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Was The BTC Bear made worse by the FEDBitcoin Bear PA key moments are listed here - the RED vertical lines are interest rate riaises by US FED. Nov '21 TAPROOT installed on Bitcoin Network, after which PA reverses. Slow "Bear" market takes hold and PA slides down FED has 1st Rate Hike in a very long time in March '22, Bitcon PA actually Rises. 2nd Ratehike by FED on early May News comes out that LUNA maybe having trouble and people begin getting nervous LUNA Collapses, Slow Bleed, effect being negated by 4th week after and next green candle. Confidence begins returning Till News comes out that FED maybe looking at a larger rate hike. The timing is perfect, like Hitting a wounded animal ** 1st 75 point Rate Hike causes Large Drop in PA as more companies struggle From here, the effect on PA of 2 more 75 point rate hikes are Minimal by comparison. PA actually recovers some. ** Another 75 point raise is too much and FTX is brought down. The Timing is perfect but after weeks of uncertainty and bad sentiment, BTC PA makes a rapid recovery Without these 2 things, PA could very possibly be around $37K right now and would have been the least damaging Bear market in BTC, Less than the normal 80%. And what we REALLY need to take into account here now, is what is going to happen on 1st Feb. TradFI ( the FED is KING odf TradFI) is threatned by Crypto....What will happen if they bring in another 75 points ? NOT A LOT...as previously shown, Bitcoin was NOT dumped by the 2 middle raises as the Coins are held, Future profits secured. So long as no more companies are brought down, Weak hands destroyed or played.....then We should be OK from here However, This is a War between the old Monopoly and the New Kid on the block....and all is fair in Love and War. Be cautious, enjoy the ride and trade safely - the likely hood is that 2nd half 2023 is not going to be kind..... Time Will tell
BITSTAMP:BTCUSD
by Orriginal
3
Echoes of the great recession of 2008An echo of the great recession of 2008 would look easy on this chart and fits nicely with the percentage distance from the 3-year moving average. I think this downturn will be even greater in magnitude and worse in different ways. QQQ at $187 by mid-summer is what I see likely. The Fed and US Treasury need folks begging to justify their next blunder. The weight of reality will be more than can be absolved by fairy tales. Also, chart colors.
NASDAQ:QQQShort
by Scorpions99
EURUSD STRUGGLES TO GO ABOVE 1.0900EURUSD is having difficulty establishing a bullish move above 1.0900 as price has been rejected on several attempts. The latest PMI readings from the eurozone didn’t help matters with a mixed report on the state of economic activities around the bloc. With sentiments of a slow pace Federal Reserve rate hike already weighing the US dollar, the price could still make it over the current psychological price level. Current Scenario Price is reacting to the current Resistance level at 1.0900 which could see selling activity towards the intraday support level around 1.0800. Should the near-term support fail to incite a bullish recovery then attention will be on the major level around 1.0750. Bullish Scenario: A convincing breakout from 1.0900 could open the door to 1.1000 Bearish Scenario: A decline below 1.0740 could incite bearish activity but price will still need to contend with an ascending trendline running from September 2022.
