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Debtceiling

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NYSE:AMRLong
by bryandowningqln
Gold:the monetary commodity’s fate in the hands of central banksGold is arguably the most sensitive commodity to monetary policy. The metal operates more like a pseudo-currency than a regular commodity (a regular commodity’s price is driven by the balance of supply and demand, gold is driven by many of the macro determinants of currencies). After hiking rates every meeting since February 2022, the Federal Reserve (Fed) took a pause in June 2023. The central bank has lifted the upper bound of Fed Fund target rates from 0.25% to 5.25% over that timeframe, marking one of the most rapid rate hiking cycles in history. At times, the Fed was hiking in 0.75% clips. Rising interest rates were an extreme headwind for gold for most of this period. Can gold investors breathe a sigh of relief now? Is this a temporary pause, or a halt on rate hikes? Well, if Fed Fund futures are to believed, there may be one more rate hike by September 2023. If the participants of the Federal Open Market Committee (FOMC) are to be believed, there could be several more rate hikes (with the median expectation of these participants pointing to a terminal midpoint rate of 5.625%, that is, an upper bound of 5.75%). Professional economists1 seem less sure of such decisive action, with the median looking for no change in rates this year (and cuts commencing in Q1 2024). Senior Economist to WisdomTree, Jeremy Siegel, believes the Fed is done hiking and that alternative inflation metrics, which incorporate real time housing inputs, show inflation running at 1.4% instead of the official 4.1% in May 20232. Market inflation expectations are not falling away as fast as we would expect. Judging by the 5yr5yr swaps, longer-term market inflation expectations are actually rising modestly. Higher inflation tends to be gold-price supportive (other things being equal). After hitting an all-time high in 2022, central bank demand for gold has maintained strong momentum. Official sector gold buying in Q1 2023 was the largest on record for the first quarter (albeit lower than Q3 2022 and Q4 2022). A YouGov poll, sponsored by the World Gold Council3 , showed that developing market central banks are expecting to increase their gold reserve holdings and decrease their US dollar reserve holdings. With a lack of forceful stimulus from the Chinese government, and still elevated gold prices in Renminbi terms, we expect a slowing of retail demand in China. In fact, Shanghai premiums over the London Bullion Market Association (LBMA) price slowed in May and remain low in June. Looking to WisdomTree’s gold price model, we can see that bond headwinds have clearly fallen away and US dollar depreciation (relative to a year ago) is offering gold some support rather than dragging prices lower. However, investor sentiment towards the metal has moderated since March 2023, when the collapse of Silicon Valley Bank (SVB) and the shotgun marriage between UBS and Credit Suisse Banks was announced. With the passing of the US debt ceiling debacle, there aren’t any specific risks driving gold demand higher. However, general recession fears and the potential for unspecified financial sector hiccups are likely to keep gold demand moderately high as the metal serves well as a strategic asset in times of uncertainty. Source: 1 Bloomberg Survey of Professional Economists, June 2023. 2 The alternative measure calculates shelter inflation using Case Shiller Housing and Zillow rent which annualise at 0.5% instead of the 8% that is biasing the Bureau of Labor Statistics CPI higher. 3 2023 Central Bank Gold Reserves Survey, May 2023.
COMEX:GC1!
by aneekaguptaWTE
1
Yields are Yelling: Recession is comingIt looks like we are turning over. Coupled with gigantic short positioning of speculators on bonds (highest in history bsed on the COT Data), the chart indicates that yields will fall again. Why would they fall? Because of a flight to saftey and/or a recession. I am keeping it very simple, I just buy Bonds via ETF. I am long TLT, IEF and SHY. With that trade, I am also long USD, since my native currency is EUR. If we have a weekly close above 3,5% on the US10Y, I will exit my positions. It might also be lucrative to go short stocks now, but I wont do that too much. This might be a great trade, but I am viewing it as a set up for an even better one. We might get a great opportunity to buy stocks soon.
