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50-50 Odds for Big Rate Cut this Wednesday The Federal Reserve’s upcoming rate decision is teetering on a knife’s edge, with the odds of a significant cut climbing. According to the CME’s FedWatch tool, the chances of a 25 or 50-basis-point reduction are now evenly split at 50-50. The decision from the cental bank comes in on Wednesday. Former New York Fed President Bill Dudley, speaking last week, bolstered the case for a more aggressive move, stating the federal funds rate could be up to 200 basis points above neutral. Dudley argued there’s a “strong case” for the Fed to start big. However, major banks are possibly leaning toward the Fed starting small. In a note, Bank of America’s analysts suggested “a small chance” of a 50bps cut, while UBS’s Brian Rose also acknowledged the possibility, though was not factoring it into his baseline.
TVC:DXY
by BlackBull_Markets
GOLD: Buy, only a small retracement for current momentumWith the MACD having just crossed above the signal line on TVC:GOLD daily chart, there is little chance of the week starting off with any strong selling direction. I am holding and entering Buy positions. I believe any meaningful retracement this week will be before Tuesday's Core Retail data and the market will look to position itself early in anticipation of major FED activity on Wednesday evening. Support this week >=$2,530 Forecasted High of <$2,620 Trend to be more sensitive to ascending channel's mean that the support level indicated above. I am very bullish this week.
TVC:GOLDLong
by Cha-Zee-ZESA
Intel Corporation ($INTC) - Potential Squeeze After Rate CutIntel Corporation ( NASDAQ:INTC ) is setting up for an exciting squeeze potential following an anticipated rate cut. Here's why the technical landscape could be shaping up for a big move: Fibonacci Support Holding Strong The stock is currently holding well above the 0.786 Fibonacci retracement level, which is a critical area of support. Historically, holding this level is a strong indicator that a reversal could be imminent. A rate cut would provide a fundamental catalyst to accelerate a recovery from this level, as lower borrowing costs typically improve market sentiment, especially for large-cap tech stocks like Intel. Worst-Case Scenario: Testing $13–$14 Support While we are optimistic about the current setup, the worst-case scenario to watch for is a potential retest of the $13–$14 range. This level marks a significant historical support zone and, if touched, could provide a final flush-out of weak hands before the stock rebounds. Should this happen, it would likely signal a capitulation event, paving the way for long-term bulls to step back in at attractive prices. Squeeze Potential and Rebound Targets If Intel holds its current Fibonacci support, we could be setting up for a short squeeze driven by fresh liquidity entering the market post-rate cut. With technical and fundamental catalysts aligning, the stock has potential to rally toward the $40+ level over the medium term. This would mark a massive rebound, and a retest of previous highs would not be out of the question. Key Levels to Watch Immediate Support: 0.786 Fib level Worst-Case Support: $13–$14 Upside Target: $40+
NASDAQ:INTCLong
by MindPoison
Fed’s Rate Decision to Set the Tone for Stocks, Gold and CryptoOfficials at the central bank are staying tight-lipped over the magnitude of the interest rate cut. What we know so far: there will be one. What we don’t know: is it going to be 25bps or 50bps? Federal Reserve Chairman Jay Powell (or JPow if you’re a cool kid) is most likely having a hard time sleeping these days. Lurking in the near distance, September 18 to be precise, is a decision he should make that has the power to slosh trillions of dollars across global markets. Stock valuations, crypto prices and the glow of gold all hinge on a single figure — the US interest rate ( USINTR ). Major central banks are on the move to unwind their restrictive monetary policies, especially when it comes to global interest rates . Investors have been trying to run ahead of the interest rate decision and position their portfolios to accommodate both a small casual trim to borrowing costs but also a bigger, juicier slash. Clashing opinions over the size of the interest rate reduction have been swaying the financial markets in recent weeks. Fed officials haven’t sent out any comms regarding that question so markets do what they do best — speculate. According to the FedWatch tool by CME Group, at the end of this week, investors were nearly even in their expectations for the upcoming interest rate cut with 55% calling for a 25bps (basis points) cut and 45% rooting for the fuller treatment of 50bps. In any case, this would be the Federal Reserve’s first cut to borrowing costs in more than four years. The benchmark rate in the US is currently sitting at a 23-year high of 5.5% — a level that has stayed