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Russell 2000 Futures -20% More$RTY1! lost 50 EMA support and racing to 100 EMA quickly on weekly, looks even uglier on daily as the pullback looks to be gaining momentum. Next level of interest would be another -20% decline. Last time this severe of a retreat was realized was March to May of 2020. The recovery was rapid given unprecedented amount of federal stimulus to prop the economy up. Stimulus is not an option in the face of sharply rising prices with persistent inflation starting to rip across all sectors. Markets shrugged off initial Fed communications and FOMC 25 bps rate hike, clearly reflecting lack of belief in Central Banks' conviction. More volatility ahead as recession lurks in the wings and stagflation appears likely without regime change.
CME_MINI:RTY1!Short
by R0MM3LL
Will sanctions on Russia backfire on the U.S.? What about crypto- Sanctions, led by the U.S. in hopes of punishing Russian aggression may NOT have the impact the U.S. is hoping for? Could they actually backfire? - Saudi Arabia rejects Biden's request for talks on increasing oil production and instead announces that they are considering accepting Yuan instead of dollars for Chinese Oil sales (per house rules, links to sources are not allowed) - India's move to "explore" alternative payment channels with Russia to avoid sanctions (per house rules, links to sources are not allowed) - With official inflation numbers running at 8% and climbing the Federal Reserve is being forced to raise interest rates for the first time since 2018 (per house rules, links to sources are not allowed). Multiple rate hikes are projected. The last time rates were raised markets crashed and the Fed quickly reversed course. This leads many to say that the Fed won't really raise rates as much as projected, because the market won't let them, but what these people don't seem to get is that in order to finance the U.S. national debt, new debt has to be sold every year. As inflation rises countries like Saudi Arabia become more and more inclined to invest in assets that show a return or at least hold their value. This means that unless you raise the rates to a level that offsets inflation many investors will move elsewhere and you won't be able to take on new debt. Central banks are cornered. Once they start raising rates government budgets will quickly hit a wall as interest payments on existing debt become unmanageable. - This may devastate the dollar along with the U.S. economy, but it may be great for crypto
INDEX:BTCUSD
by stewdamus
Bitcoin Bullish Reversal Post FOMCTraditional markets responded with rallies following the Federal Reserve's tame communication following the FOMC meeting this week. The 25 bps hike is nothing more than a symbolic statement, with the midterm elections looming and the Fed finally acknowledging that inflation is more persistent than what they had hoped. The lack of serious action is likely to result in a reversal to near-term bullish action while inflation continues unchecked. The next few months of "business as usual" are likely to support more upward prices, with CPI & PPI continuing to climb. With the Fed's dovish stance and inflation soaring, there will be a significant amount of attention on what steps to take. The real question is: can the economy support rampant inflation until midterm elections in November?
INDEX:BTCUSD
by R0MM3LL
Rampant Inflation Impacting Producer Price IndexWall Street over the past few weeks appeared to be preparing for a more hawkish Federal Reserve approach to tamp down on sharply rising prices. The FOMC did raise rates by 25 bps, and the markets promptly responded by going higher. The markets' responses indicate the Fed completely lacks credibility in doing anything to get prices under control... instead the Central Banks have committed to stability and adopting a status quo approach in the near term. Rationale appears to be mid-term elections and a desire to not "upset" the markets given tremendous uncertainty. Instead of taking responsible action, it appears that inflation will continue drive higher, and a simple trend reflects PPI raising at least 4% as midterm elections draw closer. Short-term, markets will continue to behave bullish, inflation will continue to rise, and the depth of a total market correction will be deeper the longer this continues. Unfortunately, it's apparent that a regime change will be necessary at the Fed... likely resulting from rampant inflation and a landslide Republican win at the polls. High probability the GOP will have control of both chambers of Congress going into 2023.
FRED:PPIACOLong
by R0MM3LL
Stocks Blast Off After FOMC!!Stocks have rallied after the first rate hike in three years by the Federal Reserve. Novice traders might surmise that stocks would collapse off this news, however dedicated readers here should have been prepared. We called this rally days ago. Why? The rate hikes have been priced in months ago and we are seeing a 'relief rally' which follows with more clarity on monetary policy.We pivoted from 4144 and shot up through multiple levels to break highs at 4327. When the decision came we saw a brief pullback then a subsequent rip to even higher leves (A friend bought at 4261 and crushed it, cheers MJ!!). From here we can expect either ranging or higher prices, but will likely see resistance at 4421. We must break this level to see anything higher. Currently, we are seeing a brief pullback to 4327, where we should find support. If we retrace further 4293 should provide further support.
