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Interestrates

One little observationAs I was updating the Interest Rates indicator, one thing that caught my eye was the negative correlation with bitcoin price. Increasing rates make "currencies" more expensive. After the increases, Bitcoin price was making great gains. Decreases in interest rates make "currencies" cheaper. After the decreases, not long after, the rally started. I don't know if there is a correlation but there might be. Interest Rates used to be a key indicator in the currency markets. Since Bitcoin is denominated in US Dollars, it would make some sense.
BITSTAMP:ETHUSD
by OrcChieftain
1
The Road To Normalcy Begins (06 November 2021)Fed starts tapering! The long-awaited taper meeting has finally arrived! The Federal Reserve announced during their monetary policy meeting on Thursday that it will begin slowing down its net asset purchases by $15 billion per month which comprises of $10 billion Treasury bonds and $5 billion agency mortgage-backed securities. The first round of tapering will begin later this month and the second round will take place at the beginning of December. Moving forward, the monthly pace of quantitative easing (QE) tapering will be similar to these two months and may be adjusted depending on the economic outlook. Regardless of the pace, the Fed is expecting QE to end by mid-2022. The following illustration shows that under the same tapering pace, QE will end in June 2022. Nov 2021: $70b Treasury Bonds + $35b Agency MBS Dec 2021: $60b Treasury Bonds + $30b Agency MBS Jan 2022: $50b Treasury Bonds + $25b Agency MBS Feb 2022: $40b Treasury Bonds + $20b Agency MBS Mar 2022: $30b Treasury Bonds + $15b Agency MBS Apr 2022: $20b Treasury Bonds + $10b Agency MBS May 2022: $10b Treasury Bonds + $5b Agency MBS Jun 2022: End of QE A small step back on “transitory” With the recent comment made by Fed Chairman Powell that supply bottlenecks will take longer to ease, thus expecting prices to remain high for a longer period of time, the Fed has taken a small step back from its view on inflation being transitory. The previous confidence that the elevated inflation “largely reflecting transitory factors” has now been revised to “largely reflecting factors that are expected to be transitory”. During the press conference, Powell also clarified the definition of “transitory” that the central bank adopts after highlighting that the word has different understanding to different people. For the Fed, “if something is transitory it will not leave behind permanently – or very persistently higher – inflation”. With the ongoing supply chain disruptions, the central bank Chief is expecting inflation to continue its rise into 2022 before easing back down during mid-2022. Maximum employment still quite a distance away Although tapering of the massive $120 billion per month QE programme has begun, Powell warned that the Fed’s decision to do so does not imply a rate hike is underway. The central bank held its interest rate unchanged at the targeted range of 0-0.25% and would like to see the labour market achieve maximum employment before considering a hike. As of the October’s jobs report, the U.S. job market is still some 5 million jobs away from the pre-pandemic level. The Fed is likely going to consider a rate hike only when the jobs lost during the pandemic have been fully recovered. Even so, the central bank may wait a little longer to be certain that jobs growth is indeed consistent before committing.
TVC:DXY
by GH_Lee
3
Bonds Establish ValueBonds have dipped but have found support at the levels we identified yesterday. ZN retraced from relative highs at 131'02 to 130'19. It has since rebounded and is currently testing 130'26. The Kovach OBV was quite strong, but has dipped with the retracement. We appear to be forming value between 130'19 and 131'02. If this is the case, then expect further support at 130'19 and resistance at 131'02. Beware of the vacuum zone below to 130'07. The next target above is 131'12.