by ScopeMarkets
When downside volatility becomes an advantage.It’s been a while since we looked at the Russell 2000. For the uninitiated, the Russell 2000 index is a small-cap stock market index that is made up of the smallest 2000 stocks in the Russell 3000 Index. The small-cap nature means a few things, volatility tends to be higher for one. And capturing this downside volatility using the Russell 2000 as compared with the S&P 500 has almost always proven more fruitful. When to take this trade you may ask? The recession bellwether indicator of the 2Y – 10Y yield spread is a simple place to start. With the benefit of hindsight, shorting each of the indexes at the peak ‘inversion’ points proves to be a decently successful strategy. Especially so using the Russell 2000. So the next question to ask is if we are near the peak point of inversion? To answer this, we have to circle back to research from last week, where we discussed the expected rate path for the Federal Reserve (Fed). In short, markets seem to be pricing in a Fed pause, followed by a pivot in the coming year. Looking back at the charts, this shift in stance (or pause) highlighted in the top chart generally marks the turning points for the 2y-10y yield curve inversion, highlighted in the bottom chart. Therefore, with markets expecting a pause as early as the first quarter, we suspect that the turning point for the yield curve inversion is just around the corner. On price action, the 1900 level proves to be of significant resistance, with multiple attempts to break through being rejected. As prices creep towards this resistance level once again, we think this might just provide another attractive opportunity for trading. Zooming out to a daily timeframe, the 0.382 Fibonacci levels marked by the previous high and low, also coincide close to the resistance levels on the shorter timeframe. The proven downside volatility, along with the coming turning point in the yield curve inversion, keeps us bearish on the Russell 2000. Additionally, the price action points to significant resistance overhead, around the 1900 level. Setting our stop at 2035 level (one Average True Range away & close to the next resistance level) and take the profit level at 1690, with each 1-point increment in the Russell 2000 futures contract equal to 50$. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. 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 Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description.
CME_MINI:RTY1!Short
by inspirante
10
IEF ShortTo begin, I am not a Seasoned Trader; I use this blog for: 1. Record keeping; & 2. Formalizing my thoughts a. If I can't explain simply here, I shldn't engage To begin, my Rules of Engagement ( RoE ) to identify an upside of +3 to 1 Risk to Reward ( “R/R” ); in this case it may yield a 3.1- 3.94 R/R. • Asset | IEF ( iShares 7-20 Year US Gov’t Bond ) • Type | Equity o Alt. Type 1 | Option • Position | Short • Entry | $ 100.46 • Stop Loss ( SL ) | $ 102.05 • Bring SL to Zero | n/a • Target | $ 94.19(-) • Exp. Time Horizon | ~ x2 FED meetings so Mar-end • Allocation | 5.00% • R/R | 3.1- 3.94(+) To begin, I will highlight the reasons why I am apprehensive about the trade ( the Con’s ) & finish up with the reasons why I’m interested in the position ( the Pro’s ). The issues / thoughts that make me uneasy ( the Con’s ) are: • I structured it to allow for further moderate appreciation o I “may” miss hitting the top but I have 1.5 wk’s for that too play out Now, the reasons I am interested in this position ( the Pro’s ): • In my blog, you can see the appendix whereby the 10Y can hover lower than the Fed Funds Rate (Upper) by 100 bps before it turns; we are there now • The FED is either going to raise (25 – 50 bps) or stay fixed in 1.5 wk’s o I believe they will raise; thus pushing the market down • Although the date range for the 10Yr Yield goes further, I am playing with the IEF (ETF) so only goes back to July 2002. Nevertheless, that posts a 1.95 standard deviated move which I’ll see as ~2 if it hits my entry & thus happy with that To summarize, the Tea Leaves & history is telling me to short albeit I may miss it. Financial Disclaimer | To reiterate, I’m not a Financial Advisor. If you engage based on the contents herein, you will lose money. If you interpret that mean by doing the opposite you will make money, that’s incorrect; you will also lose money. Thanks for your time; I hope you have a lovely day.
NASDAQ:IEFShort
by sobcza123
1
DXY potential LONG SIDEAfter the last three CPI reports that reported better than forecasts, DXY start a corrective move so bad…but we thinks it’s over in view of the macroeconomic aspect as well as technical. Financial markets thinks we will have pivot on monetary policies of Central banks…it’s make not sense by any mean…here on technical we have an nice spike base at 105.500, and 101.400 was touched by a hunting formation and we can expect to THIS MOVE IN WEEK AHEAD.
