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USDCAD analysis. Important news! Today Bank of Canada will publish their interest rate decision. We don't expect any changes, but there will be moves in the market! Last time in April, the interest rate remained unchanged, however there was a 150 pips move in the first hour! That's why we should expect moves today. USDCAD is currently trading sideways, which is very likely to end today. Entry options: Conservative - wait for the news to come out and once you see a clear breakout, then get involved in the direction of the breakout. Agressive - look for an entry before the news on a lower timeframe. Proper risk management and using stop loss is mandatory! Most probably we will see a downside continuation. Good luck!
by ForexTrendline
2
US Treasury Yield Curve and Inversions.This chart shows three times during the past three decades in which the yield curve inverts. An inversion is when the rate of a shorter term debt security is higher than the rate of a longer term debt security. This is identified on this chart in 2000, 2006, 2019. Treasury Debt Securities: Bill; less than one year to maturity at issue. Note; greater than one year but less than 10 years to maturity at issue. Bond; greater than 10 years to maturity at issue. In 2000 the yield of the 3 month US Treasury Bill was about 6.3% while the yields of both the 5 year Note and 30 year Bond were around 5.8%. In 2006 the yield of the 3 month US Treasury Bill was about 5.1% while the yields of both the 5 year Note and 30 year Bond were around 4.9%. In 2019 the yield of the 3 month US Treasury Bill was about 2.3% while the yield of the 2 year Note was around 1.8%.
TVC:US30YEducation
by ThrivingProject
1
Are bonds driving the ship?Liquidity is the whole ballgame As I've watched the market rip higher amid massive federal deficits, extremely low taxes, and extremely low interest rates over the last several years, I've experienced a growing conviction that "liquidity is the whole ballgame" where markets are concerned. You can chart stock market performance largely as a function of how "tight" or "easy" monetary policy is. Even the US badly losing a trade war to China and then getting locked down by a global pandemic couldn't keep this market down. Liquidity is controlled by the Fed and bond market, and inflation is the limit To a great extent, monetary policy is controlled by the Fed, and the Fed's mandate is to control inflation. So investors have definitely reacted negatively to rising inflation and Fed talk of eventually "tapering" asset purchases and raising interest rates. To be sure, the private market ultimately sets bond rates. Bond investors may demand higher interest rates if they see inflation coming, and lenders may demand higher interest rates on mortgages and consumer credit, too. But the private bond and lending market responds to signals from the Fed, so Fed policy and bond investor behavior go hand in hand. The bond market tries to anticipate the Fed and can be viewed as a leading indicator of what the Fed will do. Rising rates in early 2021 were bad for growth stocks and good for financials In the first months of 2021, bond rates rose sharply as inflation expectations rose and investor demand for low-interest bonds dried up. Technology stocks, especially unprofitable growth stocks like those held by Cathie Wood's ARK funds, sold off along with bonds. (Higher interest rates make it harder for unprofitable growth companies to raise capital through low-interest debt.) Meanwhile, financial stocks and highly profitable "cash cows" outperformed. (These companies are net lenders rather than net borrowers, so they tend to benefit from higher yields.) Basically, if you think the Fed will continue to pump liquidity into the system forever, you should bet on cash flow-negative bubble stocks like Cathie does. If you think liquidity's days are numbered, you should short ARKK and go long on Goldman Sachs. Liquidity rebounded in mid-March, but can it last? The bond selloff bottomed March 18, and since then, both bonds and growth stocks have made modest recoveries as yields eased. Partly this is just regression to the mean, and partly it may be that bond investors believed the Federal Reserve's narrative that inflation is "transitory" and that we won't need to taper asset purchases or raise interest rates until 2023. But inflation expectations have continued rising, and official inflation data have lately been surprising to the upside. The Citi inflation surprise index is at its highest level in 13 years. The dollar has been weakening, and foreign