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Interestrates

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
WATCH OUT with this PUMP!WATCH OUT GUYS 👉 ALL THIS COULD REVERSE during the Press-Conference, which is why I decided to take a little bit of profit here and rather wait❗️ "The Federal Reserve kept interest rates and its monthly pace of bond buying unchanged Wednesday, even as it acknowledged an improved economic backdrop as vaccine roll outs gather pace." It seems like the market has priced in a potential rate-hike (pretty unlikely to be honest, but the reaction shows it), which is why equities and majors vs USD are pumping. As you can see, the FED still decided to keep its Bond Purchasing Programm unchanged 👉 They probably don`t do anything to cap yields, which WILL likely cause more inflation-worries and so a potential reversal of the current moves due to rising yields. Let`s wait for Jerome Powell and see what he has to tell us!🙏 If he meontions yield-capping- we might see a continuation!
by Trading2ez
17
Interest rates 101: How they influence the market?As individuals, we face decisions every day that implicate saving money for a future use or borrowing money for consumption. If we want to make an investment, one important task for us is the analysis of transactions with present and future cash flows. When we place value on any asset, we are trying to determine the worth of a stream of future cash flows. Money has time value which means that individuals prefer a given sum of money the earlier it is received. Consider the following exchange: You pay $4,000 today and in return receive $3,500 today. Would you accept this arrangement? Not likely. But what if you received the $3,500 today and paid the $4,000 one year from now? Can these sums be considered comparable? Possibly, because a payment of $4,000 a year from now would probably be worth less to you than a payment of $4,000 today. It would be fair, therefore, to discount the $4,000 collected in one year; that means to cut its value based on the time that passes before the money is paid. An interest rate( r ) is a rate of return that reflects the relationship between differently dated cash flows. If $3,500 today and $4,000 in one year are equivalent in value, then $4000 − $3,500 = $500 is the required compensation for receiving $4,000 in one year rather than now. The interest rate—the required compensation stated as a rate of return—is $500/$3,500 = 0.1428 or 14.28 percent. Interest rates can be reflected in 3 ways: 1. Rates of return 2. Discount rates 3. Opportunity costs The opportunity cost is the value that investors are willing to quit by choosing a particular investment over another. If the party who supplied the $3,500 had instead decided to spend it today, he would have forgone earning 14,28% on the money. So, 14,28% is the opportunity cost of current consumption over investing in this example. From the perspective of an investor analyzing the market-determined interest rates we can see an interest rate r as being composed of a real risk-free interest rate plus a set of premiums that are required returns for bearing some different types of risk: r = Real risk-free interest rate + Inflation premium + Default risk premium + Maturity premium + Liquidity premium • The real risk-free interest rate is the interest rate for a completely risk-free security if no inflation is expected. In theory, the real risk-free rate echoes the time predilection of individuals for current versus future real expenditure. • The inflation premium compensates investors for expected inflation and reflects the typical inflation rate expected over the maturity of the debt. The aggregate of the real risk-free interest rate and the inflation premium is the nominal risk-free interest rate . • The default risk premium compensates investors for the risk that the borrower will fail to make a contractually agreed-upon payment on time and in the agreed-upon sum. • If an investment needs to be converted to cash quickly, the liquidity premium compensates investors for the risk of loss relative to the investment's fair value. • When maturity is extended, the maturity premium compensates investors for the increased exposure of the market value of debt to changes in market interest rates (holding all else equal). Trade with care. If you like our content, please feel free to support our page with a like, comment & subscribe for future educational ideas and trading setups.
TVC:DJIEducation
by financialflagship
97
EURUSD before Fed Tonight we are expecting a Fed Interest Rate Decision! No change in the interest rate is expected, but there will be movement! Jerome Powell's comments at the press conference will be extremely important! After today, many opportunities will be sought based on this news. We are looking for a higher probability in advance and we have expectations. Our expectations, as we have commented, are for a strong USD On H1 from yesterday we also have a lower bottom, which allows us to expect that the price will continue to 1.1836. Close above 1.1955 will be critical to the analysis If you have questions about how to trade this or another situation, contact us! To support us, like and comment!
Short
by ForexTrendline
EURUSD AnalysisUSD is rising everywhere. See the analysis from Friday: Today's possibility is for EURUSD. Here we have a very good example of a break and test of the trendline. After the impulse decline on Friday, which broke the trend line, we see a correction right next to it and repulsion. This situation, as well as the expectation of a strong USD, allows us to look for sell up to 1.1836! On Wednesday we expect the decision on the interest rate from the Fed! If you have questions about how to trade this or another situation, contact us! To support us, like and comment!
Short
by ForexTrendline
Cryptos, Stonks, Fiat, and, Interest rates... The Next Ten YearsIn this video I give you my macro view of what is coming in the next ten years. This video is designed to give you a feel of what I believe is a likely outcome based on a combination of my different views. I have played devils advocate many times before in order to get a feel for the markets. The reason is mainly to feel it and to observe other peoples reactions. For every buyer there is a seller so the views and comments will also vary, it's human psychology. Just remember: I am not a financial advisor, I suggest using this only as a guide. Always do your own research. If you don't know the long term pattern shouldn't you be doing your research instead of just following the crowd?
TVC:DJI
by AriasWave
150 pips at USDCADIf you are looking for trades that can be executed quickly and have a good ratio. See USDCAD! About the 3: 1 ratio The potential profit is 150 pips at 1.2822 levels. The minimum stop that can be used is 1.2620 or 50 pips (the more conservative version is 1.2580) Regarding the quickness of movement: A decision on the interest rate by the Bank of Canada will be published today. Even if there is no change in interest rates, it is very likely that we will see a movement. Which allows for performance throughout the day. There are less than 9 hours left until the news! Technically, we have reason to buy even after the break of the one-hour trend! If you have questions about how to trade this or another situation, contact us! To support us, like and comment!
Long
by ForexTrendline
VISA. Ascending Triangle on Weekly. 3:1 RRR.NYSE:V is breaking a year long ascending triangle on the weekly time scale. Measuring by the height of the triangle, about $80, from the top of the triangle gives us a target of $296. This is 35% potential profit from the current price of $219. Taking the recent swing low as a guide, we can set our stop loss at $189. The triangle is not considered broken upwards until we see next week's candle trading above current week's candle, given that this week's close is above the triangle. Unfortunately I can't give a time window for this move. From a fundamental point of view, I suspect that Visa benefits from the Fed's increased interest rates. But I would need more research to understand precisely the magnitude of such effect.
NYSE:VLong
by TechNerdOmar