TVC:DXYLong
by Dalltrade
3
USA $31.4T Debt: How will this affect BTC and Stocks?❗ WARNING ❗ You're about to read an unpopular opinion... Over the past few days, we've seen bullish price action across nearly all markets. Infact, this is the first time since 2013 that Bitcoin has closed so many green dailies consecutively. This entire market reversal seemed a bit sudden, and many claimed "bull trap". (I'm a believer in the Macro, so when it comes to pure charting without fundamentals, longing was the way to go over the past few days, no argument on this). However, another interesting this happened today - the U.S. government hit its $31.4 trillion borrowing limit TODAY, amid a standoff between the Republican-controlled House of Representatives and President Joe Biden's Democrats on lifting the ceiling (which could lead to a major economic crisis in a few months). Suddenly, I thought to myself, the entire reversal seems even more suspicious. Now here's my unpopular opinion : What if this is part of an elaborate plan to eliminate some of the debt? The world is dependent on the dollar, if the US financial system is in trouble, so is most of the world. Everything is just too interconnected at this point. Across the giants of investment world, there are rising concerns about unsettling markets and risking a recession. Senate Republican leader Mitch McConnell predicted that the debt ceiling would be lifted sometime in the first half of 2023 under conditions negotiated by Congress and the White House. According to Reuters, the White House is refusing to negotiate with Republicans on raising the debt ceiling because it believes that the majority of them will eventually back off their demands, as a growing group of investors, business groups and moderate conservatives warn of the dangers of edging towards a default. The high-stakes deadlock is widely expected to last for months, and could come down to the last minute as each side tests the other ahead of June when the U.S. government might be forced to default on paying its debt. A default means being unable to pay. Because U.S. debt is considered the bedrock of the global financial system, due in part to its stability, a default could shake economies across the world. Americans could also face a recession, including higher unemployment, and the stock and bond markets would likely plunge. Today, a government that defaults may be widely excluded from further credit; some of its overseas assets may be seized; and it may face political pressure from its own domestic bondholders to pay back its debt. Today on Twitter, Elon Musk said openly that even if the government taxes every billionaire by 100%, it wouldn't even make a notable dent. According to him, the only way to make a notable dent in this debt is to tax the citizens even more. But what about the markets, the whales, the insider trading between banks, governments and large corporations ?? Trading markets is a multi trillion dollar industry. To make it more practical, the total value of global equity trading alone was 41.8 trillion U.S. dollars in the third quarter of 2021. We know that the Total cryptocurrency market is currently standing just under 1T. I'm unable to find data on the total worldwide value of the commodity market, if you do please comment below with your source. It is estimated that the total amount of money in the world is a couple of quadrillion. Whatever that means. Suddenly, 30 Trillion seems pale in comparison. Furthermore, investment options go far beyond just stocks, cryptocurrency and commodities. Some of the other less frequently discussed options include: 1. High-yield savings accounts 2. Certificates of deposit (CDs) 3. Money market funds 4. Government bonds 5. Corporate bonds 6. Mutual funds 7. Index funds 8. Exchange-traded funds (ETFs) 9. Dividend stocks 10. Real estate Now imagine, scooping off a bit of cream from the top?? You wouldn't need to necessarily wipe out an entire market, but a good 20% to 30% drop across markets and Bob's your uncle ! The money machine carries on until next time it's overspent. Hike interest rates. Increases taxes. Inflation. Liquidate markets. Repeat cycle. So the point that I'm trying to get at is this - remember tot take profits. Nothing wrong with taking a hedge to manage your risk during these uncertain economic times. I personally won't be surprised if there's some major "news event" that sends the markets into a overnight flashcrash soon. I could be totally wrong, in fact I would prefer to be wrong in this case. What are your thoughts on this? _______________________ 📢Follow us here on TradingView for daily updates and trade ideas on crypto , stocks and commodities 💎Hit like & Follow 👍 We thank you for your support ! CryptoCheck
FRED:GFDEBTN
by CryptoCheck-
25
Will King Dollar Reign Again?The U.S. dollar has been in freefall since early November. But now there could signs of stabilization – at least in the near term. The first pattern on today’s chart of the U.S. dollar index is the 101.95 level. It was a weekly closing high from March 2020 before the Federal Reserve’s dovish policies pushed the greenback lower amid the pandemic. Notice how DXY bounced near this level last May and is holding it again this week. Second, the recent low represented a 50 percent retracement of the dollar index’s surge between May 2021 and September 2022. Third, stochastics are trying to rebound from an oversold level. Today’s big swings also produced an outside candle. Finally, the calendar might be a challenge with the Fed meeting two weeks away. A lot of hopes for more dovish policy have been priced in. Can it keep moving in the same direction, or will sellers look to cover before the news? TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more. Important Information TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means. This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates. Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com .