TVC:US10YShort
by Cyranus
2
How to keep your wealth and profit from the Debt Ceiling RisingMore debt leads to more devaluation. Its math. Thats why prices rise. Thats the magic trick we never learned in school. The game is designed this way. The machine harvests energy and keeps running. Debt is created by gov and spent into economy. Banks generate loans. Asset prices rise. Taxes are generated. Those who dont play the game find their purchasing power devalued. Currency isnt real, theyre accounting units. Dont work for it. It will own you if so. Create value, help people, create assets. The more you help the more value you create. Dont chase the paper only to spend it as soon as you get. The machine wants this.
SP:SPX
by optionfarmers
5
$DXY -Debt Ceiling Scenarios *2W All Eyez on TVC:DXY ! The Fate of other Financial Markets is to be decided on X Date of Debt Ceiling Important Candlesticks prints on *2W and *W Dollar Index seems to been having stuck between the range of 100.8 - 105.9 so far speaking of 2023's Price Action However, with the incoming decision of Debt Ceiling this range can very well be violated on it's borders ; wether to the downside or upside that has yet to be seen : - Bearish case'C' wave on ABC Correction) - Bullish Case Impulsive Wave1 from 1-2-3-4-5 Elliot Waves) Moreover, With the breakout of Red Trendine Resistance, wave one is about to come in to fruiton while yet needing to clear the last Lower High of the downtrend to create a Change of Character of the Donwtrend. Breaking above last LH and holding support (Wave B) also confulences with the Golden Zone of Fibb taken from 114.7 High to Lows of 100.8 (Wave A) TRADE SAFE *** Note that this is not Financial Advice ! Please do your own research and consult your Financial Advisor before partaking any trading related activities based soly on this idea.
TVC:DXY
by Mr_J__fx
GOLD SHORT TO 1878📉As I said before, we expect a correction on the bigger TF for Gold, before bulls come back into the market. We've seen a 5 wave bullish completion on Gold, with markets being overbought at the same time. We've also seen a CHOC + BOS, indicating markets now ready to sell off in the short term. Target 1: 1920-1877📉 Target 2: 1764-1740📉 Target 1 is our main target, before we DCA buy positions. Target 2 is a very deep retracement (bear trap) which we've only highlighted as a possibility, but not too fussed about.
SAXO:XAUUSDShort
by BA_Investments
2
SPY OUTLOOK 06/05 - 06/09Last week, the debt ceiling lift was signed into law which saved the US from defaulting. All of our upside targets hit last week, and the market reacted favorably with a green week up +3.2%. With not much on the economic calendar, I doubt we move much this week, but expectations of a soft landing can keep bulls in control. Technical Analysis: This week AMEX:SPY broke out to the upside of the megaphone we were watching since April. We are at a critical point in the market as we tested the top of a macro trendline dating back from September 2022. Although I can see the market moving higher in the short term, I’d expect some corrective action in the coming weeks. Even if we head higher, we will need to build some levels of support and resistance if we do head higher. Bulls will want to hold price above the megaphone breakout. If price can continue above last week’s high 428.74, our next level above is 429.57, with not much resistance until 433. What is more likely this week is some sort of healthy pullback before we head higher. I can see SPY coming down to test the daily gap made on Friday (422.92-423.95). If this doesn’t hold, we have a golden pocket from 420-421 where we can look for buyers to step in. Bears will want to invalidate the golden pocket and control price action under last week’s point of control at 419. Upside Targets: 428.74 → 429.57→ 433.07 → 436.10 → 438.08 Extended: 441.21 Downside Targets: 425.14 → 423.95 → 422.92 → 421.02 → 419.00 Extended: 416.22
AMEX:SPY
by peterjames_6
BABA @ Long Term SupportOn the 4H Chart, BABA is sitting in the the demand zone at a double bottom retest. Earnings two weeks ago beat expectations. Fundamentally, China is holding interest rates down and may even decrease their prime rate. Domestically, chaos continues with more rate increases possible and the debt ceiling issue impending resolution versus diseaster. I see trading and investing in foreign based intruments such as BABA , NIO along with ETFs diversified into China, Europe, Korea Japan and maybe others to be a useful means to diversify risk. I will take a long trade in BABA because I believe it will rise from its usual bottom.