FX:SPX500Long
by quantguy
NZD extends gains ahead of GDP, Fed raises ratesThe New Zealand dollar has extended its gains for a second straight day. NZD/USD is trading just above the 0.68 line in the North American session. As expected, the Federal Reserve raised rates for the first time since 2018. Fed Chair Powell said he expects inflation to start to ease and that the Fed had a plan to raise rates during the course of the year. Today's lift-off is just the start of a rate-tightening cycle, but it remains unclear just how fast a pace the Fed will take towards normalization. The markets have priced in six rate hikes during the year, but this projection may have to be scaled back due to the tremendous turbulence in the financial markets. The war in Ukraine has injected plenty of volatility into the financial markets. We've seen risk apprehension subside when there has been talk of a ceasefire, only to rise back up when the fighting continued. Today's reports are more encouraging, with the warring sides apparently working on a detailed plan to end the fighting, which would include Ukraine declaring neutrality. An announcement of a ceasefire would raise risk appetite and likely give a boost to the New Zealand dollar. New Zealand releases GDP for Q1 later today, with a gain of 3.2% YoY expected. This follows a dismal third quarter, which saw the economy, which was hampered by Covid restrictions contract by 3.2%. A strong gain could extend the New Zealand dollar's current upswing. NZD/USD has support at 0.6763 and 6716 There is resistance at 0.6893 and 0.6974
by OANDA
2
sp500 looking for a path back to 4300Potential bounce from D leg, could carry over to a bigger bounce to the Bigger B leg at 4300. Sp500 will look to regain levels before Fridays sell off. I expect side way action and a slow and steady rise into Wed Meeting. Any rate hike less than .50 the market sells off to 3800 level. We also could get more bad news from the emerging markets in which im short. 4150 was my target for D leg and bounce. (not trading or financial advice)
OANDA:SPX500USDLong
by moneyflow_trader
Is the US Federal Reserve hiking 25 basis points tomorrow?The US Federal Reserve kicked off its Federal Open Market Committee (FOMC) meeting on Tuesday, with the markets widely anticipating a 25 basis-point hike in what would be the first interest rate increase since 2018. Fed Chair Jerome Powell had earlier raised the prospect of a 25bp hike, telling a House financial services committee hearing two weeks ago that he is "inclined to propose and support” the increase as inflation has sat above 2% and as the United States’ labor market continued to recover. High inflation underscores need for tightening With the US consumer inflation soaring to a 40-year high of 7.9% in February, a rate hike this week is highly anticipated, although uncertainty lies in how much the Fed will have to tighten to tame inflation. Markets are also pricing in up to six or seven hikes this year, one for each of the upcoming FOMC meetings. Higher inflation expectations among US consumers, according to surveys by the New York Fed and Cleveland Fed, also ramp up the likelihood of a more hawkish Fed. 50bp hike also on the table Although many market watchers anticipate a 25bp hike when the Fed caps off its meeting on Thursday, some economists say a 50bp is also likely. Last month, St. Louis Fed President James Bullard called for a full percentage-point hike by July 1. ING Bank’s Chief International Economist James Knightley in a note last week said it wouldn’t be surprising “to see maybe two FOMC members vote for 50bp.” Knightley and other economists from the Dutch bank most recently said markets are back to pricing 160bp hikes in six meetings in total for 2022, although the Fed may have five rate hikes planned for the year. Russia-Ukraine war places Fed in a precarious spot However, the worsening conflict between Russia and Ukraine, which has reached its third week, puts the Fed on alert due to expectations that the war could worsen inflation and result in a potential global economic recession that could derail the United States’ recovery momentum. Still, the Fed appeared to be undeterred by the crisis, with Powell saying in a recent speech to Congress that the near-term effects of the war and Western sanctions on Russia remain highly uncertain. "Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways. We will need to be nimble in responding to incoming data and the evolving outlook,” Powell said. Squeezing household income A rate hike in the US — the first since the COVID-19 pandemic emerged — could further squeeze household income at a time when gas prices hover around record highs. Gasoline prices in the US surged to an all-time high of $4.33 on Friday, before retreating over the weekend, according to data from the American Automobile Association. Higher interest rates will raise borrowing costs in banks, lifting variable rates on credit card debt and affecting interests on auto loans and mortgages. This could further weigh on consumer’s spending habits.