purchases of US treasuries have almost entirely dried up. The Russian government announced today that it will sell its reserves of US dollars and replace them with other nations' currencies. The dollar reserve system that made the last decade of "easy" monetary policy possible looks to be at risk. And the Fed is sluggishly beginning to respond to these warning signs. Regional Fed presidents Robert Steven Kaplan and Patrick Harker have been vocally calling for the Fed to start thinking about "tapering" bond purchases, and yesterday the Fed announced that it is, in fact, winding down one pandemic program to purchase corporate bonds. (But this is not a signal about tapering, they insisted to the press!) For now, Fed funds rate futures continue to price the odds of an interest rate hike in 2021 at less than 10%. But in April alone we saw month-over-month inflation of 0.8%, bringing the trailing 12 months' inflation rate to 4.2%. And 0.6% seems to be the consensus for the next two months, which would bring July's trailing 12 months' inflation rate to 4.9%. The Fed probably can't ignore 5% inflation for long. (And really it's a 7-10% inflation rate right now if you annualize the rates for March-July instead of adding up the rates for the trailing 12 months.) The technicals are flashing warning signs Although bonds have rallied since March 18, they hit a ceiling in the $140.50 - $141 range. They've also been unable to hold above their 50-day EMA or their 200-week EMA. Presently TLT is below all its major moving averages not only on the hourly chart, as shown above, but also on the weekly and daily charts: Note that TLT is still within the green triangle, but it is fast approaching a decision point. Also note the bearish hidden divergence on the RSI, which would tend to favor a downward breakout from the triangle. Recent strong economic data, including this morning's blowout payroll report, paint a picture of a strong economy and may lead to faster tapering by the Fed. That's one reason that both stocks and bonds sold off today despite the positive economic data. Sentiment is bearish I'm not the only one feeling bearish on bonds right now. The put/call ratio on TLT, is 1.8, significantly worse than the 30-day average of 1.4. And investors seem to expect the indices to sell off as well. SPY has a 1.9 put/call ratio, in line with the 30-day average, and QQQ has a 2.0 put/call ratio, only slightly better than the 30-day average of 2.1. The put/call ratio for ARKK has recently improved, down to 1.5 from the 30-day average of 1.8. But if I'm right that a bond sell-off would disproportionately affect growth stocks, then ARKK's put/call ratio may turn bearish again if TLT breaches the bottom of this triangle. ARKK's price action the last few days certainly doesn't look good:
NASDAQ:TLTShort
by ChristopherCarrollSmith
82
US dollar index facing key support line!The DXY has broken down from of a bearish ascending wedge. Looking to test the .618 Fib retracement level. If we break below this, the next support level at the .786 Fib level at about $81.5. If this happens, Equities will likely remain in an uptrend, particularly commodities. Gold is normally in this category, but due to central bank manipulation I would say it is in its own category (silver also). Real rates are key to watch to determine which way gold is heading. At the moment, Real rates are negative. Should we see higher CPI (inflation) prints and nominal rates stay around current levels, real rates will continue to head lower. Not investment advice* Do your own research ! Happy trading
TVC:DXYShort
by Joelthebowl
Potential Reverse Head and Shoulders Pattern SpottedWhile the markets are looking long overdue for a pullback, the dollar, in direct contradiction (as it should be!) looks to be ready to move up (strengthen). A potential reverse Head and Shoulders (H&S) pattern appears like it could be forming on the daily. This coincides with the theory and timeframe of my prediction regarding The Fed's upcoming meeting in June, interest rate increase, and the DJI (see link to related ideas below).
TVC:DXYLong
by stewdamus
3
Breakout and reversal on GBPNZDIn April we saw a clear downtrend on GBPNZD. The pair couldn't make another lower low and it broke out. This gives us a trend reversal opportunities. Today is a very important day for the GBP due to BOE interest rate decision as well as the elections in Scotland. That means we will see big moves! If you don't want to take on any risk, then wait for a higher high! But if you're looking for a greater risk to reward ratio, then make sure to check out this opportunity.
