀
#USTreasury #Bonds #FixedIncome #Investing #Finance NASDAQ:TLT #RateCuts #MarketTrends #ETF
Yield Curve Inversion: A Warning Sign You Can't IgnoreThe yield curve, which shows the difference between short-term and long-term interest rates on government bonds (US10Y-US02Y). In normal market conditions, this number should be positive because the interest that investors require on 10Y bonds is higher than the interest required on 2Y bonds. Interest is a value of risk perception. Higher risk of default means higher required interest on bonds.
As seen on the chart, the moment that the yield-curve "un-inverts" (yellow circles) is a critical market indicator that can often predict upcoming recessions.
In the last 35 years, the un-inversion has always preceded a dump in stock prices and a recession.
Seeing this chart, it's not too far-fetched to assume that the world will go into a recession at some point in the next 1-2 years.
US10Y going lower with the Fed having no choice but to cut.Almost 10 months ago (November 7 2023, see chart below), we made a bold (for the time being) call on the U.S. Government Bonds 10YR Yield (US10Y), as against the prevailing market sentiment we gave a sell signal, right after what turned out to be a top:
Today's revisit to this pattern shows that the 1M RSI Lower Highs have already started to form a Bearish Reversal on the US10Y price, similar to 2006 - 2007. We are expecting to hit the 0.382 Fibonacci retracement level at 2.100% as its first Target, on the Fed's first wave of rate cutting and gradually hit the lower Fib targets as the rates stabilize.
For better illustration we have plotted also the U.S. Interest Rate (red trend-line), where you can clearly see that the fractal we compare to today, is right before cuts started in August 2007. Also it is a natural consequence of US10Y falling when rate cut cycles start, evident also in June 2019, December 2000, May 1995, May 1989 September 1984, May 1981 etc.
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Is the USD selloff too aggressive? Bond yields suggest soTraders continue to sell the US dollar in anticipation of a dovish speech from Jerome Powell on Friday. To the point where we wonder if this could be a case off "sell the rumour, buy the fact". Matt Simpson takes a quick look at the USD dollar index and bond yields.
$TLT Weekly Chart Inverse Head Shoulders" NASDAQ:TLT Weekly Chart: Inverse Head and Shoulders pattern was triggered last week. 📈 This could signal a potential reversal and further upside for long-term Treasuries. Are you watching this breakout? #TLT #TechnicalAnalysis #BondMarket #Investing #ChartPatterns"
German Bund Is On The Rise, So As EURUSD PairWe talked about a bullish turn on German Bund back on June 20th, where we mentioned and highlighted more gains within wave C of an A-B-C rally, which can also recover the EURUSD pair.
As you can see today on August 05, German Bund is extending strongly higher within a five-wave bullish cycle for wave C with space up to 140 area. At the same time EURUSD is also nicely recovering due to a positive correlation and with still bullish Bund, EURUSD can easily see more upside.
Comparing Different Financial MarketsComparing Different Financial Markets
In trading, understanding the types of international financial markets is crucial. This article offers a comprehensive market comparison of the stock, forex, commodity, crypto* and bond arenas. You’ll learn the importance of these financial markets and what it takes to navigate each one effectively.
Stock Market
The stock market is a financial marketplace where traders and investors can buy and sell shares of publicly traded companies. By purchasing a stock, an investor essentially owns a slice of the company, and their investment's value moves in tandem with the company's performance.
- Risk: Stocks can be volatile, subject to market sentiment, economic indicators, and company performance. Risk varies widely among different types of stocks.
- Income Potential: Day traders aim for short-term gains, while long-term investors often seek stocks that offer dividends or high growth potential.
- Knowledge: A solid understanding of market trends, company fundamentals, and technical indicators is beneficial for effective trading.
- Liquidity: Most stocks, especially those listed on major exchanges, have high liquidity, allowing for quick entry and exit.
- Costs and Fees: Costs can include brokerage commissions, although many online platforms now offer zero-commission trading.
- Trading Hours: Generally restricted to weekdays, opening and closing at set times, with after-hours trading being possible but less liquid.