NYSE:BABALong
by AwesomeAvani
Swiss franc higher as markets eye US jobs reportThe Swiss franc has moved higher on Thursday and is trading at 0.9068  in the North American session, down 0.41%. On Wednesday, the Swiss franc fell as low as 0.9147, its lowest level in two months. The Swiss National Bank meets on June 22nd and SNB President Jordan had a warning today for the markets. Jordan said that the central bank would not allow inflation to become entrenched, adding that if core inflation remained above 2% for too long, it would be difficult to bring it back down below 2%. Inflation remains above the Bank's 0-2% target, and Jordan has repeatedly warned that the Bank could continue tightening rates to curb inflation. The Bank is expected to raise rates by 25 basis points at the June meeting, which would bring the cash rate to 1.75%. The Federal Reserve meets on June 14th and members appear divided as to what action the Fed will take. Fed member Mester supports another rate hike and said on Wednesday that she did not see a “compelling reason to pause”, saying there was a more compelling case to 'hike and hold' rates. On the opposite side, members Jefferson and Harker said on Wednesday that they supported a pause in June and making future rate decisions based on the data. Jefferson warned that the effects of tightening had not been fully processed by the economy and higher rates could increase stress on the banking sector. The markets had widely expected a rate pause just a few weeks ago, but have now priced in a 25-basis point hike at 67%. US economic data has been solid, making it more difficult for the Fed to take a pause. Unless Friday's nonfarm payrolls are woefully below the forecast, it's looking likely that the Fed will be forced to hike again in June. The US House of Representatives has approved the debt ceiling deal by a resounding vote of 314-117. The Senate will have to quickly vote on the bill, as the government could reach its spending limit as early as June 5. The debt ceiling crisis sapped risk appetite and has helped the US dollar post broad gains against the majors. Fed member Loretta said that the deal removes a “big piece of uncertainty” about the economy. The US dollar has posted strong gains against the majors due to the debt crisis ceiling, which sapped risk sentiment. Once the debt ceiling is out of the way, it will be interesting to see if the US dollar loses some steam. USD/CHF is testing support at 0.9103. Below, there is support at 0.9022 0.9156 and 0.9237 are the next resistance lines
by OANDA
EUR/USD falls to 5-week low as inflation easesThe euro has edged higher on Thursday, trading at 1.0708, up 0.19%. The currency remains under pressure as the US dollar is flexing some muscles. On Wednesday, EUR/USD touched a low of 1.0635, its lowest level since March 20. There are clear signs of disinflation in the eurozone, as rising interest rates have dampened economic activity. Spain and France reported sharp drops in inflation in April, and Germany has followed suit, with inflation dropping from 7.6% in April to 6.3% in May. This was lower than the consensus of 6.8%. In the eurozone, inflation fell from 7% to 6.1%, below the consensus of 6.3%. Inflation has eased as energy prices have fallen sharply, with food prices also dropping. Most importantly, eurozone core inflation fell to 5.3%, down from 5.6% and below the consensus of 5.5%. The ECB is focussed on the core rate, which excludes energy and food prices. The drop in the core inflation in April will add support for the ECB to take a pause in rate hikes, as early as the July meeting. The US House of Representatives approved the debt ceiling deal on Wednesday. The measure sailed through, by a vote of 314-117. The Senate is expected to vote on the bill later this week, with the government forecast to hit the debt ceiling by June 5th. On the employment front, JOLTS Job Openings rose to 10.1 million, above the upwardly revised prior reading of 9.7 million and the consensus of 94 million. This is another indication that the labour market remains very strong and if the nonfarm payrolls release on Friday is solid, the Fed may have to continue raising rates. Fed members are divided on whether to pause or hike at the June 14th meeting, and Fed swap futures are pricing in a 67% chance of a 0.25% hike at the meeting. There is resistance at 1.0753 and 1.0804 1.0675 and 1.0624 are providing support
by OANDA
1