TVC:DXY
by TradeStation
Short STOXX EUROPE 600 OIL & Gas sectorWe are having here a very well structured trade idea, exploiting the confluence of high important technical factors, mean reverting stance, and extreme positioning in the Oil and Gas space thanks for a Long Inflation lean by most investors this year. Into year end and preparing for 2023, Fact is that after such a good performance some will be tempted to take profit especially with a potential FED pivot in [/b preparation based on Inflation peaking. Saying it simply and pragmatically : if you made money being long the sectors or High dividend stocks in that space, that's a great achievement, but the forward looking factors are clearly pointing lower. the USD price action is clearly indicating of Inflation peaking and is highly supportive of this trading idea. Bottom line: Sell / Short SXEP Sector using this Multi Month horizontal trendline and overbought technical indicators
EUREX:FSTE1!Short
by ArisopeCapital
1
ES/SPX Short/Put entry Weekly Chart shown and Daily Fed Net liquidity indicator applied. This indicator shows fed inflow/outflow money’s based on their Quantitative tightening and easing (denoted by the green line). As you can see by looking at the circles drawn in, when Net liquidity becomes meaningfully extended above the price action, price eventually makes its way there, and the same goes with when the NL under-extends. Currently SPX is $4009 and its fair value (denoted by the Net liquidity indicator) is $3790 as of 1/16/23. We are clearly down trending as we keep rejecting off the trend line. The play here looks to be an entry around $4050-4100 near the upper region of the trend line and a short all the way down to $3790. This is interesting as it would likely ripple over to $BTC and cause it to also decline. Looking for this to play out around the end of February or early March.
CME_MINI:ES1!Short
by Stellurz
Ridiculous play incomingMarket trying to front run the fed, and trying to convince fed itself that fed is going to pivot XD (like a bunch of degenerates). And celebrating the likelihood of 25 bps like it's the start of bull market, even though several members of the fed this week have been hawkish. Even Jerome Powell himself has said, fed will have to do something the majority wouldn't like. Anyways this is kind of ridiculous but here is my expectation XD. Currently we got rejected several time near the year long bear channel resistance.
OANDA:SPX500USDShort
by jobanis
4
Where is the EURUSD headed amid the EU and US inflation lag?We hope everyone had a great start to the year! As we think about the year ahead and some of the major themes that might play out, the EU vs US inflation story is among those catching our eyes now in particular. “Inflation” & “Rate Hikes” were the main talking points for the US Economy in 2022 as the US Federal Reserve (Fed) reacted and adjusted to stubborn inflation. On the other side of the Atlantic, a similar situation is playing out, albeit with a 4 to 7 months lag behind the US. Measuring the difference between the turning points, we can roughly determine the lag between the economic indicators. Headline Inflation (top chart) in the US moved up close to 7 months before the EU’s. Core Inflation (middle chart) in the EU lags the US by 5 months. Policy reaction (bottom chart) of the European Central Bank (ECB) lags the Fed by 4 months. This dynamic is important when trying to understand the path forward for the EURUSD currency pair as central banks watch inflation figures and adjust policy rates accordingly. EU & US policy rate differentials help us sniff out major turning points for the EURUSD pair. As seen in the chart above, the yield differential measured using CME Eurodollar and Euribor futures, started to widen in September 2021, which marked the EURUSD tumble from 1.160 all the way to 0.987. But now it appears the reverse is happening. Yield differentials are starting to close as markets adjust to slower pace of rate hike environment in the US while ECB still battles stubbornly high inflation. Using CME’s Fed watch tool as well as Bloomberg’s OIS Implied Euro interest rate probability tool, we can estimate the market implied forward path for the 2 major central bank’s policy rates. With the market expecting the Fed to pause rate hikes in March, while the ECB is expected to only pause in July. Interestingly, the difference in expected rate pivot is in line with the 4 to 7 months lag in economic conditions we established from the analysis above. As the ECB continues to hike while the Fed pauses, yield differential is likely to close, helping to boost Euro’s attractiveness against the USD. Coupled with the dollar’s downward momentum, This