CBOT:ZN1!Long
by quantguy
1
A Rate Hike Before 2024? (04 November 2021)The Reserve Bank of Australia (RBA) concluded its monetary policy meeting on Tuesday with no change in its weekly A$4 billion bond purchases, aka quantitative easing (QE), while holding interest rate unchanged at 0.10%. What has changed during this meeting is the ending of the central bank’s yield curve control (YCC). Dropping the YCC It all began when the RBA carried out an unscheduled purchase of A$1 billion of April 2024 Australian government bond back in 22 October in an attempt to tame the rising yield, bringing it back down to the central bank’s 0.10% target. Towards the end of October, yield on the April 2024 bond sky-rocketed to 0.75%, the biggest monthly increase since 1994. This time round however, the RBA did not attempt to bring down the yield to its target through any purchase of bonds, leaving the market to speculate that the RBA may be discontinuing its YCC during its November meeting. The decision to end the YCC “reflects the improvement in the economy and the earlier-than-expected progress towards the inflation target” as explained in the rate statement. With the rise of interest rates from other markets, the central bank felt that the efficacy of the YCC has vanished. An earlier rate hike timeline The RBA has repeatedly emphasized that an interest rate hike will be considered only when inflation is sustainably achieved within its 2-3% target. Prior to the November’s meeting, the central bank forecasts that this condition “will not be met before 2024”. However, it has revised this forecast somewhat optimistically in yesterday’s statement, indicating that: “The Board is prepared to be patient, with the central forecast being for underlying inflation to be no higher than 2½ per cent at the end of 2023 and for only a gradual increase in wages growth.” With this revision, the RBA is now implying the possibility of inflation coming into the 2-3% targeted range at the end of 2023. This means it is fair game for the central bank to carry forward its rate hike timeline. Overall positive economic projections The RBA’s quarterly economic projections for 2022 and 2023 have underwent positive revisions. Specifically, inflation projection has been revised upwards which is good as it is the main deciding factor of a rate hike from the central bank. The RBA now expects inflation to fall within their 2-3% target for 2022 and 2023. For year 2022, GDP: 5.50% (a little over 4.00%) Unemployment: 4.25% (4.25%) CPI Inflation: 2.25% (1.75%) For year 2023, GDP: 2.50% (2.50%) Unemployment: 4.00% (4.00%) CPI Inflation: 2.50% (2.25%) *Figures shown in parentheses refers to projections from August 2021
by GH_Lee
2
US 10 YEARS - W1 - BEARISH ENGULFING !Weekly (W1) After a RSI bearish divergence detected the week before, the last week price action triggered a "Bearish Engulfing pattern" which should be seen as a second warning signal calling for a trend reversal ! Indeed, looking back we can see 2 clear trends and in monitoring the ongoing uptrend we can easily see the failure to confir m an upside breakout of the ongoing uptrend channel. So, looking forward, it is likely to see further downside towards 1.4850 % first (38.2 % Fib ret & Tenkan-Sen), ahead of 1.4170 % (50% & Kijun-Sen). Mid-Bollinger Band, slightly below and currently @ 1.40 % should again be seen as the barometer indicator, having in mind the following mood : Above 1.4000 % bullish (yield) and below 1.4000 % ( bearish yield) Interesting to note that a failure to stay and hold above 1.4000 % on a weekly closing basis would confirm a downside breakout of this ongoing uptrend channel and potentially open the door for a new downtrend move, calling for 1.35 % - 1.25 %. On the upside, only a clear breakout of the former high @ 1.7060 would neutralise the downside risk and would open the door for higher level towards 1.80-1.90 (former congestion top) Daily (D1) : Failure to recover both above TS and Mid Bollinger band on a daily closing basis should also be seen as a negative signal, calling for further downside. In addition, the 10 Years US Treasury is currently flirting with the Kijun-Sen important level support @ 1.550 %. A daily closing level below 1.55 % would also add further selling pressure (yield) which would open the door for the levels above mentioned in my W1 analysis. On this time frame, very interesting to note that the clouds support area coincides with the Fibonacci retracement, 1.4170 % and 1.3480 %, being respectively the 50 % and 61.8%. CONCLUSION : Watch the clouds on shorter intraday time frames which will help you to get intermediate signal (s) for validation or invalidation of the scenarios above mentioned. H 4 : below the clouds H1 : bottom of the clouds under attack M30, M15, M5 : below the clouds Do you like my analysis ? If yes, do not hesitate to like it and if it is not done yet, please do not forget to add Ironman8848 in your following list. Many thanks in advance All the best and take care. Ironman8848 :-)
TVC:US10YShort
by Ironman8848
1
Global bonds rout put central banks on the spot What a crazy market,” said Priya Misra, global head of rates strategy at TD Securities. “The 20s-30s curve is just reflecting the overall flattening theme in the market -- where central banks are forced to respond to inflation, which slows growth significantly.” Yield-curve flattening has gained momentum across global bond markets this week as traders scrambled to price in more aggressive central-bank actions to fend off inflation. The Bank of Canada surprised investors Wednesday by abruptly ending its bond-buying stimulus program and accelerated the potential timing of future interest rate increases; the Canadian yield curve flattened sharply in response. While declining oil prices account for some of the pullback in breakevens, “profit-taking after a very strong run over the past several weeks” was also a likely factor, said Michael Pond, head of inflation market strategy at Barclays Capital Inc. “We might be seeing de-risking ahead of the Fed,” which has been mindful of inflation expectations and doesn’t want to appear to be behind the curve, Pond said.
TVC:US10YLong
by GrizzlyBearBee
Bond market volatility rocks the EuroData released Thursday showed that U.S. GDP growth slowed sharply to a 2% annualized rate in the third quarter. Meanwhile, investors continued to price in rate increases by the European Central Bank, while dismissing President Christine Lagarde’s effort to push back against such expectations. Market expectations of higher interest rates has brought out bears, with Danske Bank strategists expecting the euro to fall to $1.10 over the next 12 months.
