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100 Years of 100% ProbabilityThis Chart shows the normalized Bollinger Band Width for the US Ten Year Treasury Bond Yield. Basis = 10 Year SMA Upper and Lower Bollinger Bands = 3.0 Standard Deviations from Basis Normalized BB Width = (Upper - Lower) / Basis For the last century, 100% of the time that US Ten Year Yields extended 3 Standard Deviations above their 10 Year SMA while their normalized Bollinger Band width reached this 100 year long trend, rates experienced a sharp and meaningful correction. *** During World War II, width reached the trend line but rates remained at the 10 year average and did not extend 3 Standard Deviations above it.
TVC:US10YShort
by MarkLefevre
$JPINTR - Japan's Interest RateECONOMICS:JPINTR (Devember/2024) source: Bank of Japan -The Bank of Japan (BoJ) maintained its key short-term interest rate at around 0.25% during its final meeting of the year, keeping it at the highest level since 2008 and meeting market consensus. The vote was split 8-1, with board member Naoki Tamura advocating for a 25bps increase. Thursday's decision came despite the US implementing its third rate cut this year, as the BoJ needed more time to assess certain risks, particularly US economic policies under Donald Trump and next year's wage outlook. The board adhered to its assessment that Japan's economy is on track for a moderate recovery, despite some areas of weakness. Private consumption continued its upward trend, aided by improving corporate profits and business spending. Meanwhile, exports and industrial output remained relatively flat. On inflation, the YoY figures have ranged between 2.0% and 2.5%, driven by higher service prices. Inflation expectations showed a moderate rise, and the underlying CPI is expected to add gradually.
ECONOMICS:JPINTR
by Mr_J__fx
USD/JPY price action: breakout rally after hawkish FedThe USD/JPY pair has surged over 2% to reach 157.51, marking the yen's weakest level in four months. This significant rally follows recent interest rate decisions by the Federal Reserve and the Bank of Japan. Despite the Fed's 25bps rate cut, the US dollar has gained strength due to the market's anticipation of only two rate cuts in 2025, contrasting with earlier expectations of four. This decision maintains the interest rate differential between the US and Japan, benefiting carry trade strategies. Meanwhile, the BoJ has kept its short-term rate steady at 0.25%, its highest since 2008, with potential rate hikes forecasted if economic conditions align. The US's optimistic economic projections, with rising GDP, inflation, and job growth, further bolster the dollar's appeal. As global economic uncertainties and political changes unfold, traders should monitor central bank signals to navigate the USD/JPY's trajectory and carry trade opportunities.
by tastyfx
Forex Traders Await the Fed's DecisionForex Traders Await the Fed's Decision The Federal Reserve is set to announce its interest rate decision today at 21:00 GMT+2, with Fed Chair Jerome Powell holding a press conference 30 minutes later. According to Forex Factory, the market expects a rate cut to 4.25%-4.50% from the current 4.50%-4.75%. Analysts at Apollo Global Management, in their Economic Outlook, predict: → In 2025, the Fed will continue lowering rates but at a slower pace than the market anticipates; → By the end of 2025, the rate is expected to settle at 4.0%. In anticipation of today's decision, the currency markets are experiencing a period of calm. The technical analysis of the EUR/USD chart shows that the pair consolidates between the upper boundary of a descending channel and the lower black support line, forming a narrowing triangle pattern (highlighted in purple). Today's Fed meeting could trigger a surge in volatility, potentially driving sharp movements in USD pairs. For EUR/USD, opposite scenarios are possible: → An upward movement with a bullish breakout of the upper boundary of the long-term descending channel; → Continuation of the downtrend with a breakout below the lower black support line. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
by FXOpen
2
USD/JPY carry trade explainedCurrently, the USD/JPY pair is trading around 154.26, influenced by upcoming policy decisions from the US Federal Reserve and the Bank of Japan (BoJ). The US Fed's anticipated 25bps rate cut could potentially narrow the interest rate gap, affecting the carry trade's immediate appeal. However, the strong performance of the US economy, with robust job growth and rising inflation, might sustain the dollar's strength, keeping the carry trade attractive. Meanwhile, the BoJ's steady interest rate at 0.25% and potential for future hikes offer a contrasting backdrop, maintaining the yen's role as a low-interest currency. Global economic uncertainties and political changes in both the US and Japan could impact these dynamics, so traders should monitor central bank signals and economic data closely to navigate potential shifts in the carry trade's profitability.