flat since July. After a series of reports pointing to a wobbling economy — and on the back of mostly receding inflation — the central banking clique issued its uplifting guidance at their previous meeting, saying rates are about to go down when they meet again. But what they didn’t say — because they’re data dependent — is how much. A 25bps cut to interest rates would most likely be already priced in across the spectrum. Stocks, the US dollar, gold and even cryptocurrency are now acting as if this level of rate cut is factored in. Moreover, some investors might even be disappointed to see a rate cut of that casual magnitude. Buy the rumor, sell the news, maybe? A 50bps cut to interest rates could bring some needed fuel for the next leg up in stocks, gold and crypto. And, on the flip side, knock the dollar’s valuation. Lower interest rates make money more affordable, enticing investors, businesses and consumers to get more cash out of the bank and spend more freely on big-ticket purchases. Obviously, investors shove the cash into various markets. Businesses expand operations and build new products. And consumers, well, they buy the new iPhone 16 and jam what's left in meme stocks ? Perhaps even more importantly, lower interest rates help steer the economy, keeping it on an upward trajectory. Liquidity improves, because there’s more money flowing in the system, and valuations of public and private assets usually increase. Take gold ( XAU/USD ), for example. Gold hit an all-time high Friday morning, pumping above $2,570 per ounce . Driving the gains was the relationship between gold and the prospects of lower rates, which make bullion more appealing because they reduce the opportunity cost of holding a non-yielding asset. At the same time, the US dollar loses some of its allure because the reduction in rates triggers a lower yield on dollar deposits. Bitcoin ( BTC/USD ) is another interest -ing candidate to join the rate interplay. The OG token has been increasingly correlated to macroeconomic factors and the rate decision is already seen impacting its price in a positive way. Stocks have been in choppy trading mode over the past couple of months largely due to the looming uncertainty about the looming rate-setting meeting. So what do you think it’s going to be — 25bps or 50bps? And how would it affect financial markets? Shoot your thoughts below!
Editors' picks
SP:SPX
by TradingView
9
FOMC Showdown Poised to Ignite a Surge in Yield SpreadsWith inflation finally cooling and the Fed signaling rate cuts, it seems relief is on the horizon—until you look at the job market. As recession risks grow and Treasury yields falter, a steepening yield curve presents a compelling opportunity. Positioning in the yield curve ahead of the FOMC meeting offers a more measured way to navigate the uncertainty. COOLING CPI SIGNALS GREEN LIGHT FOR RATE CUTS This week’s inflation report showed headline CPI cooling to 2.5%, the lowest since February 2021. With this release, inflation has finally fallen decisively below the stubborn 3% mark and is now just 0.5% above the Fed’s target range. PCE inflation reflects similar levels, likely giving the Fed the signal to start cutting rates. JOB MARKET REPRESENTS MATERIAL RECESSION RISKS Recent job market data suggests it may be too soon to declare a soft landing. The labor market is significantly weakening, and with household savings dwindling and credit delinquencies increasing, conditions may worsen before improving. U.S. economic data from the past week indicates that the labor market is in a precarious situation. The August JOLTS report showed job openings dropping to their lowest since early 2021, reflecting decreased labor demand, while unemployment edged up slightly. Additionally, the August jobs report revealed a modest gain of 142,000 non-farm jobs, falling short of expectations, with downward revision for July bringing those figures down to just 89,000. As covered by Mint Finance previously a recession is likely to lead to a sharp steepening of the yield curve. We covered average levels of the yield spread at the start of recessions in detail previously, but in summary with the current 10Y-2Y spreads at 15 basis points, there may be up to 85 basis points of further upside in the spread. TREASURY YIELD PERFORMANCE Despite a short recovery following the ominous jobs report on 2/August, Treasury yields have continued to decline. Unsurprisingly, short-dated treasuries have underperformed as 2Y yields are 27 basis points lower, while 30Y yields have only declined by 12 basis points and 10Y by 15 basis points. Overlaying yield performance with economic releases, the largest impact on yields over the last few months has been from FOMC releases and non-farm payrolls while performance around CPI releases has been mixed. Potentially suggesting traders are more concerned about recession risk than moderating inflation. OUTLOOK FOR SEPTEMBER FOMC MEETING Source: CME FedWatch FedWatch currently suggests that a 25 basis point rate cut is more likely in the upcoming FOMC meeting scheduled on September 17/18. However, probabilities of a 50 basis point rate cut are also relatively high at 43%. Source: CME FedWatch While the odds of a 25 basis point cut have remained in majority, the 50 basis point cut has been uncertain with probability shifting over the past week. FOMC meetings have driven a rally in yield spreads over the past year. With FOMC meeting slated for next week, it is interesting to note that performance in yield spread prior to meetings has been more compelling than performance post-FOMC meeting. Over the last 5 meetings, pre-FOMC meetings, the 10Y-2Y spread has increased by 4 basis points. Performance is even more compelling in the 30Y-2Y spread which has increased by an average of 13 basis points. AUCTION DEMAND FAVORS 10Y Recent auction for 10Y treasuries indicated strong demand with a bid/cover ratio of 2.64, which is higher than the average over the last 10 auctions of 2.45. Contrastingly, the 30Y auction was less positive with a bid/cover ratio of 2.38, below the average of 2.42. 2Y auction was sharply weaker with a bid/cover of 2.65 compared to average of 2.94. Auction uptake suggests higher demand for 10Y treasuries than 30Y treasuries and fading demand for near-term 2Y treasuries. HYPOTHETICAL TRADE SETUP Recent economic data has made an upcoming rate cut nearly certain. However, the size of the cut remains unclear. CME FedWatch currently indicates a 42% probability of a larger 50-basis-point cut, driven by the recent CPI report and weak jobs data. With rising recession risks, the Fed might opt for a larger rate cut. However, if they choose a moderate 25-basis-point cut, market sentiment could stabilize. Historically, yield spreads around FOMC meetings suggest that positioning before the meetings tends to be more advantageous than after. This is especially relevant now, as moderating sentiment from a 25-basis-point cut could trigger a temporary reversal in yield spreads. Considering the underperformance of the 10Y-2Y spread in September and increased auction demand for 10-year Treasuries, a long position in the 10Y-2Y spread may be the most favorable strategy for gaining exposure to the steepening yield curve. Investors can express views on the yield curve using CME Yield Futures through a long position in 10Y yield futures and a short position in 2Y yield futures. CME Yield Futures are quoted directly in yield with a 1 basis point change representing USD 10 in one lot of Yield Future contract. This makes spread calculations trivial with a 1 basis point change in spread representing PnL of USD 10. The individual margin requirements for 2Y and 10Y Yield futures are USD 330 and USD 320, respectively. However, with CME’s 50% margin offset for the spread, the required margin drops to USD 325 as of September 13, making this trade even more compelling. A hypothetical trade setup offering a reward to risk ratio of 1.46x is provided below: Entry: 14.2 basis points Target: 35 basis points Stop Loss: 0 basis point Profit at Target: USD 208 (20.8 basis points x 10) Loss at Stop: USD 142 (14.2 basis points x 10) Reward to Risk: 1.46x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme . DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CBOT_MINI:10Y1!Long
by mintdotfinance
PIMCO Warning on Fed's First Cut in 4 Years next week The only event that matters next week is the US Federal Reserve's interest rate decision, which could result in its first rate cut in over four years PIMCO analysts, in a fresh note, outlined what could be in store for the U.S. dollar as the Fed embarks on its rate-cutting cycle. Historically, the dollar has shown a tendency to weaken, at least briefly, following the Fed’s initial rate cuts since the 1990s. The Fed now faces a tight decision on whether to opt for a larger-than-expected half-point cut or stick with a quarter-point reduction. An aggressive half-point move could raise concerns that the central bank is concerned about the economic outlook for the US, potentially prompting markets to price in further, more drastic rate cuts beyond the Fed's current trajectory.
ECONOMICS:USINTR
by BlackBull_Markets
Silver is Rising!With the weakening of the U.S. labor market, expectations for a 25 basis point rate cut by the Fed remain intact. In this context, U.S. 10-year Treasury yields have turned downward. The dollar's depreciation in yesterday's session led to a recovery in commodities, supporting a rebound in silver prices from the 27.75 level. The inflation data to be released today will provide further clues regarding the extent of the Fed's interest rate cuts. From a technical perspective, if prices hold above the 28.90 resistance level, a rise to 30.0 and then to 30.80 could occur. On the downside, if the price falls below the 27.75 support level, it could decline to 26.75 and then to 25.70.