by BlackBull_Markets
Bitcoin Assumptions Gone WildToday's Presidential Executive Order did not mention Bitcoin by name once. Instead it focused on "digital asset technologies" and CBDC's. The White House Talking Points also failed to reference cryptocurrency as as the focus of the order, instead including crypto in the discussion as being outside of regulatory framework and as part of illicit activities. Bitcoin maxis and crypto evangelists make extreme projections, relying on assumptions as fact. When discussion or critical thought is entertained, an abundance of fallacies (straw man, red herring, slippery slope) and biases (experiential, confirmation, reinforced through echo chambers) get piled on. Since Bitcoin's inception, the economic environment has been supported by a dovish Federal Reserve and Central Banks, with unfettered money supply driving risk-on speculative investing. This unsustainable monetary policy has resulted in extreme price spikes and inflation not realized in over 40 years. Nascent markets lack regulatory frameworks and are more volatile given low market capitalization. Assumptions including replacing gold as a safe haven store of value as well as a belief that decentralization will succeed in the face of traditional finance and government driven efforts to maintain status quo are rampant. Financial controls are now being weaponized against Russia for invading Ukraine in a way that has never been seen before. The second and third order effects of Nation States and entities realizing the vulnerability are unfathomable at this point in time. Power exists not only in the centralized environment, but also in controlling access to decentralized platforms via Internet Service Providers and fiat on/off ramps. Governments have the ability to declare threats to national security as illegal and have ways to attack these threats directly and more importantly indirectly. When all is said and done, we have gravitated from critical thought and open dialogue to communication via headlines and memes. At the end of the day, Bitcoin and the broader crypto community will either find a way to coexist and complement existing order or be relegated to a niche that doesn't gain widespread support or use because of difficulties imposed by those seeking to retain centralized control.
INDEX:BTCUSD
by R0MM3LL
👀 S&P500 - Inflation vs Fed.Reserve. 1D chart. ObservationsHello everyone! Today is a big day. Fed Reserve is going to make decision about rate hike. And whats todays structure on SP500? 1. We saw how we lose demand line of the big channel in January. We stopped at 4200. 2. Tried to rally. Result - inability to return into channel. That is bearish 3. Then we rallied down, made LL. 4. After that all bulls tryouts have been declined despite of good demand came in, Result is bad. 5. Moreover, We want to admit that we havent seen good result (price action: momentum, big spreads) from bears yet too. At the moment we try to go lower and it seems like all demand that came in during that 2 month in this trading range have been absorbed... Thank you for reading. What are your thoughts? Write it down in comment section.
CME_MINI:ES1!
by JustCharts
$US10Y Breaking Out OF 40 Year TrendHistorically, in the absence of QE (Quantitative Easing), the US10Y (US 10 Year Treasury Bon) exceeds inflation. This means that bond yields must rise to exceed inflation for non-Federal Reserve buyers to enter the market place. Non-Government buyers will not buy a bond below inflation as their real returns would be negative. A SIGNIFICANT CONCERNS/CONSIDERATIONS: How The Fed May Reduce The Balance Sheet: - If they flood the market, we could see a squeeze on the bond market as the FED represented 2/3 of the bond market prior to ending their aggressive purchasing of bonds last week. How The New "Standing Repo Facility (S.R.F)" Will Effect The Bond Market: - Unclear, as it is untested in this Quantitative Tightening (QT) climate. - The premise is that the S.R.F is a tool that FED now has to avoid what happened in 2019. The goal is to help prevent a spike in bond yields. Explanation from Federal reserve website: www.federalreserve.gov "When the Federal Reserve conducts an overnight repo, it buys a security from an eligible counterparty and simultaneously agrees to sell the security back the next day. The difference between the purchase price and the sale price of the securities implies a rate of interest earned by the Federal Reserve on the transaction. The FOMC sets the S.R.F minimum bid rate, which is the minimum interest rate the Federal Reserve is willing to receive in an S.R.F operation; if the amount of bids exceeds the operation limit, the actual interest rate that a counterparty pays is determined through an auction process. The securities accepted in S.R.F operations include Treasury securities, agency debt securities, and agency mortgage backed securities."