could favor further strength in the EURUSD pair. On the technical front, we see a golden cross with 50-day moving average crossing above the 200-day moving average for the pair. Coupled with an uptrend and spike in the RSI, it has marked the recent up trends remarkably well. If this historical behavior holds, the EURUSD pair could still have further room to run. For those who use Parabolic SAR, the current chart has just flipped back to a buy signal after the recent price consolidation. Given the ECB’s policy lag, dollar weakness, and a bullish technical setup, we lean on the buy side for the EURUSD pair. We set our stop at the 1.0520 level, and take profit level at 1.12800, with each 0.00005 increments per EUR in the EURUSD futures contract equal to 6.25$. Do also check out our previous EURUSD idea which played out nicely: The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. 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 Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Sources: www.cmegroup.com www.cmegroup.com Bloomberg
CME:6E1!Long
by inspirante
November Midterms + Bear Market Rally I believe we'll see a ferocious rally that will shock everyone and make everyone bullish again - but this will just be a bear market rally (this is my thinking unless we break below 800B) There is still a very good chance we continue down towards 500B MC and sit there for the next 12-18 months but I am not leaning too heavily on the short side at the moment. The democrats need something on their side, they don't have the market - everything comes down to whether they raise rates at the next meeting. 100bp points increase = market dump 75bp points increase = market dump 50bp points increase = market rally's hard Even the most bearish people agree we're due for a rally - even if it is a bear market rally - if we do get this rally it'll be the last one until we go into a long bear market/depression (this will be your last chance to exit your trades in crypto/equities)
CRYPTOCAP:TOTALLong
by InvestingIdeas9
CPI & Inflation Rate USHello everyone! Let's take a look on what happened yesterday on the US financial market and understand the impact of CPI and inflation rate. The Consumer Price Index (CPI) and inflation news from the United States can have a significant impact on financial markets and the value of the U.S. dollar. The CPI measures the change in the price of a basket of goods and services consumed by households, and inflation is the rate at which the general level of prices for goods and services is rising. When the CPI and inflation numbers are higher than expected , it can indicate that the economy is growing, which can boost stock prices, lead to higher interest rates, and appreciate the dollar. This is because as the economy grows, companies will see increased demand for their products and services, which can lead to higher profits and stock prices. Higher interest rates can also attract more investors to bonds, which can lead to higher bond prices. Additionally, a strong economy can lead to increased demand for U.S. goods and services, and increased foreign investment in the U.S. economy. As a result, the demand for dollars increases, which can lead to an increase in the value of the dollar. On the other hand, if the CPI and inflation numbers are lower than expected , it can indicate that the economy is slowing down , which can lead to lower stock prices, lower interest rates and depreciation of the dollar. This is because as the economy slows down, companies will see decreased demand for their products and services, which can lead to lower profits and stock prices. Lower interest rates can also lead to less investors in bonds, which can lead to lower bond prices. Additionally, a weak economy can lead to decreased demand for U.S. goods and services, and decreased foreign investment in the U.S. economy. As a result, the demand for dollars decreases, which can lead to a decrease in the value of the dollar. It's important to note that the Federal Reserve uses inflation as an indicator to change the monetary policy, as they use interest rates as a tool to control inflation. Typically if inflation is too high, the Fed will increase interest rates to slow down the economy and curb inflation, and if inflation is too low, the Fed will decrease interest rates to stimulate the economy. These monetary policy decisions can also have an impact on the value of the dollar, as when the Fed raises interest rates, it can make the U.S. a more attractive place to invest, which can lead to an appreciation of the dollar. Conversely, when the Fed lowers interest rates, it can make the U.S. a less attractive place to invest, which can lead to a depreciation of the dollar.