Canadian dollar edges lower ahead of Canadian GDPThe Canadian dollar is trading close to a two-month low, as the currency remains under pressure. USD/CAD is trading at 1.3646 in the European session, up 0.34%. Canada releases GDP later today, and the markets are projecting a modest 0.4% q/q for the first quarter, after flatlining in Q4 2022. On an annualized basis, GDP is expected to jump by 2.5%, after stalling at 0% in Q4. The GDP report takes on even more significance as it is the last tier-1 release ahead of the Bank of Canada rate meeting on June 7th. A strong GDP release would support the Bank raising rates, while soft growth would give the Bank room to continue pausing rates at 4.25%. The key to the BoC's decision could well depend on the GDP release. The BoC has a tough decision to make at next week's meeting. The BoC would like to extend its pause of rate hikes but inflation hasn't cooperated, as it ticked upwards to 4.4% in April, up from 4.3% in March. Inflation has been coming down, but remains well above the Bank's target of 2%. In the US, the debt ceiling deal between President Biden and House Speaker McCarthy now has to be approved by both houses of Congress. Some Republicans are against the agreement, but the deal is expected to go through. The markets are optimistic, as 10-year Treasury yields dropped sharply on Tuesday in response to the agreement, which was reached on the weekend (US markets were closed on Monday). The 10-year yields are currently at 3.65%, after rising to 3.85% on Friday, their highest level since March. 1.3585 and 1.3515 are providing support 1.3685 and 1.3755 are the next resistance lines
by OANDA
🪙 Gold (US$ / OZ) | Wednesday 31/5/2023 🪙Gold (US$ / OZ) | Wednesday 31/5/2023 | Ethan Smythe Fundemetal Gold prices rose higher at market open on Tuesday in response to a fall in US Treasury Yields following Washington's push to raise the US debt ceiling. This development sparked optimism with respect to recent fears of a US debt default on Tuesday. Congress now has up until June the 5th to consolidate this policy which still presents a degree of uncertainty as to whether this outcome will be met. Joe Biden went on to express his confidence and reassurance to markets that the debt will bill gets passed by the Senate. So what's the verdict? We anticipate that should the bill get passed we could see US yields continue to fall putting further upward pressure on gold throughout the remainder of the year. Technical From a technical standpoint, gold is currently trading at the bottom of its monthly upward channel and appears to be showing significant signs of strength. This strength appears to be the result of previously mentioned fundamental drivers. As of now, gold is testing the 200 MA, if we can get a clear break of the 200 MA and find support above this key level we should expect to see price raid the $2000 level. Provided this outcome does in fact occurs we further anticipate significant resistance at the $2000 level as buyers begin to realize gains. This would be an optimal level to set a profit target on any longs taken on the break of the 200MA. After price has begun to settle and the bulk of profit-taking has occurred we expect buyers to accumulate and break the $2000 level. If the price finds support above $2000 and breaks its previous ATH we expect gold to try and reach the top of its channel at around $2100.
TVC:GOLDLong
by Doxbin
Temporary Debt Ceiling RetracementLooks like Minor wave 3 ended a tad shy of 4136 and a few days late, but still on track overall. Minor wave 4 should only last 2-3 days with the bottom likely occurring by Thursday at the latest. It is possible Minute wave A inside of Minor wave 4 was completed today. Models are pointing to the bottom around 4176 based on historical Minor wave data. Minute wave C could end with a 138.2% retracement of Minute wave A which would place the bottom around 4177. Once Minor wave 4 is finished, Minor wave 5 should complete Intermediate wave 3 up with a larger top at one of the highest prices experienced in over 12 months. Based on all of the Intermediate wave 3 interior waves, Intermediate wave 3 will likely come up short from initial forecasts above 4300. The top will likely occur sometime next week around 4268. I will likely look into Intermediate wave 4’s bottom around the middle of next week. This drop for Minor wave 4 will likely continue until the House and/or Senate votes on the debt ceiling bill. Everything should see a nice jump when the bill is passed, however, something else is lurking around the corner with Intermediate wave 4 down. CPI is June 13, PPI is June 14 along with the next Fed rate decision in the afternoon. Looks like market could drop into the Fed meeting but begin Intermediate wave 5 upward after the meeting. With the debt ceiling likely out of the way by mid-June and Fed news possibly positive, the cause of the major market top near the end of June beginning of July could be earnings related or geopolitical. China action against Taiwan is still my leading catalyst especially after the GPU chip boom. This could turn into a major bust quickly if China takes Taiwan in a short or prolonged conflict. Too much of the world operates on chips moving through Taiwan.