TVC:US10YLong
by VakninAnalytics
3
Japanese yen falls to five-year highThe US dollar continues to pummel the Japanese yen. USD/JPY pushed above the 117 line earlier today for the first time since January 2017. USD/JPY is up 0.61% on the day and has recorded a massive gain of 1.76% this week. We continue to see sharp volatility in the currency markets and the Japanese yen has not been immune to the turbulence. Risk apprehension has been fluctuating, depending on developments in the Ukraine crisis. Like the US dollar, the yen is also considered a safe-haven currency, but with the US economy in much better shape than that of Japan, the US dollar has been the big winner from the recent turbulence we're seeing in the markets. As well, commodities are priced in US dollars, so the recent surge in commodity prices has boosted the US dollar. If the Ukraine crisis worsens and commodity prices continue to soar, it is entirely feasible that the USD/JPY will continue its upswing and break above the 120 line. In the US, headline CPI continued to accelerate, with a gain of 7.9% for February YoY. This matched the forecast and was up from 7.5% beforehand. With inflation running at 40-year high, there's little doubt that the Fed will raise rates at next week's meeting, most likely by 25 basis points. Japan ended the week with mixed numbers. Household Spending for January showed a sharp rebound of 6.9% YoY, up from -0.2% in December and above the consensus of 3.3%. However, the BSI Manufacturing Index for Q1 came in at -7.6, down from +7.2 in Q3 and way off the consensus estimate of +8.2. The BoJ is expected to maintain a dovish stance, despite rising inflation. On Friday, a senior BoJ official stated Japan's current and economic price conditions would make it inappropriate to respond with monetary tightening. USD/JPY continues to climb and break above resistance lines. Earlier in the day, the pair broke above resistance at 116.27 and 116.72. The next resistance is at 117.33. There is support at 115.56 and 115.11
by OANDA
2
How the Fed's Rate Hikes Affect the Market (or Not)In this post, I'll be demonstrating how the Fed's rate hikes affect the equity market (or how they don't), through historical examples and analyses of market psychology. This is an issue that has been going on for a while, and one that has caught the attention of all market participants. Yes, tapering and rate hikes aren’t necessarily good news, but I don’t think that 1) they necessarily indicate the beginning of a bear market/recession, and 2) the Fed is as powerful and influential as we think they are. This is not financial advice. This is for educational purposes only. Introduction - There’s a myth, a misconception in the market that the Fed allegedly rescues falling markets with rate cuts and easing measures, and vice versa for when the market is overheated. - This myth began in 1987 during Black Monday, when Alan Greenspan’s Fed cut rates after the crash, creating an impression that the Fed was directly responding to the stock market. - This is when the (mis)belief that the Fed would put a floor under a a falling market stuck. - Nevertheless, if we analyze the data, it actually demonstrates that the Fed stood pat for most corrections, and cutting cycles typically arrive during bear markets, just as coincidence. Historical Cases - There are only two occasions in history where the Fed’s cutting cycles corresponded with market lowpoints. - The first is the aforementioned Black Monday of 1987, and even for this case. - If we take a look at the situation back then, it’s not so much that the Fed made international moves that contributed to history, but rather that the bear market started amid a global liquidity crisis. - With excess liquidity, the rates should have been flat, or down, but that wasn’t the case. - Thus, the Fed’s rate cuts were vital to unfreezing credit and ensuring banks and clearing houses would have access to liquidity they needed, while the market was under severe stress. - The second occasion was the rate cut in 1998, when stocks were reacting to the collapse of Long-Term Capital Management (LTCM). - There was fear in the market that this collapse would lead to a domino effect, ending in a banking meltdown. - Generally, when people fear a banking contagion, liquidity in interbank funding markets dry up. - The Fed’s action to cut rates during this time helped keep money moving, and ensured that banks met their regulatory obligations. Market Psychology - In order to understand the recent discussion revolving around the importance of the Fed’s actions, we need to understand human nature. - People love finding narrative threads and grand explanations because we’re biologically wired to make sense of the world