OANDA:XAGUSD
by primequotes
Bitcoin's Eternal Wait for Rate Cuts ContinuesThe current market setup can be described as 'Waiting for Godot'. But in contrast to the Samuel Beckett play, markets are awaiting the Federal Reserve to finally start cutting interest rates. And hopefully, also unlike in the actual play, the wait will not be eternal. Over the past week, market sentiment dropped even further. Jitters about the slowing US economy and rumours, later denied by the company, of a subpoena by the Department of Justice issued to AI stock darling Nvidia over antitrust matter led traditional markets downwards. Crypto markets quickly followed suit. Bitcoin has foreshadowed the slow slide downwards of the wider crypto market. Ever since Bitcoin lost its parabolic momentum earlier in the year, it has trended down, first towards the $60k support. Once Bitcoin breached through the $60k level, and in the absence of any new positive momentum, we are now looking at the $50k price mark. Optimism right now is hard to come by for most traders. The upcoming US jobs report for August has created further expectations of possible doom and gloom. Economists expect that the August jobs report will show that the labor market is cooling, but not dramatically. Consensus estimates are for a net gain of 160,000 jobs, which would be an increase over July’s estimated 114,000 gain according to FactSet estimates. The outcome of the August jobs report will be an important driver for the extent to which the Federal Reserve will cut rates. The decision is both critical and difficult. Cut rates too much and markets could start raising inflation expectations. Do not cut them enough and the economy could weaken further as businesses reel from high rates on their debt. Whatever they do, the impact of lower rates will take time to show effects. In the meantime, markets can continue to struggle. A final unknown variable in this setup are the upcoming US elections. It is likely that weaker economic performance will hurt the chances of the incumbent administration. Crypto markets clearly favour a Trump presidency due to his recently discovered pro-crypto stance. Not even the best analysts can predict the full extent of the the 2nd and 3rd order impacts of a weakening economy, possible rate cuts and a US election that is on knife's edge. Markets hate uncertainty. Unfortunately there seems to be plenty more of it to come before traders can finally start to look upwards once more.
Short
by Coinrule
$USINTR / US Federal Reserve Interest Rate 2024-2025US Federal Reserve Interest Rate 2024-2025 And here’s the chart of the interest rate. ECONOMICS:USINTR I’ll just take a wild guess! Don’t judge me too harshly, but they might keep the rate steady, with a potential cut closer to the elections. Logically, though, it would make more sense to cut it now, so the masses think there’s no recession coming and that the “Democrats” are saving the world like Chip and Dale. But people seem to forget that it’s the Democrats who’ve hiked the rate from 0.25% to 5.5% over the past four years, putting the economy in its worst shape in the last 15 years. Getting excited about these 0.25-0.5 point cuts is, at the very least, naive. So, at the November meeting, most likely just before the elections, we might see a “boost”—a rate cut of 0.5, or even a whole point (wishful thinking). This could lead to another spike in Bitcoin’s price. These thoughts lead me to believe that the Democrats (Kamala Harris) will win, followed by one more meeting in December, where they might hold or lower the rate again with the new U.S. president in place. And by late January 2025, the world might plunge into chaos, oops—I mean the rates will start climbing again. The next cut might not come until 2026. That’s why I’d expect the recession we’ve been hearing about for over two and a half years to finally kick in. Just my two cents!
ECONOMICS:USINTR
by trushkovskiy
The economy peaked in April 2023"JOBS, JOBS, JOBS!" As Obama said during the recovery period post GFC This chart shows the employment level --- how many people are employed in the States / divided by the unemployment level --- the number of people without a job. . A simple Ratio With all the official Recessions highlighted in the red box. The dates of the recessions are from Wikipedia. JOBS are the ECONOMY Goods and services are still made by people. (That is obviously under attack by robotics and AI) --- but will likely lead to new economies being birthed and new jobs created. THE #FED is late to cut and will likely cut too slowly guaranteeing a GDP contraction therefore further job losses. HOLDING RISK ASSETS IS RISKY needless to say.