Forex Market
The forex market is the global marketplace for buying and selling currencies. Traders pair two currencies, like EUR/USD, and profit from the fluctuations in exchange rates.
- Risk: Forex trading can be highly volatile and is considered riskier than stock trading, influenced by geopolitical events, interest rates, and economic data.
- Income Potential: High leverage can amplify gains but also increase risk. Many traders seek to profit from short-term fluctuations.
- Knowledge: Understanding of macroeconomic indicators, geopolitical events, and technical analysis can be crucial for success.
- Liquidity: Extremely high, given the 24/5 operation of the Forex market.
- Costs and Fees: Typically lower than other markets, often involving spreads rather than direct commissions.
- Trading Hours: Operates 24 hours a day, five days a week, allowing for flexibility in trading times.
Commodity Market
The commodity market is one of the types of international financial markets where physical or virtual assets like gold, oil, or agricultural products are traded. These markets often act as a gauge for supply and demand conditions globally.
- Risk: Commodities can be quite volatile, influenced by global events, natural disasters, and political instability. Traders often hedge against other market risks by investing in commodities.
- Income Potential: Gains can be substantial but are also subject to dramatic shifts based on the factors mentioned above.
- Knowledge: Understanding of global economic indicators, supply and demand factors, and geopolitical events is critical.
- Liquidity: Varies widely depending on the commodity; for example, gold and oil are highly liquid.
- Costs and Fees: This can include brokerage commissions, futures contract fees, and costs associated with physical storage for some commodities.
- Trading Hours: Vary by commodity and exchange, but many have extended hours due to global demand.
Cryptocurrency Market*
The cryptocurrency market is a decentralised digital asset market that includes cryptocurrencies like Bitcoin, Ethereum, and various tokens. It's the newest and one of the most rapidly evolving financial markets.
- Risk: Extremely volatile, with prices subject to rapid fluctuations, sometimes within minutes. Regulatory concerns add another layer of risk.
- Income Potential: High potential for both short-term and long-term gains, but also significant risk of loss.
- Knowledge: Understanding of blockchain technology, market sentiment, and technical analysis is often crucial. Familiarity with regulation is also beneficial.
- Liquidity: Generally high for well-known cryptocurrencies but can be low for lesser-known tokens and coins.
- Costs and Fees: Vary by platform and may include transaction fees, deposit/withdrawal fees, and "gas" fees for certain types of transactions.
- Trading Hours: Operates 24/7, allowing for ongoing trading and the chance to react to market news or events.
You can head over to FXOpen's free TickTrader platform to explore the above-mentioned markets for CFD trading in real-time.
Bond Market
The bond market is a segment of the financial market where debt securities are issued and traded. Unlike the stock market, which is a part of the capital market, the bond market focuses on long-term debt instruments. This highlights the difference between capital markets and financial markets.
- Risk: Generally considered lower risk compared to stocks and commodities, although risk can vary depending on the issuer's creditworthiness.
- Income Potential: Lower yield compared to more volatile markets, but often offers more stable returns through interest payments.
- Knowledge: Understanding of interest rates, yield curves, and credit ratings is essential for bond trading.
- Liquidity: Varies depending on the type of bond; government bonds are usually highly liquid, while corporate bonds can be less so.
- Costs and Fees: Transaction costs are generally built into the bond's price, but some brokers may charge commissions.
- Trading Hours: Primarily traded over-the-counter (OTC), with some bonds available on exchanges. Trading hours can vary but are generally regular business hours.
The Bottom Line
In summary, the diverse features of financial markets offer traders a range of opportunities, from stocks and commodities to cryptocurrencies* and bonds. Armed with this knowledge, you're now equipped to navigate the markets with confidence. Want to put these insights into action? Consider opening an FXOpen account to kickstart your trading adventure.
*At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Why are Interest rates falling? Time to buy? We have seen an amazing fall in interest rates.
Bonds have looked to put in a local bottom.
Why are bonds showing signs of accumulation?
Is the bond market pricing in a recession?