by tastyfx
Market Year Wrap 2024: Key Highlights and Outlook for 2025Market Year Wrap 2024: Key Highlights and Outlook for 2025 The year 2024 has been a transformative period in the global financial markets, characterised by a mix of challenges and opportunities. Inflation battles, monetary policy shifts, economic uncertainties, and surprising bouts of optimism dominated the landscape. These forces created a volatile yet dynamic environment where some markets flourished while others struggled under significant pressure. From central bank interventions to geopolitical developments and technological advancements, every corner of the financial world experienced notable activity. In this article, we will take a detailed look at the major trends and events shaping the global economy in 2024 and provide insights into what lies ahead in 2025. Inflation and Interest Rates: A Balancing Act In 2024, inflation showed signs of moderation globally. In the United States, it stabilised around 2.7%, marking a notable shift that bolstered market confidence and set a cautiously optimistic tone for the broader economy. Throughout the year, rate cuts dominated monetary policy discussions. Following the unprecedented rate hikes implemented in response to the COVID-19 pandemic, major central banks began scaling back rates. However, they had to walk a tightrope between a complex landscape of lower but still stubborn inflation and resilient labour markets and the necessity for monetary easing. The magnitude and pace of these cuts varied significantly, reflecting differences in economic conditions across regions and creating complex relationships in the forex market. Analysts widely anticipate that policymakers will adopt a more measured approach to easing monetary policy as 2025 unfolds. Most developed market central banks, excluding Japan, are expected to reduce interest rates to neutral levels by the year's end. However, if economic conditions deteriorate more than anticipated, there is potential for central banks to push rates below neutral to support growth. The Fed, in particular, faces a delicate balancing act, as it must carefully navigate potential policy developments—such as trade tariffs—that may not ultimately materialise. At the same time, any resurgence in inflationary pressures could prompt a shift toward a more restrictive rate trajectory in 2025 and beyond, further complicating the policy landscape. Forex Market: A Year of Divergence Currency markets in 2024 were shaped by a combination of monetary policy shifts, economic recovery efforts, and political developments. The US dollar experienced a rollercoaster year, initially depreciating against major currencies as markets anticipated the Federal Reserve’s first rate cut since the COVID-19 pandemic. However, it rebounded toward the end of the year, influenced by post-election optimism and expectations of protectionist trade policies under the Trump administration. The British pound demonstrated resilience throughout 2024, supported by the Bank of England’s patient and measured approach to monetary policy. Despite potential rate cuts, the pound maintained its strength, reflecting confidence in the UK’s economic fundamentals. In contrast, the euro faced significant headwinds. The ECB’s aggressive easing measures widened interest rate differentials with the pound and the dollar, weakening the euro. By the end of the year, trade uncertainty stemming from potential US tariffs weighed heavily on the euro, given the Eurozone’s dependence on global trade. The Japanese yen experienced mixed fortunes, bolstered by the Bank of Japan’s decision to raise its benchmark interest rate to 0.25%, the highest level since 2008. This move provided much-needed support for the yen, although concerns about potential US trade policies created downside risks. Meanwhile, commodity-linked currencies such as the Australian and Canadian dollars saw fluctuations driven by interest rate differentials, global trade dynamics and their respective economies' ties to the United States and China. Analysts caution that President Trump’s tariff policies could intensify the overvaluation of the US dollar in 2025, potentially heightening the risk of global financial instability. The prospect of trade restrictions may add complexity to an already volatile economic landscape. Commodity Markets: Precious Metals Shine, Oil Struggles Commodity markets have seen a resurgence in investor interest. According to data from WisdomTree and Bloomberg, the proportion of investors allocating resources to commodities rose to 79% in 2024, compared to 71% in 2023—an expected rebound after a challenging year for commodities in 2023. Precious metals, particularly gold and silver, emerged as top performers. As of time of the writing on 11th December, gold prices surged by over 30%, while silver outpaced gold with a 35% gain. Several factors drove these impressive performances, including geopolitical tensions, economic uncertainties surrounding the US presidential election, and strong demand from emerging market central banks. According to analysts, these factors should continue supporting precious metals in 2025. Natural gas prices also experienced significant growth, rising 30% to 50% across major markets in Asia, Europe, and North America. Colder weather forecasts have fueled demand, particularly in Europe and Asia. Analysts suggest that this bullish sentiment in gas markets is likely to persist through the winter, with prices unlikely to see significant declines until well into 2025. However, high gas prices are expected to increase power costs globally, straining fragile economic growth in key regions such as China and Europe while rekindling inflationary concerns. Oil, however, faced a challenging year despite geopolitical crises and production cuts. One of the reasons is a weak demand, particularly from China. In the United States, gasoline inventories exceeded long-term seasonal levels. According