ECONOMICS:USCPIEducation
by m_maia14
A Grim Picture of InflationFed Funds Futures (ZQ) CBOT:ZQ1! , 2-Yr Yield (2YY) CBOT_MINI:2YY1! , 10-Yr Yield (10Y) CBOT_MINI:10Y1! This is the third report in the series “Year of the Rabbit: Short-tailed Trading”. US Consumer Price Index (CPI) declined 0.1% in December 2022 on a seasonally adjusted basis, after increasing 0.1% in November, the U.S. Bureau of Labor Statistics reported on Thursday, January 12th. Over the last 12 months, the headline CPI increased 6.5%. The inflation index for all items less food and energy rose 0.3% in December, after rising 0.2% in November. The Core CPI increased 5.7% year-over-year. December is the only month in 2022 when aggregate price falls below prior-month level. The headline CPI is now 0.5% lower than a year ago on an annualized basis. Cooling inflation is welcoming news to consumers, businesses, and investors. It also gives the US Federal Reserve more flexibility to moderate its hawkish monetary policy. Inflation by Category Data Paints a Different Picture The December CPI data was a “one-man show”. Gasoline price declined 9.4% in one month, bringing its annual change to -1.5%. After an all-time high record of $5/gallon reached in June, we ended 2022 with lower gasoline price year-over-year. If you think we are getting relief in energy cost, nothing could be further from the truth. • Fuel oil dropped 16.6% in December, but it is up 41.5% for the year • Electricity price went up 1% in December and +14.3% for the year • Pipelined natural gas were up 3% monthly and +19.3% yearly Americans are getting bigger utility bills to light up the room and heat the house this winter. Other essential items: • Food cost +0.3% in December and +10.4% Y/Y in 2022 • Shelter cost +0.8% monthly and +7.5% annually • New cars cost 5.9% more but used cars are 8.8% cheaper in 2022 Inflation is certainly on the way down, but it is sticky. Many product and service items essential to household living and business operation are far from under control. Interest Rate Outlook for 2023 After the release of new CPI data, market consensus centers on a modest 25-basis-point increase on February 1st., which would bring the Fed Funds rate up to 4.50-4.75%. I also expect another 25-bp raise on March 22nd, setting the so-called terminal rate at 4.75-5.00% for the rest of 2023. This is my baseline forecast for 2023. The previous section shows that inflation is still uncomfortably high for food, housing, and energy to power the home, as well as for new vehicle. The Fed’s job for fighting inflation is far from over. I do not expect any rate cuts to occur in foreseeable future. When it comes to central bank monetary policy, there is a lagging period before it works its way through the economy. The response lag could be anywhere from 6 to 12 months. By my estimate, it takes about 7 months in this rate-hike cycle. The Fed initiated the first increase in March, but inflation did not peak until June at 9.1%. Monthly CPI was unchanged the following month. However, the slowdown was solely due to a sharp decline in gasoline price, not attributable to the Fed. Core CPI topped 6.6% in September, then subsequently moved lower to 6.3%, 6.0% and 5.7% in the fourth quarter. October was the first month when core inflation reverses its rising path. This is where I mark the start of inflation response to monetary tightening. Once the Fed reaches its terminal rate, the force of inertia would carry the policy impact on inflation for several more months. That’s why the Fed is likely to keep the rate unchanged for the remainder of 2023, measuring the policy effect. Fixed Income Investment Opportunities On “The Real Cost of Fed Rate Hikes”, published on July 25th, I spelled out the impact of interest rate increases to households, corporations, Federal and local governments. With the risk-free rate expected to reach 5%, all borrowing cost will go up further, even after they rose significantly last year. As the economy slows down, those with high debt loads may not make it through this downturn. If you plan on investing in bonds, default risk should be on the very top of your mind. Consider safe play: Avoid any issuer with a high debt-to-equity ratio. Corporate high-yield, municipal bonds, and securities backed by adjustable-rate mortgages and credit card balance fit this bill. JPMorgan Chase took notice. On Friday the 13th, JPM NYSE:JPM posted revenue that beat expectations, but the biggest US bank