Long
by ForexTrendline
Think differently about inflation to recognize opportunitiesCredit to Lyn Alden on Twitter for the idea for this chart. As she quipped when she posted a similar chart, inflation is low... as long as you don't buy food, or a house, or commodities. CPI inflation has been unusually low for the last decade From 2010 to 2019, CPI (the Consumer Price Index, a popular measure of inflation) averaged 1.73%. That's a historically low inflation rate. Since 1913, CPI inflation has averaged about 3.1% per year. The Federal Reserve's target inflation rate is about 2% per year. The last decade's low CPI inflation rate puzzled economists and gave rise to a new economic theory called "Modern Monetary Theory," which argued that the US government needed to increase its deficit spending in order to hit its 2% inflation target. According to MMT, the limit on government spending is inflation, not revenue. In times of crisis, CPI inflation can get much higher During certain historical periods-- usually periods of crisis, such as wartime-- CPI inflation got much higher. In the WWI / Spanish Flu decade it averaged nearly 10%, and in the WWII decade it averaged nearly 5%. In the Vietnam War decade the average exceeded 7%. High inflation during times of national crisis seems to result from "loose" monetary policy and enormous deficit spending. When inflation gets this high, the Central Bank typically has to "tighten" monetary policy in order to control it. That means raising taxes, raising interest rates, and reducing deficit spending. "Tight" monetary policy can cause prolonged recessions. It took over a decade of high interest rates to get Vietnam War-era inflation under control. Could the massive deficit spending and loose monetary policy of the Covid-19 crisis usher in a new era of high CPI? Presently, economists don't expect it. The Federal Reserve forecasts about 2.5% inflation this year, to fall to 2% in 2022. But the Fed also doesn't have good models of inflation, so to some extent these projections are a shot in the dark. Is CPI a broken measure? CPI includes several components, including food, energy, apparel, and rent. Several factors have conspired to keep CPI low. Thanks to technological changes such as automation and renewables, apparel and energy costs have trended downward over the last couple decades. And rents are kept artificially low in many areas of the country by rent controls that limit how much landlords can increase rent. Purchase prices for single-family homes are not included in CPI, and purchase prices have grown much faster than rents: imageproxy.themaven.net Obviously CPI also doesn't include stocks, bonds, and other investment assets, which have inflated to pretty astronomical levels. It also doesn't include the cost of healthcare, which grew about 3.7% per year over the last decade and are projected to grow nearly 5% per year over the next decade. So there's a case to be made that "real" inflation in the economy may actually be higher than the CPI numbers suggest. Ben Bernanke once said that "inflation is always a monetary phenomenon." If so, then CPI isn't a very good measure of inflation, because CPI is influenced by all sorts of non-monetary phenomena like supply and demand shocks, technological changes, price manipulation, and government regulations. CPI is a crude approximation at best, and at worst a broken metric. What if there's not just one inflation rate? The reality is that different categories of prices "inflate" at different rates. For instance, large increases in the money supply often cause inflation in asset prices, but not in consumer prices. It's partly a function of how the newly created money is distributed. If it goes into the pockets of the wealthy, they will use it to speculate on stocks and real estate. You will see asset price inflation, but not consumer price inflation. But if you put it into the pockets of regular people, then you may see consumer prices start to rise. And even within the broad categories of "consumer goods" and "assets," there are loads of subcategories. During a pandemic, socially distanced assets (like suburban housing and food at home) will be in high demand, while non-socially distanced assets (like urban housing or commercial real estate or restaurant food) will not. Thus, urban home prices might deflate even as suburban home prices inflate. Once you start to see inflation as lots of different numbers rather than as a single number, you will start to recognize new investment opportunities. You want to own asset categories where inflation will run hotter than CPI, not asset categories where it will run cooler than CPI. It's extremely valuable to understand the forces that influence some categories to inflate faster than others, and to be able to recognize turning points where a category's inflation rate will change. That's how fortunes are made.