FRED:CE16OV
by BallaJi
Knock Knock. Who's There? Vibecession Ft. US Interest RatesHello Everyone, IMPORTANT: ALL FED POLICIES LEAD TO NEGATIVE OUTCOMES TLDR AT THE END In February 2022 the Federal Reserve gave us the fastest rate raising campaign in history to try and combat very high inflation, but they were very late in raising rates causing one of the worst inflation in 40 years. During his speech at Jackson Hole he confirms rate cuts in September due to inflation being under control and the labor market "cooling." Good news is inflation is under control, however this is only the start of our labor market "cooling." Jerome Powell is extremely late in cutting rates and will be cutting rates because we are getting BAD economic data and the cracks are showing in our labor market, commercial real estate, and banking sectors. The Federal Reserve 100% KNOWS a recession is coming that is why they are cutting rates. We have Jerome Powell come up on stage sweet talk to us about a soft landing, inflation under control, and how he will cut rates to help the labor market. He's not going to be instilling fear in Americans as a chairman. Just Remember, ALL FED POLICIES LEAD TO NEGATIVE OUTCOMES. Recession is coming, Sahm rule and inverted yield curve hasn't been wrong and it won't be wrong this time. This time it's not different. TLDR: Jerome Powell is too late in cutting rates causing a recession
ECONOMICS:USINTR
by justaturboman44
1
Macro Monday 61 - Fed Balance Sheet Signals Liquidity BounceMacro Monday 61 Fed Balance Sheet Hits Long Term Supporting Trend Line The Federal Reserve Balance Sheet The balance sheet is published weekly, typically on Thursday afternoons, and it provides valuable information on the direction of global liquidity and the fed’s monetary policy. When the Federal Reserve’s balance sheet increases, it means that the central bank is acquiring more assets. This expansion can occur through purchases of Treasury securities, mortgage-backed securities, or other financial instruments. The increase in assets typically leads to greater liquidity in the financial system and can influence interest rates. Conversely, a decrease in the balance sheet indicates asset sales and reduced liquidity The Chart - FRED:WALCL ▫️ Since April 2022 the Federal Reserve Balance Sheet has reduced from $8.973 trillion to $7.140 trillion (reduction of $1.833 Trillion). ▫️ Right now, the chart has signaled that we have hit a critical diagonal trend line support (red line on chart). ▫️ We have hit this red trend line twice in the past (Sept 2019 & Aug 2008) and on both occasions it bounced from the red trend line and the balance sheet thereafter increased significantly for 2 to 5 years. If you follow me on Trading view, you can revisit this chart at any time and press play to get the up to date data and see if we have held the line or fallen below it. What does the following mean to you? ✅High likelihood of interest rate reductions in Sept. ✅Apparent stabilization of the rate of inflation (U.S) ✅A current stable labor market in the U.S ⏳The possibility of the balance sheet bouncing from trend support and increasing from the support line as it did in the past for 2 years+ (Increasing Global Liquidity). Versus 🚨 The yield curve un-inverting (moving above 0) 🚨 Sahm Rule Triggered 🚨 The marginal increase in the U.S. Unemployment Rate which is consistent with prior recessions. 🚨 U.S. Initial Jobless Claims and Continuous Jobless claims have had increases consistent with pre recession historic activity. 🚨Job openings reducing since March 2022 from approx. 12m to 9m (this would be the largest pre recession drop ever if followed by a recession. 🚨 Warren Buffet sitting on the biggest pile of cash ever. Does this all say “soft landing” imminent or should we be worried? In my opinion, we will know by Jan 2026. Its a big window of time, but the timing is the biggest challenge, and if we can take one thing from the above, volatility is guaranteed. Happy Trading PUKA
FRED:WALCLLong
by PukaCharts
2
What does OIL (BRENT PETROL) mean for the world economy?#BRENT Oil (Petrol) 1W chart; What does oil mean for the world economy? Oil is critical to the world economy and is considered the basic energy source of modern industrial societies. And then there are the quarterbacks. Market makers, a term we hear a lot in the crypto space. These and similar important charts cannot be moved by ordinary people. They cannot afford it. Only the most important countries in the world can do it. So what usually happens when these charts come to trend breaks? While situations such as war, geopolitical tensions, chaos, finding a vaccine for an existing virus move the chart upwards, Situations such as viruses, recessions, economic depressions also move the chart downwards. Significant chart movements are only possible with these and similar news. Conscious or unconscious. If you think there is anything unconscious in the world, I can't say anything about it. The trend line in the middle is important. I have indicated the details of the important breaks and critical intersections on the chart. But there is one place I would like to draw your attention. Russia-Ukraine war; The chart is rising sharply with pre-decline gapped openings and momentum candles. What happens in the world in such a situation? Energy, industrial production costs, important basic services such as electricity, heating, transportation, raw material prices would increase. Global economic slowdowns. Geopolitical tensions increase. In short, inflation would be fueled. Just like the economic crisis that would be caused by a sharp fall in the oil prices of the countries that depend on oil for their economies. Then energy companies cannot make a profit. Labor prices would fall, companies would go bankrupt, unemployment would rise. In short... Inflation was deliberately and willfully fueled. Because it was time to start raising interest rates. The world was not ready for that yet. With the war, the chart went up 40% in 2 weeks. I am not talking about any coin in crypto, I am talking about the oil chart increasing 40% in such a short time. You all know the scenario afterwards. The top of the chart is where the red needle is. March 2022. The Fed has officially started the cycle of rate hikes with 25 basis points.