warned it was setting aside more money to cover credit losses because of a “mild recession” is its “central case.” The bank posted a $2.3 billion provision for credit losses in Q4, a 49% increase from the 3rd quarter. For relatively safe investment options, bank certificates of deposits (Jumbo CD) and high-quality corporate bonds (rated A or above) offer yields from 4.50% to 6.0%. They could beat inflation in the coming years. Spread Trade Opportunities We have been in a negative yield-curve environment since July. In my opinion, slower rate hikes weaken the force that drives short-term yield rising faster than long-term ones. Once the Fed actions are over, mean reversion could occur so long as we do not fall into a deep recession. A Refresher: Yield curve plots the interest rates on government bonds with different maturity dates, notably 3-month Treasury Bills, 2-year and 10-year Treasury Notes, 15-year and 30-year Treasury Bonds. Bond investors expect to be paid more for locking up their money for a long stretch, so interest rates on long-term debt are normally higher than those on short-term. Plotted out on a chart, the various yields for bonds create an upward sloping line. Sometimes short-term rates rise above long-term ones. That negative relationship is called yield curve inversion. An inversion has preceded every U.S. recession for the past half century, so it’s seen as a leading indicator of economic downturn. On January 12th, 2-year T-note is quoted at 4.20% in cash market, while the 10-year T-note is priced at 3.61%. This measures the 10Y-2Y yield spread at 59 basis points. The negative yield curve could become less inverted, then change to a flat yield curve in the coming months. It could reverse back to an upward sloping normal yield curve in 2024. Here are my reasoning: • Easy money created by record government spending kept the borrowing cost low. This was a main reason why longer-term yields rise less than short-term ones. • The new Republican-controlled Congress would stall the approval of big-ticket expenditure bills. Closing the flood gate could bring the borrowing cost back up. • After the depletion of low-cost capital, lenders will have no choice but to raise the long-term lending rate above the short-term deposit rate. CBOT Micro Yield Futures offer a way to express your view on future yield direction. You could also observe how the expected yield spread changes between 10Y and 2Y. On January 12th, February Micro 10Y Yield Futures (10YG3) was settled at 3.446. February Micro 2Y Yield Futures (2YYG3) was settled at 4.081. The 10Y-2Y spread is -63.5 basis points. Micro Yield Futures are notional at 1,000 index point, with each point equal to 1/10 of 1 basis point and value at $1. For example, if the 10Y-2Y spread narrows to -40 basis points, your position would gain $235 (= (-40+63.5) x 10) if you long the spread. To trade Micro Yield futures, margins are $375 for 10Y and 2YY. A long spread can be constructed by a Long 10Y and a Short 2YY positions. 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 trade set-ups and express my market views. If you have futures in your trading portfolio, check out on CME Group data plans in TradingView that suit your trading needs www.tradingview.com
CBOT:ZQ1!Long
by JimHuangChicago
3
GBP/USD drifting, UK GDP nextThe British pound is drifting for a third straight day. In the European session, GBP/USD is trading at 1.2161, down 0.09%. We could see stronger volatility from the pound before the weekend, with the release of the US inflation report and UK GDP on Friday, both of which are market movers. There is guarded optimism ahead of the US inflation report. Inflation is projected to drop in December, which would be music to the market's ears. The forecast for headline inflation stands at 6.5%, following the November gain of 7.1%. The core rate, which is more important, is also expected to ease, with a forecast of 5.7% in December, compared to 6.0% in November. The inflation release should result in volatility from the US dollar. If inflation, particularly the core rate, falls as expected or more, the US dollar will likely lose ground, as speculation will increase that the Fed may have to pivot from its hawkish stance and ease up on the pace of rates. Conversely, if inflation does not fall as much as expected, it would vindicate the Fed's hawkish position, which the markets may have to grudgingly accept. There remains a dissonance between the Fed and the