E
by ChristopherCarrollSmith
51
DOW will drop to 25,000 by End of YearA simple chart here folks. Obviously, most of you technical traders are probably already aware of this ominous ascending wedge that the market has been working on and working inside since March of 2020, the apex of 'Rona lockdown fears. Since that time the Fed has really done absolutely nothing to help the U.S. dollar. Now, this was a known campaign message under Trump. Republican candidates tend to raise taxes secretly under the guise of inflation, and Democrats a generally more forthcoming in their taxing endeavors, making the American people aware of their initiatives by raising taxes. When the economy suffers most from our political administrations' actions, both taxes and interest rates are simultaneously raised. So far, under the Biden administration, this has not yet occurred. "YET" is the keyword here. Typically, the most politically diplomatic action any leader can take if they are being encouraged to do both is to first raise capital via new taxes (or orders that necessitate new taxes), and then, once these have been signed into law the Fed can begin to work on their end raising basis points. The dollar is usually strengthened by the latter action, depending upon what it is being juxtaposed against. Lately, the dollar has been spiraling downward, at times, sinking to new lows monthly. Tremendous pressure is being placed on Powell and the Fed to take action. However, to this point, the Fed has done nothing. I believe that if we combine a bit of simple technical data with historical precedence and political strategy, we should be able to reasonably deduce what the future may hold for our fragile (my opinion, of course) economy. With that long preface out of the way, allow me to show you what my idea here concludes. First, the ascending wedge. Typically, this is a bearish signal. Sometimes, it can be broken to the upside (as with S&P and the NASDAQ); however; when this occurs, it will most often come back down to touch the top of the wedge. Previous resistance now becomes support. Many times this support is broken and the bearish indication of the rising wedge still comes to fruition. I believe this will be the case. Technical analysis historically supports this probability. Additionally, on the technical side, we have a small Head & Shoulders pattern playing out on the 4-hour chart. The neckline is in RED. We could move between the RED (neckline support) and BLACK (overhead resistance and topline of the ascending wedge) through the middle of May before we finally collapse down and fulfill this pattern, at which point, I believe the domino effect may begin as the fundamental logic and political strategy of what I have mentioned above will begin to be initiated by the Biden admin and the Fed. By mid-May Biden will have signed into order most of the most impactful (economically speaking) actions. The Fed, under his admin, has been patient. They have been able to make it this far without taking action. But the dollar is being absolutely demolished while they have been sitting on their hands. There is tremendous pressure to take action. Enter June. On June 15-16 (tentatively scheduled) the Fed will meet again. It is at this point that I believe they will be compelled to take some sort of action against the falling price of the dollar. I predict that they will start with a small basis point hike. It may only be 25 basis points at first. But this will be enough to trigger the domino effect. It will strengthen the dollar just enough to cause the market to stall. However, I don't believe the Fed will stop there. I believe from June through the rest of 2021, Powell and the Fed will continue to increase interest rates. By the time the year ends, the combined sum of all interest rate hikes could be as much as 175 basis points! I know this sounds far-fetched, but I am not alone in this theory. Someone is betting $90 million if it doesn't happen. I will post the article in the comments as I don't want to be flagged by TV for it. The last time I posted outside material, my post was hidden. Please let me know in the comments if you agree or disagree with my current market sentiment. Happy trading friends.
TVC:DJIShort
by stewdamus
11
Rising Interest Rates Are ComingTightening monetary policies are coming. Throughout history, bond yields have been a clear telltale sign of rising interest rates. Throughout the last couple of months you can see bond yields have risen quite sharply. There is no alarm to be raised just yet on the health of the market, just an early indicator that Feds will start tightening monetary policies. I will be watching bond yields closely as the next indicator for market uncertainty would be the yield curve.