I believe the recent decline in yields is due to commodity weakness.
Yields have soften because energy & base metals have become cheaper.
This drives the disinflationary narrative.
I think its to early to tell whether this decline is from demand or global weakness.
US 2-Year T-NoteHey Traders
We have US 2-Year T-Note, all my weekly fundamentals are showing a nice drop from from supply zone bounced out and is looking strong to sell down, I will be waiting for a pullback to my sell limit marked off on chart.
When I am lining up a set up I always use the daily TF to place a sell limit or buy limit from supply zone or demand zone.
Please like comment and follow cheers
This chart material is for education purposes only / Demo account should be traded only
Time for TLTThe 20-year Treasury Bond ETF 'TLT' is looking good now that the Federal Reserve has stated that an interest rate cut could come as early as September if inflation continues to fall. The fact that Fed chairman Jerome Powell is now using dovish language and naming dates for potential cuts is cause enough to consider shifting some money to bonds. The swift selloff in stocks earlier this week is also good reason to be cautious in equities and bullish bonds, still waiting to see if that was a one-time dip or the start of something more prolonged. We also have rising unemployment, record personal debt and increasing rates of delinquency in auto loans that signal potential recession ahead. At this point it's not a question of 'if' rates cuts and money printing are going to happen, but 'when', especially if we see markets turn back down in a significant way and/or a continued move higher in unemployment.
TLT has recently broke above a short-term resistance line as the 20-year treasury bond yield broke below a short-term support line which shows how inversely correlated they are. If we can expect bond yields to come down via Fed rate cuts then we can expect bond prices to go up. TLT is the most popular bond ETF and I've personally been buying ever since price fell below $100 last year with the intention of building a large position ahead of inevitable rate cuts. I'll stop buying when rate cuts begin and then ride TLT until it looks like a bottom in rates is in, and then sell the entire position and flip long stocks.
A look at M2 Money Stock Out of curiosity I took a look M2 to see the trends over the years and how it compares to COVID and the last few years. I don't have any great revelations to share about what to do, but I thought the chart was interesting. I also did some research and used ChatGPT to help me create a summary about M2. Please note that I cannot guarantee the following text is perfectly accurate, I am not a financial expert or advisor, but it is an interesting overview. Enjoy.
1) Introduction:
Money Stock Measure 2, or M2, is a comprehensive measure of the money supply that includes various types of financial assets held by the public. It encompasses M1 — which consists of the most liquid forms of money like cash and checking deposits — and adds less liquid forms such as savings deposits, time deposits under $100,000, and retail money market mutual funds. This broader measure provides a more complete picture of the available money within an economy than M1 alone.
2) Why M2 Matters to the Economy and the Stock Market:
Monetary Policy Indicator: M2 growth rates can indicate the looseness or tightness of the Federal Reserve's monetary policy. Rapid growth in M2 may suggest a looser policy with potential implications for lower interest rates, while slower growth could indicate a tightening policy stance.
Economic Health Predictor: Fluctuations in M2 can signal upcoming changes in economic activity. An expanding M2 typically suggests that more money is flowing into the economy, potentially boosting consumer spending and overall economic growth. However, if this expansion leads to inflation without an accompanying increase in real output, it could be detrimental.
Interest Rate Influence: Since M2 impacts interest rates, it indirectly affects the stock market. Lower interest rates from an increased M2 can reduce borrowing costs and stimulate both capital expenditures and consumer spending, which generally supports higher stock prices.
Inflation Expectations: Inflation can erode the purchasing power of money. An inflating M2 can lead investors to adjust their expectations, impacting bond yields and stock valuations.
3) As an investor, monitoring M2 can enhance decision-making in several ways:
Growth Trends: Observing whether M2 is expanding or contracting can provide clues about future economic conditions and monetary policy directions, helping investors anticipate market movements.
Asset Allocation: During periods of M2 expansion (indicative of lower interest rates), investors might favor stocks, particularly in sectors like consumer discretionary that benefit from increased consumer spending. Conversely, a slowdown in M2 growth could be a signal to move towards safer assets like short-term bonds, which are less sensitive to interest rate rises.