that way. - They confuse correlation and causation, and zero in on evidence that supports their view and shuns whatever suggests otherwise. - But it’s important to remember that in most cases, a fact that everyone knows, tends to be closer to myth than reality, and even if it weren’t a myth, the fact that everyone knows it does not give us an edge in the market. Summary Market shocks are caused by surprises. News about a pandemic or cyber attack that catches investors off guard is much riskier than macro events that are predictable and can be anticipated. Given that the markets are efficient (which I believe they are), it's rational to assume that news about the Fed's rate hikes, and people reaction to it are already priced in. While short term volatility is definitely expected, I believe that the likelihood of this event becoming a trigger for a multi-year recession is extremely unlikely. If you like this educational post, please make sure to like, and follow for more quality content! If you have any questions or comments, feel free to comment below! :)
TVC:IXICEducation
by Michael_Wang_Official
61
Pound falls, US inflation jumpsGBP/USD has reversed directions on Thursday, giving up most of the gains from a day earlier. In the North American, session, GBP/USD is trading at 1.3132, down 0.41% on the day. In the US, headline CPI continued to accelerate, with a gain of 7.9% for February YoY. This matched the forecast and was up from 7.5% beforehand. With inflation running close to 8%, a rate hike is a virtual given at next week's Federal Reserve meeting. What happens after that is less clear, as the Fed has to worry about stagflation, given the massive upswing in oil prices. The markets had priced in six rate hikes this year, but the turbulence due to the Ukraine crisis and the staggering rise in oil prices will translate into the Fed being more cautious about future rate hikes. Earlier today, a meeting between the foreign ministers of Russia and Ukraine earlier today did not result in any breakthroughs, although the sides agreed to continue to meet. The fighting continues, and with the Russian invasion force appearing to have stalled, there are fears that Russian President Putin could double down in frustration and hit more civilian targets. This would exacerbate the massive humanitarian crisis due to the Russian invasion, which has already affected millions of Ukrainians. The markets will be treated to a data dump from the UK on Friday. The highlights include the January reports for GDP and Manufacturing Production. GDP is expected to jump 9.3% YoY, following a 6.5% gain in December. Manufacturing Production is forecast to accelerate to 3.1%, compared to 1.3% beforehand. Strong readings would be further indication that the UK economy continues to improve, with the next BoE rate meeting just a week away. GBP/USD has broken through support at 1.3146. Below, there is support at 1.3057 There is resistance at 1.3249 and 1.3380
by OANDA
1
Sterling moves higher as dollar dipsThe British pound is in positive territory, as the US dollar has retreated against the major currencies for the first time in five days. GBP/USD is trading at 1.3169 in the North American session, up 0.52% on the day. The US dollar has had its way with the pound in recent sessions, but GBP/USD has reversed directions today. We are seeing a buy-the-dip move, which has boosted equities and led to a US bond selloff, with yields falling. The dollar index has fallen sharply to 98.02, down 1.02% and the US dollar outlook is suddenly not looking so bullish. Market direction has been shaped to a great extent by the crisis in Ukraine and the markets continue to react as developments unfold. On Thursday, the foreign ministers of Russia and Ukraine are scheduled to meet in Turkey, and if progress is made towards a ceasefire in the fighting, risk appetite would find some traction and we could see a rotation out of US dollars. Conversely, if the talks collapse and Russia intensifies its attacks, the safe-haven dollar would become more attractive to investors. The Fed is poised to commence its rate lift-off at next week's meeting, likely by a quarter-point. What happens after that has become very unclear, with the extreme turbulence we are seeing. There is a full-blown war in Europe, commodity prices are soaring, and oil has rocketed above 120 dollars a barrel. This nasty recipe could lead to stagflation, which means that Fed policymakers will have to show an abundance of caution moving forward - we can expect a slower pace of rate hikes this year than had been anticipated just a few weeks ago. GBP/USD has broken through resistance at 1.3146. Above, there is resistance at 1.3291 There is support at 1.3057 and 1.2912
by yesfish