FRED:FEDFUNDS
by WaisTrades
A longer term perspective on BondsThe recent sell off in the bonds has been sharp and is having reverberations throughout the broader markets. This is a monthly chart looking at bond prices going back twenty years. I was surprised to find that although the current price action has felt extreme, the bonds are still well within a 2 standard deviation regression channel. I've drawn in some possible pathways for bond prices over the next decade. While I believe there's a fairly high probability that the bottom of the regression channel around 125'00'0 will be tested and prices will eventuate toward high value areas on the volume profile, the pathways are less of a forecast and more of an illustration of questions that I have. Specifically: will the highs around 142'00'0 during the March 2020 COVID crash be tested (and possibly taken out), or will they end up being the high for the foreseeable future? If Bond prices continue to fall, when will the FED step in and apply yield curve control? Most importantly, what effects will all of this have on the broader markets? In April 2019, the Federal Reserve released a report which stated that for every 2.5 move up in the DXY, there is a 10% decline in new C&I bank loan origination. Not only do falling bond prices lead to more challenging debt environments for businesses and consumers, they can lead to a stronger dollar thus putting deflationary pressures on an economy. Needless to say, trading bond positions on a Monthly time frame isn't really viable (or exciting) for most retail traders. However, keeping these kind of macro ideas in mind help me provide a context and framework toward my own trading.
CBOT:ZN1!
by InnerMotionTrading
Under the hood of the DXYThis chart breaks the DXY down to it's individual components and examines each currency pair individually. In addition, the DXY itself is depicted as an area line at the bottom of the chart to give a more comprehensive feel for its movement. There has been a confluence of the US treasuries selling off (pushing rates higher) while the opposite is occurring in other countries. Therefore, the widening of treasury spreads between the USD and its DXY counterparts is creating an increase in demand for the dollar.
Long
by InnerMotionTrading
US10 Y - TREND REVERSAL IN PROGRESS...D1 : Recent price action is showing a trend reversal in progress. Indeed, last Friday a "doji" (uncertainty and indecision) took place which has been followed yesterday by a bearish engulfing pattern ! Today's ongoing price action continue to move to the downside. Watch carefully the Tenkan-Sen or Conversion Line, currently @ 1.6140 as the first important support and last but not least, at the MID BOLLINGER BAND, "T H E L E A D I N G I N D I C A T O R", currently @ 1.5620 as a pivot level for the ongoing session (s) If you find my analysis valuable for your trading, please do not forget to like and follow me Have a nice trading day All the best Ironman8848
TVC:US10Y
by Ironman8848
2
Using Comparisons as indicators?After sitting in on one of @scheplick live streams last night. It got me thinking about starting a discussion with the community on tools used outside of the conventional methods. Comparisons, or using other instruments to calculate/forecast other aspects of your trading. Sure we can use things like Interest rates or 30 year bonds, take a measure of curves in the Dow Jones. But what tools - pairs - crosses or instruments do you find interesting and why? In the crypto world - Bitcoin is changing the dynamic & I can't stress enough - it can't and will not keep moving up at 90-degrees. So how does it interact with the Dow, SPX or Gold? Be great to get your thoughts and opinions here on the topic. Share ideas, regardless of the tool, cross or instrument. See some examples below; Silver to the Dow Jones The Fed's Balance sheet - this is interesting in its own right. How about Gold to the Dow - take a look at the stochastic level Now overly gold as a comparison. Then you have the US500 (SPX) compared with Gold You can use this to get a multiplier of the neutral cash ratio Then overlay with the calculation Take a look at some crypto - Bitcoin & SPX Bitcoin to Gold And Bitcoin to the DJI (Dow Jones) As I said, it would be fascinating to get ideas & opinions - where you use crosses like this, why you find them interesting. Have a great weekend! Disclaimer This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
BITSTAMP:BTCUSD
by Mayfair_Ventures
6