Sector Impacts: Different sectors react differently to changes in M2. For example, financials might benefit from higher interest rates, while sectors sensitive to consumer spending could gain from an expansionary M2 environment.
Inflation Hedge: Rapid increases in M2 that might lead to inflation suggest that investors should consider assets that typically perform well during inflationary periods, such as commodities or real estate.
Global Considerations: For those invested internationally, understanding how M2 changes affect global markets and capital flows is crucial, particularly in how developed economies' liquidity influences emerging markets.
4) Conclusion:
M2 is a critical economic indicator that offers valuable insights into future monetary policies, economic health, and market directions. It is not a perfect metric on its own, but by integrating M2 data into broader market analyses and considering its implications on different sectors and asset classes, investors can make more informed decisions, optimizing their portfolios to better navigate the complexities of financial markets.
New high in yields by November?I don't think anyone is expecting this, but I think we're setup for yields to hit new highs this year.
The chart indicates yields are breaking out to the upside again, and this move could be a strong one.
I think we're setting up to see a new high in yields by November topping somewhere between 5.35%-6.40%.
Let's see if it plays out.
is this signalling a market crash? The yield curve invesrion remains in place for the longest historical inversion run.
This cant be good right?
History shows once the spread between the 10 & 2 corrects back to normal / un-inverts you usually get a sell signal in the market.
We are observing a massive bullish wedge pattern unfolding and looks poised at any moment to breakout.
The un- inversion breakout usually happens quickly and sharply.
US10Y Expecting a bullish reversal at the bottom.The U.S. Government Bonds 10 YR Yield (US10Y) initially expanded but then took a breather on the new Bullish Leg, as per our January 24 (see chart below) buy signal, before hitting our Target:
The price is now approaching the bottom of the 2-year Channel Up yet again and by next week a 1D Death Cross will be completed. The 2 previous such formations within the Channel Up, have both been made right on its Higher Lows.
As a result, we consider this a great bullish opportunity for the medium-term. Our Target is intact at 5.000%.
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How will the market react after the next US election?How will the market perform if either Biden or Trump wins? That should be an easy question to answer, as we can track the market performance on the first day each became President of the United States.
Micro E-Mini Nasdaq Futures and Options
Ticker: MNQ
Minimum fluctuation:
0.25 index points = $0.50
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time 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
Bullish Divergence + Pinbar in TLTI'll start with the weekly RSI bullish divergence off the 2022 and 2023 yearly lows. In addition to that, there is also a nice bullish pinbar on the 4M chart. This also hints to a possible bottom/bullish reversal. Price is now pushing against the trendline resistance (from Mar 23' to Jul 24'). Once price is able to break and hold this area it could really start moving. There is some overhead resistance that the market will need to overcome and I expect plenty of volatility, so safest play may be to have a stop just below the 23' lows and then stay hands off and give it room to run.
$TLT Treasury Bond ETF Inverse Head & Shoulders NASDAQ:TLT Treasury Bond ETF Inverse Head & Shoulders, In technical analysis of Treasury Bond ETFs, an inverse head and shoulders pattern is a bullish reversal signal. It occurs when the ETF's price forms three distinct troughs, with the middle trough ("head") being the lowest and the two outer troughs ("shoulders") being higher. A "neckline" is drawn connecting the highs of the two shoulders. When the price breaks above this neckline, usually with increased volume, it confirms the pattern and signals a potential shift from a bearish to a bullish trend. The distance between the head and the neckline can be projected upward from the breakout point to estimate a price target for the potential rally. However, traders often combine this pattern with other indicators like moving averages or oscillators for further confirmation and risk management.
2Yr Yield Rolling Over?And there goes the the 2Yr Yield, it is whimpering.
Unless something happens this is rolling over further.
10Yr Yield had a nice bounce but it is also rolling over.
TVC:TNX is only 33 basis points from normalization!
Short term #yield is looking very weak, 6 month and 1 Yr, not shown.
More info see profile...