SP:SPX
by StockSignaler
Debt Ceiling Deal Reached (anybody shocked?) - Now What?S&P 500 INDEX MODEL TRADING PLANS for TUE. 05/30 Now that the Debt Ceiling drama is apparently over, can the markets continue to be intoxicated on the nVidia-A.I. exuberance and continue the bullish leg or get back to the macro-economic fundamentals of inflation, valuation, china-slowdown (bad news good news here, with hopes of China stimulus?) etc.? A couple of sessions into this shortened week shall reveal. Till then, caution might be warranted on the part of the bulls. We started last trading week with our trading plans on Monday titled: "Debt Ceiling Deadline Likely to Whipsaw the Markets", and these words: "Expect the approaching debt ceiling deadline to attract both bulls and bears to heightened speculation, resulting in some whipsaw movements until the deadline passes and the dust settles". The dust might be settling this week. Positional Trading Models: For today, our positional models indicate going short on the close if below 4180, with a 52-point trailing stop. By definition, positional trading models may carry the positions overnight and over multiple days, and hence assume trading an 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 TUE. 05/30: For today, our aggressive intraday models indicate going long on a break above 4256, 4226, 4203, 4187, or 4156 with a 9-point trailing stop, and going short on a break below 4250, 4218, 4199, 4183, or 4150 with a 9-point trailing stop.  Models indicate no explicit exits. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 10:01am ET 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, #fomc, #fed, #fedspeak, #regionalbanks, #debtceiling, #china
SP:SPX
by TradersAIDotCom
USD/JPY punches above 140, Tokyo issues warningUSD/JPY is showing little movement on Tuesday. In the European session, USD/JPY is trading at 140.17, down 0.19%. The Japanese yen continues to underperform and has plunged 2.8% in May. The yen fell as low as 140.93 on Monday, its lowest level since November 21st. The sharp depreciation is raising concerns in Tokyo and Masota Kanda, a top official at the Ministry of Finance (MOF) weighed in on Tuesday. Kanda said officials were not focussing on particular exchange rate levels but said they were monitoring the forex market and "would respond appropriately". Kanda's veiled warning should not be ignored, as he blindsided the markets back in December when the MoF intervened in the currency markets in order to prop up the yen. Japanese releases have been solid, reinforcing speculation that inflation isn't going anywhere and the Bank of Japan may have to tighten policy. Service and manufacturing PMIs showed slight expansion last week and retail sales and industrial production will be released on Wednesday. Retail sales are expected to remain strong at 7.0% y/y in April, following a prior reading of 7.1%. Industrial production is projected to improve to 1.5% m/m in April, up from 1.1% in March. President Biden and Republican Speaker McCarthy have reached an agreement in principle on the debt ceiling, after weeks of brinkmanship between Republicans and Democrats. The deal must be approved in both houses of Congress, which is expected to happen despite grumblings from some Republicans. The weeks of uncertainty prior to the deal weighed on risk appetite and the big winners have been US Treasury yields and the US dollar. USD/JPY has support at 139.61 and 138.50 There is resistance at 140.88 and 141.73
by OANDA
1
Aussie unchanged ahead of Lowe, CPIThe Australian dollar is drifting lower on Tuesday. AUD/USD is trading at 0.6538 in Europe, unchanged on the day. RBA Governor Lowe testifies before a Senate Committee later today. Lawmakers will likely press Lowe about rate policy and the battle against inflation. Earlier this month, the RBA shocked the markets by delivering a 25-basis point hike. At the April meeting, the RBA had paused in order to assess the effect of its aggressive rate-hike cycle, and the markets had expected another pause at the May meeting. Lowe will have to reassure the committee that the RBA is following a plan and is not zig-zagging between hikes and pauses. Attention will quickly shift to inflation, with the release of Australian CPI on Wednesday. Inflation has been falling, and the downturn is expected to continue, with a consensus estimate of 6.4%, down from 7.0% prior. The RBA has pledged to bring inflation back down to its 2% target, but there's no doubt that it will be a long and bumpy road. The central bank meets on June 6th and is widely expected to pause and maintain the benchmark rate at 3.85%. The US debt ceiling agreement is a done deal. Well, almost. President Biden and Republican Speaker McCarthy have reached an agreement in principle which must be ratified by both houses of Congress. Some Republicans have threatened to vote against the deal, but with overwhelming support from the Democrats, approval of the deal is very likely. The weeks of uncertainty prior to the deal weighed on risk appetite, and the big winners have been US Treasury yields and the US dollar. There is resistance at 0.6665 and 0.6756 0.6525 is a weak support line, followed by 0.6434