Short
by GrizzlyBearBee
Double Hawkish Tone From The BOC (28 October 2021)QE has ended. During the monetary policy meeting yesterday, the Bank of Canada (BoC) carried out a hawkish move. The initial expectation from the market was for the central bank to taper its quantitative easing (QE) from C$2 billion per week to C$1 billion per week. However, the BoC surprised the market by bringing its QE to a halt. Rate hike timeline carried forward. Back in September’s meeting, the BoC mentioned in the rate statement that interest rate will be held at its current level until its 2% inflation target is sustainably achieved. The central bank projected this target to be met during the second half of 2022. However, in the released rate statement yesterday, the BoC revised its projection and is now expecting the target to be met in the middle quarters of 2022. This directly translates to an earlier timeline for the central bank to hike interest rate. Quarterly economic projections. The BoC revised its economic growth projections for 2021 and 2022 downwards while revising upwards for 2023. The downwards revision comes as the central bank is expecting global supply chain disruptions and shipping bottlenecks to carry on into next year, having a negative impact on economic growth. As for inflation, the BoC revised its projections upwards for all three years, explaining that higher energy prices and supply bottlenecks are now “stronger and more persistent then expected”. Hence, the central bank is expecting inflation to be elevated into 2022. For year 2021, GDP: 5.1% (6.0%) CPI Inflation: 3.4% (3.0%) For year 2022, GDP: 4.3% (4.6%) CPI Inflation: 3.4% (2.4%) For year 2023, GDP: 3.7% (3.3%) CPI Inflation: 2.3% (2.2%) *Figures shown in parentheses refers to projections from July 2021 What’s next for the BoC? With the conclusion of QE, the BoC is now moving into the reinvestment phase. In this phase, the central bank will offset bonds maturities by purchasing new bonds to replace those that are maturing in order to maintain the overall bond holdings at around the same level. The targeted range of purchase will be from C$4 billion to C$5 billion per month. With that, the duration of the reinvestment phase has become a future monetary policy decision and will depend on the economic recovery and how inflation plays out in the future.
by GH_Lee
QCOM probably good for at least a short-term swingWith today's weak inflation data, treasury yields are falling, which should be at least short-term bullish for tech. Qualcomm has an additional news catalyst from yesterday's announcement that they authorized a $10 B buyback plan. Qualcomm looks to be exiting oversold territory on the daily RSI. It's just under 15 forward P/E right now, with PEG under 0.5 and dividend yield at 2.2%. We may get some positive analyst coverage over the next week as an upside catalyst. I took a gamble on October 22 calls at the 128 strike.
NASDAQ:QCOMLong
by ChristopherCarrollSmith
11
US 10 YEARS -W1/D1 - DB TARGET @ 1.6500WEEKLY : Double bottom (@1.1270) gives a technical target @ 1.65 %; it has nearly been filled with a high so far @ 1.6150 Interesting to note that current level coincides with the former congestion top seen early this year between April and May. Therefore, this 1.6000/1.6500 area may this time trigger the second top and should be watch at very carefully ! DAILY : The upside breakout of the triangle pattern around 1.3900 which also coincided roughly with the daily top clouds triggered an upside acceleration with a small consolidation. Note the RSI which is currently in a bearish divergence mode (wait for confirmation) As long as the US 10 Y stays and hold above TS, it is fine for further upside towards former March high @ 1.774 (50 % Fib ret @ 1.8060) ... but a failure to do it, would directly put the focus on the next support level around 1.35/1.45 former resistance area which becomes now the new support zone. As usual, watch an monitor closely price action on shorter intraday time frames to get intermediate clues for the upcoming trading sessions. Have a nice week All the best Ironman8848
TVC:US10Y
by Ironman8848
US GOV BONDS 10 YR YIELD - M1 ---> D1Good morning, today we are going to look at 3 time frames, beginning with : MONTHLY September monthly closing level is showing a failure to close above the ongoing downtrend line resistance.(1.5570). Interesting to note that the September intramonth high (1.56) was slighly higher than the 61.8% Fib ret @ 1.5270 (1.7740-1.1270 move). So for the time being recent price action was only a corrective move. October monthly closing level will validate or invalidate a potential breakout of this important downtrend line resistance. WEEKLY This week ongoing price action is, for the time being, showing also, a failure to clearly breakout the W1 downtrend line resistance. Important support levels on a weekly basis @ 1.4360 ahead of 1.3950; a failure to hold above this area would open the door for lower levels, towards 1.3440 (W1 top clouds) ahead of 1.25 Wait the weekly closing level for confirmation. DAILY Recent price action seen over the last couple of days, is also showing, for the time being, a breakout failure to crossover the daily downtrend line resistance and hold above it ! Looking forwards, I strongly suggest to look at the following levels : Support area : 1.43 - 1.38 A failure to hold above this zone would put the focus on the daily clouds support 1.35-1.27 Resistance area : On the upside, as above mentioned, a breakout and daily closing level above the ongoing downtrend line resistance (currently around 1.52), would be the first significant warning signal for a trend change (from a SELL on rally to a buy on dips) in watching carefully the following price action, if the breakout occurs. Be careful, on pullback (bull "yield" trap !!) Have a nice day All the best If you like my analysis, please do not forget to like it and me on your following list. Many thanks in advance Best regards Ironman8848
TVC:US10Y
by Ironman8848
ČNB massively increases interest ratesČeská národní banka (Czech National Bank) has increased interest rates from 0.75 to 1.5 This was not expected at all and is likely to have continuous impact on the markets. I started shorting both USD and EUR against CZK. Support on EUR Support on USD There is far more room to go for Crown against Dollar, but I expect the support to be broken unless FED and ECB also increase the rates. I will be updating my indicators this weekend with a new value.