VELOCITY:BRENT
by ugurtash
Will Gold Hit $3,000 with Fed Rate Cuts and Geopolitical Risks?Gold has outperformed the broader U.S. stock market this year, with analysts predicting further gains as the Federal Reserve nears rate cuts. Gold surged to a new record high of over $2,500 per ounce, and some experts forecast it could reach $3,000 next year. Key drivers include potential Fed easing, geopolitical uncertainties, and increased demand from central banks diversifying away from the U.S. dollar. As interest rates decline, gold’s appeal as a safe-haven asset continues to grow.
FX_IDC:XAUUSDLong
by signalmastermind
$XAUUSD $GOLD $2,540 PLAUSABLE BY END OF WEEK (23Aug2024)Since the 1st of April 2024, TVC:GOLD has formed a clear bullish channel with a highly probable eventful price action week to the few hours after FED Chairman Powell's speech on Friday. I believe a suggestion of an emergency FED rate cut outside schedule propels TVC:GOLD to between $2,525 and $2,540. This of course is dependent on the size of retracement in the earlier days of this week. 12th to 16th August was a bullish week that saw TVC:GOLD reach an ATH above a psychological mark of $2,500. In the absence of clear increased and unpriced geopolitical risk(s), I expect some retracement within the accelerated channel from 12th Aug (white channel). The accelerated bullish channel (white) and the longer term bullish channel (pink) provide a great tier of support levels to use as risk indicators against the bullish trade. 1. The 1st support level will be $2,483 as it coincides with the high of day's trades for 17th July and coincides with the progressive mean for the accelerated channel for last week's trades on the yellow metal. The yellow dashed line shows the first level a retracement can breach against opposing the long positions this week. This will probably come as early as the Asian trades in a few hours. I will still hold if a position was opened in fear of a huge event over the weekend. I opened a smaller than normal position near Friday's closing bell. 2. The slightly more significant area for me will be the $2,464 - $2,472 price range on a daily candle. Any close in this range between Monday and Tuesday together with Volume profile analysis should indicate strong selling pressure (amber range). This will be the last level I would add to my position (but on the small side as the probability to hit $2,525 - $2,540 would need more certainty of an event driving the price's momentum. 3. If on the Day candle we hit the red-pink zone, then an event driven momentum could only see us hitting sub $2,530 but for me sellers would have significantly dented my expectations for the week. LET"S GO FOR THE GREEN DOT OR HIGHER. GOOD LUCK 4. Touching $2,429 or under before or Wednesday on any timeframe is significant even for the bullish channel started 1st April. This will be its rising mean and crossing under is some seller strength in the arm wrestle for $GOLD.
CAPITALCOM:GOLDLong
by Cha-Zee-ZESA
Why an emergency rate cut is badThe market has been desperately waiting for a FED rate cut for nearly a year now. We have not received one yet even with the recent flash crash in the market. Despite calls for an emergency rate cut after the crash we didn't get one. Why not? Why is that a good thing? The Fed does not cut rates out of the kindness of their hearts They cut rates only they broke something and they are trying to fix it The lack of emergency rate cut means the recent flash crash was more irrational panic, less based on actual facts The economic data while concerning in areas still is nothing alarming to the point for the Fed to "break glass in case of emergency" rate cut button over When the rate cut does come which is expected still in September, we should hope for 25bps rate cut, nothing more. Small rate cuts a bullish sign that we are still doing ok. Large rate cuts is the equivalent to oxygen masks falling from ceiling, brace for rough landing.
AMEX:SPYLong
by ratchet-mint
3
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.