to analysts, the growing transition to electric vehicles in developed markets represents a long-term challenge for oil demand. Although some analysts anticipate a recovery in 2025 as OPEC+ production cuts take effect and geopolitical risks persist. Stock Markets: Tech Leads the Charge The US stock market delivered robust performances in 2024, reaching new record highs, with the technology sector at the forefront. Innovations in artificial intelligence (AI) played a pivotal role in driving growth, with major companies such as Microsoft, Nvidia, and Amazon reporting strong earnings. This momentum boosted broader indices, with the S&P 500 and Nasdaq 100 recording gains of 28.57% and 27.4%, respectively, as of 10th December. The broader market also benefited from declining inflation, interest rate cuts, and better-than-expected corporate earnings. These factors may contribute to the stock market growth in 2025. However, stretched valuations temper some of the optimism, and concerns about potential trade tariffs add a layer of uncertainty. Looking Ahead to 2025: Key Market Drivers As we look ahead to 2025, several critical factors are poised to influence the direction of financial markets. Central Bank Policies Central banks will remain pivotal in shaping financial markets in 2025. The balance between maintaining growth and addressing inflationary pressures will be a key theme for central banks throughout the year, influencing the strength of equity markets. Interest rate differentials will play a significant role in determining currency movements. Global Economic Recovery The global economy is expected to continue rebounding from pandemic effects. GDP growth, employment trends, and trade balances will be key factors influencing financial markets. Trade War Uncertainty Potential trade tariffs pose a significant risk. The scope, products, and geographies targeted will determine the impact on global GDP, inflation, and interest rates. Any escalation in trade tensions could disrupt markets and strain economic recovery. Artificial Intelligence and Innovation AI and emerging technologies may drive productivity gains, offering an upside to global growth. By boosting efficiency and reducing costs, AI could also exert disinflationary pressure, influencing economic dynamics in the long term. Geopolitical Tensions Geopolitical risks, including trade disputes and political conflicts, remain unpredictable but could disrupt markets. Final Thoughts: Embracing Opportunities Amid Volatility The year 2024 brought its share of challenges and opportunities, showcasing the resilience and adaptability of global markets. From navigating geopolitical uncertainties and evolving monetary policies to embracing the transformative potential of technologies like artificial intelligence, market participants faced a dynamic landscape. Looking ahead to 2025, the horizon offers new opportunities. Continued advancements in innovation, shifts in economic policies, and the resolution of key global tensions could set the stage for exciting market fluctuations. Use the new year to test your skills and look for new opportunities! This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
by FXOpen
2
SPX × US10Y: A Signal for Market Tops and Economic Shifts1. Combining Equity Levels and Yield Sensitivity SPX (S&P 500) reflects equity market strength and investor sentiment. When SPX is rising, it typically indicates optimism or strong earnings growth expectations. US10Y (10-year Treasury yield) reflects the cost of capital and inflation expectations. Rising yields can signify tightening financial conditions or economic overheating. When you multiply these two metrics, the product magnifies the impact of simultaneous market exuberance (high SPX) and rising yields (high US10Y). A very high SPX × US10Y value could indicate a market environment where valuations are stretched, and higher yields are increasing the cost of capital—often a precursor to market corrections. 2. Historical Patterns In prior market tops, both equity valuations (SPX) and yields (US10Y) often peak together before significant corrections: Dot-Com Bubble (2000): SPX was highly elevated, and rising yields signaled an end to loose monetary conditions. 2007-2008 Financial Crisis: SPX was at record highs, and US10Y yields were climbing, reflecting tighter monetary policy. 2021-2022 Post-Pandemic: SPX hit record highs, and yields started to rise sharply as inflation surged, leading to a market correction. The SPX × US10Y value tends to peak during these moments, providing a warning signal of market excess. If you are using the SPX × US10Y (multiplication) instead of division, it can still serve as a market indicator, though the mechanics are slightly different. Here’s why the product of the S&P 500 and the 10-year Treasury yield (SPX × US10Y) might be relevant for predicting market tops: 3. Economic Logic Behind the Indicator A. Reflects Cost of Capital Rising US10Y yields increase the discount rate used to value stocks. High SPX × US10Y suggests equities are vulnerable to revaluation if yields continue to rise. B. Overheating Economy High SPX × US10Y often coincides with an overheating economy, where inflation pressures push yields higher, while equities are driven by optimism. This imbalance can quickly reverse if monetary tightening occurs. C. Peak Growth Phase A peak in the SPX × US10Y value might signal the economy is at the late stage of the business cycle, where growth slows, and equities face headwinds. 4. Why It May Predict Market Tops Valuation Excess: A high SPX × US10Y product reflects elevated valuations combined with tightening financial conditions. Transition to Risk-Off Environment: Rising yields make bonds more attractive relative to stocks, potentially triggering equity outflows. Fed Policy Influence: If yields are rising due to Federal Reserve tightening, equity markets often react negatively as borrowing costs rise and liquidity is withdrawn.