by OANDA
1
SPY S&P 500 Index ETF and the Debt Ceiling DealThe political climate is favorable for a small rally of SPY, the S&P 500 Index ETF, towards the next resistance level of $430. After several weeks of tense negotiations, President Joe Biden and House Republicans have reached an agreement in principle to address the debt limit and cap spending. The debt-ceiling deal is now finalized, and here are significant parts of the agreement: First, the agreement suspends our $31 Trillion debt ceiling until January 2025, providing some relief and avoiding immediate concerns. Additionally, the agreement ends the pause on student loan repayments, allowing borrowers to resume their payments. This decision aims to ensure the stability of the student loan system and address the long-term financial implications. Furthermore, the agreement includes stricter work requirements for low-income and older Americans who receive food stamps. These requirements are intended to encourage self-sufficiency and help ensure that federal aid benefits are effectively utilized. Regarding IRS funding, the agreement entails a $20 billion reduction from the initially proposed $80 billion budget. This reduction specifically targets the allocation meant to crack down on tax evasion by wealthy individuals and corporations. Moreover, the deal puts an end to the ongoing freeze on monthly student loan payments and interest. It also introduces restrictions on the President's ability to reintroduce such a freeze in the future. To avoid contentious debates until after the next presidential election, the agreement suspends the debt limit until January 2025. This decision provides a temporary relief from potential conflicts surrounding the debt limit. The agreement also implements new work conditions for Supplemental Nutrition Assistance Program (SNAP) recipients, raising the age limit for work requirements to 54. This measure aims to promote workforce participation and enhance the effectiveness of federal aid programs. Overall, this comprehensive agreement addresses various aspects of the debt limit and spending caps, aiming to strike a balance between fiscal responsibility and supporting those in need. My overall outlook is still bearish and i think the small rally could easily turn into a bull trap. Looking forward to read your opinion about it.
AMEX:SPYLong
by TopgOptions
1
5 Key Factors Shaping US Dollar Trading This WeekThe US dollar is in the midst of a week filled with pivotal events. Together, these fundamental drivers hold the key to understanding the potential shifts in the US dollar's performance throughout the week: US President Joe Biden announced that a bipartisan agreement has been reached to raise the US debt ceiling of $31.4 trillion, aiming to avoid a default. He has now called on Congress to pass the deal asap. Fitch ratings will remove the “negative watch” rating on the United States when the deal passes or looks likely to pass congress. The debt ceiling agreement has potentially weakened the safe-haven appeal of the US dollar, leading to an increase in risk appetite in global markets. The Personal Consumption Expenditures price index, the Federal Reserve's favored inflation measure, rose by 4.4% in April compared to the previous year, up from the 4.2% increase observed in March. This development has raised the probability of a 25-basis-point interest rate hike by the Federal Reserve in June. Due to the Memorial Day weekend in the US, as well as bank holidays in Europe and the UK, Monday will experience reduced market liquidity. Additionally, institutions are preparing for month-end trading on Wednesday, which could introduce more volatility. The US payrolls report for May will be released on June 2nd. Recent months have consistently shown better-than-expected job figures. It is anticipated that this week's job numbers will indicate an addition of 180,000 jobs, with a slight increase in the unemployment rate to 3.5%. A tighter job market will reinforce the Federal Reserve's hawkish stance, with strong wage data also providing support if the actual figures surpass estimates.