markets, despite warnings by the Fed that the markets are underestimating Fed rate policy. The Fed has insisted that further rate hikes are coming, while there have been market players who are expecting a "one and done" hike in February which will wrap up the current rate cycle. The markets have priced in a peak terminal rate below 5% as well as rate cuts late in the year, while the Fed has been signalling a peak rate of 5-5.25% or even higher. In the UK, there are no major releases on Thursday, but Friday will be busy, highlighted by monthly GDP and Manufacturing Production. The markets are braced for soft numbers, which could send the pound lower. GDP for November is expected to contract by 0.2% m/m, following a gain of 0.5% in October. Manufacturing Production for November is forecast to come in at -4.8% y/y, after a -4.6% reading in October. GBP/USD is putting pressure on 1.1832 and could test this line today. The next support level is 1.1726 There is resistance at 1.1913 and 1.2026
by OANDA
Japanese yen edges lowerThe Japanese yen continues to have a quiet week. USD/JPY has edged up 0.20% and is trading at 132.50. There is optimism in the air ahead of the US inflation report for December. The forecast is for inflation to fall, which is exactly what investors want to hear. The consensus for headline inflation stands at 6.5%, following the November gain of 7.1%. The core rate is also expected to ease, with a forecast of 5.7% in December, compared to 6.0% in November. We've seen in recent months how inflation reports can move the equity and currency markets and investors should be prepared for the same from tomorrow's inflation report. Soft inflation releases have sent the US dollar lower, as the markets have assumed that the Fed will ease up on the pace of rates and even cuts rates late in the year. The Fed continues to present a hawkish stance, but the markets will likely march to their own tune if inflation comes in as expected or drops even lower. The markets have priced in a peak fed funds rate of 4.93%, lower than the Fed dot plot which projects rates peaking at 5-5.25%. Some Fed members have said rates could go even higher than that, but that hasn't made much impression on the markets. The Bank of Japan meets next week, and investors will be watching carefully. The BoJ meetings are no longer sleepy affairs with little substance, as the markets saw in December when the BoJ stunned the markets by widening the yield curve control band. We're unlikely to get more fireworks at the upcoming meeting, but the BoJ's inflation forecasts will be significant. There have been reports that the BoJ may raise the forecasts for core inflation. This would be bullish for the yen as a higher inflation forecast would be a prerequisite for the BoJ normalizing policy. There is weak resistance at 132.13, followed by 133.30 131.25 and 130.60 are the next support lines
by OANDA
Bitcoin Macro LowMy previous analysis based on the historic halving cycles predicted a macro low on the week of Nov 21st 22. It would appear that this played out but not totally in alignment with price prediction. Let's be clear, the global macro economic landscape is not looking rosy with the FED still Hawkishly raising rates, massive tech stocks haemorrhaging up to 70%, huge yield curve inversions, public credit card debt reaching all time highs, the housing market on the brink of collapse and every economic commentator predicting a recession. However, what cannot also be ignored is the historic accuracy of the Relative Strength Index (RSI) for Bitcoin since its inception. You will see it either marks off to the week the marco low or identifies clear bullish divergence to start a new upward trend. The RSI has also formed a huge descending wedge which has been beautifully tested many times within the last year and a half. Only a fool would ignore the ATL of RSI, this descending wedge and the bullish divergence. Is it possible that Digital Strategy group fold, that Gemini can't release client funds, that GreyScale sell some assets, that Mount Gox release BTC in March causing a retest of lows? Absolutely!!! But what should not be ignored is the ability to capitalise on the short term gains and long term deployment of which can be capitalised on through technical analysis. The DXY is forming a head and shoulders the accumulation/distribution indicator on the monthly has flattened January is often a bullish month in legacy markets.
INDEX:BTCUSDLong
by MrGoose83