SP:SPX
by ILuminosity
EURUSD Trading Idea EUR/USD dipped 0.2% on Tuesday, marking its third straight decline as it approaches the key 1.0500 level. The Euro’s recent bullish momentum is fading, with traders shifting to a cautious stance ahead of two major events: US CPI Data (Wednesday): A pivotal release ahead of the Fed's final 2024 meeting. Inflation is expected to tick up to 2.7% YoY (from 2.6%), with core CPI holding steady at 3.3%. Any signs of stalled progress could dash hopes for a third consecutive rate cut on December 18, fueling USD volatility. ECB Rate Decision (Thursday): The ECB is widely anticipated to deliver another quarter-point rate cut. Forecasts suggest the Main Refinancing Operations Rate will be trimmed to 3.15% (from 3.4%), and the Deposit Facility Rate is expected to drop to 3.0% (from 3.25%). EUR/USD Technical Analysis: Entry Opportunity with SMC and Fibonacci Using Smart Money Concepts (SMC) and Fibonacci retracement, the key zone between the 0.71 and 0.79 Fibonacci levels is shaping up as a critical area of interest. Following the creation of a fair value gap at the last high, the price is now testing the 50% Fibonacci level, setting the stage for a potential trade setup. Trade Setup: Entry Point: 1.05520 (aligned with the 0.75 Fibonacci level) Stop Loss: 1.05697 (just above the 0.79 Fibonacci level for added risk protection) Take Profit: 1.04990 (targeting below the fair value gap for optimal risk-to-reward) Risk/Reward Insights: This setup offers a Risk/Reward Ratio of 2.98. By risking 17.7 pips to gain 53 pips, you're maximizing reward relative to risk. Disclaimer: Trading carries significant risks, and it’s essential to practice strict risk management. Always trade with a clear plan, use stop-loss orders, and never risk more than you can afford to lose. This analysis is not financial advice—ensure you understand the risks before making any decisions. Follow for more trading ideas, strategies, and insights to level up your trading game!
Short
by InwardTrader
Macroeconomic History Tells Us Rough Times Are AheadIn 2023, I did a write up on TradingView about how there is a positive correlation between interest rates and equities, meaning that equites tend to decrease when interest rates decrease. However, correlation does not equal causation. The real correlation is between poor economic data and the stock market, where the poor economic data spurs interest rate cuts and causes a fall in equities. The recent surprisingly bad July jobs report jolted the markets, and reasonably so. The Fed decided to hold interest rates steady in July, causing some to think that they may be behind the curve. Not to mention the Sahm Rule flashed positive; an economic observation that has never been wrong in being a precursor to a recession. fred.stlouisfed.org I am of the party that the Fed is behind the curve In the past, Jerome Powell has stated that he doesn't expect a "severe" recession, and that there could be a "softish" landing, hinting at the difficulties that the Fed faced in preventing a recession altogether. I believe that the stock market will continue to fall, mixed with large rallies (which will make buying the bottom difficult), and I think this will play out for many months. So what's my plan? I sold my LEAPS before the poor jobs market data was released, saving my bacon to be honest. I sold my HOOD profits as well, as I had made a 100% return. I then took both and dumped the funds into QQQ. I do not hold cash in case I am wrong. I would rather be wrong and invested than wrong and sitting on cash. I plan on waiting until the Q's drop another 20% or so before buying LEAPS. Typically, I advise only to put 10% into LEAPS, but this could be a rare opportunity where risk on could pay of in a big way. When I do decide to jump in, I will buy LEAPS with expirations two years out. I want to give them the longest time frame possible because I know I won't be able to time the bottom perfectly. The real risk is waiting too long Wait too long, and I miss a big opportunity. However, being exposed to equities, I'll still ride the wave up. If I'm wrong altogether, I'm still invested in equities and will ride the wave up. I will still be somewhat hesitant to invest into LEAPS through this rate cutting cycle considering history warns against leveraging into QE. Thank you for coming to my Ted Talk. InTheMoney
NASDAQ:QQQShort
by InTheMoneyAdam
2
Will We have Another Rate Cut In December? Hey Traders After this week's inflation data and the Fed meeting on Thursday the dollar steadied at a one year-peak, set for a strong week as markets dialed back bets on lower U.S interest rates. The Fed appeared less dovish based on strong U.S inflation readings which added to the dollar strength. However, under the Trump administration, inflation is expected to go up as a result of their expansionary policies. During the Fed meeting on Thursday, Fed chair Jerome Powel said that due to the resilience of the U.S economy they have more time to consider cutting rates. This comment reduced expectations for a 25 basis point cut in December. Strong U.S inflation data and less dovish signals from the Fed sparked doubts over lower interest rates. As it stands, Gold set to lose over 4% this week with its worst performance since June 2021. Bitcoin fell from its near record highs as optimism over a Trump presidency oiled, while broader risk appetite was hit by increased uncertainty over U.S interest rates.