TVC:DXY
by BlackBull_Markets
USDebtCeilingCrisis.ComLet’s make some noise for the 11th hour party people. Bipartisan talks between US President Biden and House Republicans over the debt ceiling crisis have finally come to a resolution. Well, in theory at least since there is the small matter of Congress having to vote on it later this week. US lawmakers might balk at the idea that this is an 11th hour deal since the much touted ‘hard deadline’ of the 1st of June has now moved to the 5th of June. Any chances we could see that pushed forward by a few more days in the event of further brinkmanship during the Congressional vote on the deal? Make no mistake. Regardless of the real hard deadline before the US technically defaults on its public debt, this will have been an 11th hour deal. The thing with 11th hour deals whether they’re related to business, divorce settlements, ransom/hostage negotiations or drug deals is that they tend to be equally bad for both parties but at least everyone walks away equally disappointed. A deal as critical as the one needed to tackle the debt ceiling crisis should have been done and dusted well before this game of chicken ended in both parties swerving just before the head on collision. The US debt ceiling issue is a bubble. The limit has been lifted 78 times since 1960 and is quite the magician’s trick. Raising the limit each time a ceiling is reached and then kicking the issue into the long grass until the next time negotiations need to take place is dangerous enough but the way in which this current deal has been tentatively reached has created micro tears in this bubble and only time will tell if the bubble bursts at some point in the not- too-distant future. Even a smooth run through Congress later this week will be short-term relief for markets as the possibility of a crash depends on the extent of any liquidity leaving the system and where exactly that liquidity drain comes from as soon as the US Treasury turns on the T-bill tap to full blast after a confirmed deal. These are exciting times for FX traders as we trade the bull runs, the bear runs and the crashes. Keep yourself educated and informed at all times. And remember that whenever you go to the market, be careful out there. BluetonaFX
Education
by BluetonaFX
4
$SPY Outlook 05/30 - 06/02With a tentative agreement to raise the debt ceiling reached over the weekend, we now look to see how the markets react when it is voted on later this week. Technical Analysis: The megaphone pattern we’ve been watching all month is still in play. We also have the macro uptrend line that we have not tested since March. My general lean for this week is bullish. Bulls will want AMEX:SPY to hold above last week’s open at 418.64. Barring any additional news, I’m expecting us to fill the gap above to 420.77 - 421.22 when markets open on Tuesday. I do see a 15 minute Fair Value Gap around last week’s open at 418.64 where we could potentially form a support base before we head higher into the 423-425 range. Although I can see the market moving higher in the short term, I’d expect some corrective action in the coming weeks. Bear case if we fail to hold the 418.64 level, we could potentially retrace to the 0.618 fib at 414.04. Should we invalidate a golden pocket bounce, our next support zone would be the daily gap under the 50 SMA from 409.87- 407.27. Under this… megaphone plays out and we test the macro support trendline. Upside Targets: 420.77 → 421.22 → 421.97 → 422.82 → 423.54 Extended: 425.26 Downside Targets: 418.64 → 417.30 → 416.25 → 414.94 → 414.15 Extended: 408.87
AMEX:SPYLong
by peterjames_6
More Rate Hikes on the MenuCBOT: Micro 30-Year Treasury Yield ( CBOT_MINI:30Y1! ) President Biden and House Speaker Kevin McCarthy reached an agreement in principle late Saturday to raise the nation’s debt limit and cut federal spending, ending a rollercoaster round of negotiations. The current national debt ceiling is $31.4 trillion. The tentative deal would raise it by $4 trillion through the end of 2024. In return, it would cap annual discretionary spending for two years, keeping non-defense spending levels flat. Future Fed Rate Actions With a US default and potential economic disaster being averted, the Federal Reserve (Fed) would likely stay on its course of fighting inflation. On May 26th, the Bureau of Economic Analysis (BEA) reported the Personal