NASDAQ:TLTLong
by PrepForProfit
3
Hey mates! What just happened? What happens next?Why Has the Equities Market Tanked? Several factors have contributed to the recent decline in the equities market. One significant factor is the impact of the Bank of Japan's (BOJ) actions. Although the BOJ has only recently begun to raise rates, with the overnight rate currently at just 0.25% compared to around 5.5% for dollar rates, its move has triggered substantial turbulence. Specifically, global stock and bond markets, particularly in Japan, are being unsettled by the unwinding of the yen carry trade. Understanding the Yen Carry Trade The yen carry trade involves borrowing yen at a low interest rate to invest in currencies and assets that offer higher yields. This trade has been particularly popular due to Japan's historically low rates. Investors use borrowed yen to purchase higher-yielding currencies and invest in assets like bonds. The typical annualized returns on dollar-yen carry trades are around 5%, reflecting the difference between U.S. and Japanese rates, with additional gains possible if the yen depreciates. The yen carry trade has its origins in 1999, following Japan's policy rate cut to zero after the burst of its asset price bubble. The scale of this trade is substantial, though not precisely measured. Analysts estimate that Japanese banks have about $350 billion in short-term external loans related to yen-funded trades. This estimate likely underrepresents the true scale due to leverage used by hedge funds and computer-driven funds. Japanese pension funds, insurers, and other investors have significant foreign investments, with Japan's foreign portfolio investments totaling approximately ¥666.86 trillion ($4.54 trillion) as of March. More than half of this is in interest rate-sensitive debt assets, most of which are long-term. Recent discussions about potential further rate hikes in Japan and anticipated rate cuts by the Federal Reserve have led to a 13% increase in the yen over a month and reduced the yield gap. This has wiped out the modest gains from yen-dollar carry trades. Consequently, investors with large, leveraged yen carry positions are forced to de-leverage, leading them to sell off other stock and bond holdings. www.cnn.com Current Market Conditions and Implications Despite these market upheavals, there are bullish factors to consider. Recent weakening in U.S. unemployment data, coupled with a growing U.S. deficit, suggests that rate cuts might be on the horizon. Additionally, the recession, which many overlook, has already affected debt-intensive sectors of the market. However, sectors with less reliance on debt have not been as severely impacted. The increase in multiple job holdings indicates that high interest rates have had a more nuanced effect. Furthermore, the Treasury Department's buyback programs, authorized under Section 3111 of Title 31 of the United States Code, play a crucial role. These programs include: Cash Management Buybacks: Aimed at reducing volatility in Treasury's cash balance, minimizing disruptions in bill supply, and lowering borrowing costs over time. treasurydirect.gov Liquidity Support Buybacks: Intended to enhance market liquidity by offering regular opportunities for market participants to sell off-the-run Treasury securities. The combination of these programs and the BOJ's likely pause on further rate increases, along with anticipated domestic rate cuts, creates a potentially bullish environment. www.wsj.com Moreover, the recession indicators are strong : aside from the ongoing inverted yield curve the Manufacturing PMI is contracting at 46.8 , marking its fourth consecutive month of decline. www.ismworld.org Any PMI reading under 50 is indicative of contraction. The PMI also reflects that New orders have also dropped to 47.4 . Despite Prices growing for seven months, the overall economic picture shows severe weakness in manufacturing and transportation sectors, with trucking rates at recessionary levels, when including inflationary cost pressures, not seen since 2009 . www.dat.com Federal Reserve and Treasury Department Actions The Federal Reserve's policy of "beyond maximum employment" suggested that job losses were acceptable to combat inflation. However, the Fed's actions often appear reactive rather than proactive. With Treasury Secretary Janet Yellen's announcement of the U.S. Treasury Quarterly Refunding and the planned injection of $300 billion to $1.05 trillion by year-end , the outlook includes both anticipated rate cuts and substantial Treasury market support. treasurydirect.gov During the second quarter of 2024, U.S. economic data indicated robust growth in output and labor markets, even as inflation slowed. Real GDP growth accelerated to 2.8% from 1.4% in the first quarter, driven by increased private consumption, business investment, and government spending, particularly in national defense. While payroll job growth slowed and the unemployment rate edged up to 4.1%, it remains historically low. Inflation, measured by the consumer price index, slowed to 3.0% from a peak of 9.1% in June 2022. PCE inflation also approached the Fed's target of 2%, while housing markets showed mixed signals. Optimal Capital Deployment: Focus on Cryptocurrency In light of recent market dynamics, the cryptocurrency market presents an intriguing opportunity for capital deployment. Despite the severe downturn in the altcoin market, Bitcoin has shown resilience, bolstered by several positive developments. This includes the resolution of the Mt. Gox distribution issue and the alleviation