BINANCE:BTCUSD
by DeanMuller
Rising Inflation Expectations: TIP vs. IEFIntroduction: With the election concluded, market focus has shifted to bond markets, where recent developments hint at rising inflation expectations. Despite President Trump's campaign emphasis on price control, indicators suggest a shift toward higher inflation. A key metric to monitor is the ratio between Treasury Inflation-Protected Securities AMEX:TIP and 7-10 Year Treasuries $IEF. When (TIP) outperforms NASDAQ:IEF , it signals increasing inflation expectations; conversely, when IEF outperforms, it suggests a decline in inflation expectations. Analysis: Inflation Expectations: The TIP-to-IEF ratio is a reliable gauge of the market's inflation outlook. A rising ratio indicates growing inflation concerns, as investors favor TIPs for their inflation protection over traditional Treasuries. Technical Pattern: Currently, the TIP-to-IEF ratio is breaking out of a descending triangle formation, a continuation pattern that signals the potential for higher inflation expectations. This breakout aligns with a recent surge in interest rates, reflecting heightened inflation concerns in the bond market. Market Implications: This breakout could be the early stage of a sustained trend toward higher inflation, raising questions about whether the recent interest rate surge is a temporary fluctuation or the beginning of a longer-term shift. Conclusion: The bond market is sending signals of rising inflation expectations, as indicated by the breakout in the TIP-to-IEF ratio. This could mark the start of a new phase in the inflation cycle, with potential implications for interest rates and broader market sentiment. Traders should closely monitor this ratio to assess the longevity of the current trend. Do you think inflation expectations are set to rise further? Share your thoughts below! Charts: (Include relevant charts showing the TIP-to-IEF ratio, the descending triangle formation, and breakout targets) Tags: #Inflation #Bonds #Treasuries #TIP #IEF #InterestRates #TechnicalAnalysis
AMEX:TIP
by Richtv_official
USDCHF: Technicals Meet Diverging Dollar-Franc FundamentalsHey Traders! In today’s trading session, we’re closely monitoring USD/CHF for a potential buying opportunity around the 0.88400 zone. Currently, USD/CHF is trading in an uptrend, but it’s in a correction phase and approaching the 0.88400 support and resistance area—a key level that could offer an entry point aligned with the ongoing trend. Fundamental Insights: USD Strength vs. CHF Weakness From a fundamental perspective, we’re seeing diverging influences on USD and CHF. A Trump victory could boost the dollar, as it may reintroduce inflationary pressures, paving the way for potential rate hikes and a stronger dollar outlook. In contrast, the Swiss franc may continue to soften, as the Swiss National Bank remains committed to a dovish stance, keeping monetary policy highly accommodative. If these fundamentals align, USD/CHF could see upward momentum, with 0.88400 as a critical support level for this potential move. Trade safe, Joe
Long
by JoeChampion
11
Trump's Impact on Interest Rates: Higher Rates Ahead?After Trump’s decisive win on November 6th, Bitcoin, the USD, and yields (or interest rates) moved higher. In fact, these markets began moving upward in September, more than a month before Donald Trump became the 47th President of the United States. We will study the direction of interest rates based on the actual market sentiment as reflected in U.S. bond yields. 10 Year Yield Futures Ticker: 10Y Minimum fluctuation: 0.001 Index points (1/10th basis point per annum) = $1.00 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CBOT_MINI:10Y1!Long
by konhow
2