Consumption Expenditures Price Index (PCE) up by 0.4% in April to an annual rate of 4.4%. This surpassed both the market consensus of 3.9% and the March PCE of 4.2%. The Core PCE excluding food and energy is 4.7%, exceeding March level by 0.1%. The surprising rebound in inflation indicates that the Fed’s job is not done, even after it hiked the Fed Funds rate seven times last year and three more times in 2023. CME FedWatch Tool gauges the probabilities of rate hikes based on 30-Day Fed Funds futures pricing data. It shows that, on May 28th, the odds of a 25-bp hike in June FOMC meeting at 64.2%. The probability of raising another 25 bps in July is 27.1%. The futures market does not expect the Fed to cut interest rates before the end of the year. The interest rate market is in disarray, and this may present new trading opportunities. Mortgage Rate Tops 7% On Sunday, May 28th, the average 30-year fixed mortgage interest rate is 7.15%, rising 16 basis points from last week, according to Bankrate.com. This is an annual increase of 1.61%: the 30-year fixed was 5.54% on May 26th, 2022; Prior to the Fed rate hikes, it was only 3.65%-3.85% in February 2022. MORTGAGE30US, the mortgage rate data tracked by the Federal Reserve Bank of St. Louis, records 6.57% on May 25th. Meanwhile, CBOT 30-Year Micro Yield Futures is quoted 3.988% for its May contract last Friday. What does this mean? The 30-year duration interest rate spread between the riskless Treasury rate and a risky mortgage rate is now 258 basis points. For comparison, in September 2021, the same spread was only 80 bps with a 2.1% Treasury yield and a 2.9% mortgage rate. The spread has more than tripled in the past two years. When the Fed started raising rates last year, both Treasury yield and mortgage rate rose. The trends diverged in October. In the mortgage market, banks continued to raise lending rates in response to the actual increases in the cost of capital. In the financial market, “Fed Pivot” expectations weighed on Treasury prices. As the Fed lowered the rate increases from 75 bps to 50 bps and then 25 bps, 10- and 30-Year bond yields fell, while 1-Month and 2-Year yields rose, creating a negative yield curve, or the so-called inverted yield curve. Why Treasury Yield Needs to Catch Up In hindsight, mortgage bankers are proven to be right, while the rate cut forecast by bond investors is premature. With the new twist in inflation data, both bond yield and mortgage rate have the potential to go up further in the coming months. Treasury bond yield has some “catching up” to do as investors adjust their expectations. Here is my logic: Firstly, raising the debt ceiling opens up trillions of dollars of new government borrowing. By the rule of supply and demand, a high demand of money will raise its price, all else constant. Treasury bond yield is the price the government paid to borrow money; Secondly, the last-minute deal on debt ceiling helps avoid a potential economic crisis. The housing market is cooling but unlikely to crash any time soon. This ensures that the higher mortgage rates are here to stay; Thirdly, the large interest rate spread created an arbitrage opportunity for lenders by borrowing from the bond market to fund the mortgage operations with the same maturity; Therefore, the 30-year Mortgage-to-Treasury spread could narrow in the future. Since mortgage rate is not likely to fall, the gap could be closed by a higher Treasury yield. We could express the view of high Treasury yield expectation by establishing a long position in CBOT 30-Year Micro Yield Futures. The June contract 30YM3 is quoted 4.000% last Friday. Each contract has a notional value of 1,000 index points, which equates to $4,000 at current quote. CME Group requires an initial margin of $300 per contract. Current Fed Funds target rate is 500-525 bps. Hypothetically, if the Fed raises 25 bps in June, and 30-Year Treasury Yield goes up by the same amount, a long futures position could gain $250. This would be equivalent to an 83% return, excluding commissions. Long Futures would lose money if the yield falls, by $10 for each basis point movement. The July contract 30YN3 will begin trading this week. I would monitor the opening price to determine if it is still quoted at a discount - below short-term Treasury rate and mortgage rate. 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