of selling pressure from the German government. Moreover, a significant catalyst has emerged with the People's Bank of China (PBOC) cutting key interest rates, which could have far-reaching implications for global markets and, notably, for cryptocurrencies. www.cnbc.com Catalysts for the Crypto Market China's Interest Rate Cut: The PBOC’s recent decision to cut key interest rates is an additional bullish catalyst. China's equity market has felt severe pain. China just announced a reduction in the seven-day reverse repo rate from 1.8% to 1.7%, alongside improvements in open market operations. Additionally, benchmark lending rates were lowered: the one-year loan prime rate (LPR) dropped from 3.45% to 3.35%, and the five-year LPR fell from 3.95% to 3.85%. This action, which precedes any Federal Reserve rate cuts, reflects China's proactive stance to counteract economic weakness and a housing market crisis. This move signals a potential boost for global growth and could positively impact asset classes like cryptocurrencies. www.nytimes.com Current Market Conditions: The broader global recession, often only recognized in hindsight, sets the stage for a potential economic rebound. Recessions, while challenging, can lead to recovery phases where the economy "catches up" to previous projections. Although recessions vary in duration and impact across different sectors, they often follow cyclical patterns of peaks and troughs. In the current climate, where various sectors experience disparate impacts, capital deployment in sectors poised for recovery could yield significant returns. K-Shaped Recession and Sector Variability: The present economic environment suggests we might be witnessing yet another K-shaped recession. This type of recession features divergent recovery paths for different segments of the economy. Some sectors may rebound swiftly, while others may face prolonged struggles. The COVID-19 pandemic-induced recession, for example, displayed K-shaped characteristics, with technology and remote work sectors rebounding quickly, while industries like in-person dining and live entertainment lagged. In the current cycle, similar divergence is evident. For instance, transportation sector pricing varies significantly even in-sector: international container shipper rates are surging, while less-than-truckload (LTL) rates remain relatively stable, and full-truckload (FTL) rates have sharply declined. Such disparities highlight the importance of identifying sectors and assets likely to benefit from upcoming economic shifts. www.cnbc.com Why Cryptocurrency Could Be the Next Big Opportunity Given the current economic environment and sectoral variations, the cryptocurrency market appears to be a promising area for investment. Despite recent setbacks in the altcoin market, Bitcoin's stability and recovery potential, coupled with the positive effects of global economic policies, create a bullish outlook for crypto assets. The forthcoming economic recovery phase could see significant growth in the cryptocurrency sector, driven by both institutional interest and broader market acceptance. For those seeking a solid and reliable investment with long-term prospects, Bitcoin (BTC) and Ethereum (ETH) are currently the top choices. The inflows and education of ETH is only starting, and Bitcoin is only now or soon to be recommended by quality wire houses like Bank of America Merrill Lynch, Wells Fargo, and quality ones like Morgan Stanley. www.investopedia.com Specifically, if you’re planning a long-term hold, consider stETH or cbETH, which offer strong potential and stability in the Ethereum ecosystem will picking up that passive staking yield. For investors with a higher risk tolerance who are looking for potentially significant rewards, I continue to be bullish on Solana (SOL). Solana’s innovative technology and growth potential make it an appealing choice for those willing to embrace volatility for the chance of substantial returns. For extreme risk-reward scenarios, I highly recommend ONDO. ONDO is at the forefront of revolutionizing financial infrastructure by tokenizing US Treasuries on the Ethereum and Solana blockchains. They offer a US Dollar yield of 5.35% APY and have achieved over half a billion in Total Value Locked (TVL). With investments managed by top-tier bond managers and a team with expertise from firms like BlackRock, Goldman Sachs, Bridgewater, and Millennium, ONDO is a standout in the crypto space. However, be mindful of ongoing emissions of ONDO tokens, which involve a daily linear unlock of 0.001% of the maximum supply over a five-year period. This feature may impact the market dynamics, so proceed with caution and stay informed. In summary, for a balanced approach, BTC and ETH (particularly stETH and cbETH) offer stability ( relative to the crypto market ) and high growth potential. For those seeking higher returns with a tolerance for risk, SOL is a promising option. And for those willing to engage in high-risk, high-reward strategies, ONDO presents an innovative opportunity with significant upside potential. Good luck, and may your investments bring great success! So mates, while traditional sectors and markets exhibit mixed recovery prospects, the cryptocurrency market stands out as a potentially lucrative opportunity for capital deployment. With key economic indicators signaling a forthcoming rebound and structural issues in other asset classes, cryptocurrencies could emerge as a leading investment choice in the next economic cycle.
CME:NKD1!Long
by ZenMode
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