Short
by OrcChieftain
US Dollar and the macro landscapeThe USD is currently looking pretty strong, with 96 looking very likely the first key target and resistance zone. It looks like it has formed a major based and has potentially bottomed for real... The US compared to other countries can raise rates a lot more and therefore the dollar could strengthen more, but the key is that raising rates will create all sorts of issues. There is too much US denominated debt and as rates go higher people struggle to pay debts and therefore sell real assets to buy USD. As inflation is going higher, people are already struggling to pay certain things and this is just the cherry on top. I seriously don't understand how raising rates will stop energy prices going higher, especially when the way the system is currently set and in its current state raising rates even to 3% would blow up the entire US junk bond market. There is too much leverage and malinvestment at this stage that can only be washed out violently. However I am not as bearish for now, especially on US stocks. I believe we will get a dip, and a strong dip but it is a great opportunity. I truly believe stocks have much higher to go and this is just an ordinary correction. We haven't had a 10% correction in the S&P 500 for about a year and in the meantime stock prices have risen tremendously. Yes there is more upside, but corrections are part of the game regardless of whether there is a narrative behind them or not. That could be high inflation, Fed raising rates, Evergrande or whatever... but the truth is that it was time. Based on my analysis stocks could fall another 5-10% before they bottom, but this doesn't mean it is going to happen in one candle. Expect chop for some time and a potential bottom when we get really high volatility with the VIX around 40. In the short term US rates could go up (bonds going down) and that move was building up for quite some time, but I don't think it will be a moonshot for rates and it won't be a long lasting move. At some point growth will slow down and many of the structural issues will be solved, so inflation will come down and we will be stuck in the same disinflationary environment... Lots of things will start breaking, lots of people will be trapped on the inflationary trade and rates will go negative next time around. So what do I see? Rates up to 1.5-2% and then back down again. What I find most interesting here is how the Russell 2000 looks like distribution, but as rates go up it could be the biggest beneficiary as people exit large caps to enter into small caps. Maybe that's a key rotation to pay attention to as it has shown quite a lot of strength recently. Not only that, but the lows on RUT could be broken violently and then we could see an even more violent come back with new highs shortly after (essentially that range being re-accumulation). Personally I really don't like the way the VIX has bottomed and I feel a big move is coming and that we will have a very volatile environment for quite some time. Things aren't going well globally and nothing has been done to fix all the issues going on. What worries me the most is how relentless Oil and Natural gas look like, which could do a lot of damage on huge parts of the economy as inequality keeps growing. We are stuck in a trap and we can't escape... a vicious loop that only makes things worse. So who knows... maybe my expectation for a small correction is small and a much larger one will come. It is clear that the main trend has broken and I have spoken about it quite a bit over the last few weeks. I have no idea how bad things could get, but for now being patient and waiting to buy the dip is what I think is best. Buy dips on Oil and Stocks. Forget metals and bonds for sure.
TVC:DXY
by BitcoinMacro
USDJPY Breaking Out Of A Triangle USDJPY finally breaks out of a triangle as both SP and US yields rally. Keep in mind that higher Yields are positive for the currency, while risk-on means depreciation of JPY, especially now when BOJ is not ready to take any action on interest rates. Based on their recent statement, they will most likely maintain stimulus in the next few years. Technically I expect USDJPY to see more upside after a completed triangle, so looking for a retest of the 2021, maybe even 2020 highs. JPY crosses are also looking interesting, GBPJPY in particular.
by ew-forecast