Get started

Ratecut

XAUUSD - Will Trump cause gold to fall?If gold reaches the bottom of the descending channel, which is also in response to the demand zone, we can look for gold buying positions. Donald Trump won in Wisconsin and got 10 electoral votes, and Trump's total electoral votes reached 277 electoral votes. In this way, Donald Trump became the 47th president of the United States. The rise in long-term interest rates and the broad sell-off across the Treasury yield curve reflect public expectations for an inflationary mix of domestic (fiscal and immigration) and foreign (tariffs) policies from Trump. Also, we see movements in short-term US dollar swap rates related to the hawkish revision of Fed interest rate expectations. In line with forecasts and public expectation, markets still expect the Federal Open Market Committee (FOMC) to cut interest rates by 25 basis points to 4.75% tomorrow.
FOREXCOM:XAUUSDShort
by Ali_PSND
XAUUSD - gold waiting for the Federal Reserve meeting!Gold is below the EMA200 and EMA50 in the 4H timeframe. In case of an upward correction by the FOMC today, we can see a supply zone and sell within that zone with a suitable risk reward. Donald Trump’s victory in the Tuesday presidential election could alter the economic outlook of the United States and influence the Federal Reserve’s policies in the coming months. Concerns about how much pressure Trump might exert on the U.S. central bank in his second term have resurfaced. In his campaign, Trump has pledged to impose stricter tariffs on America’s trading partners, deport millions of unauthorized immigrants, and extend the tax cuts approved in 2017. If these policies are implemented, they could exert upward pressure on prices, wages, and budget deficits, creating significant challenges for the Federal Reserve. Under these circumstances, the Federal Reserve will face increased obstacles in achieving its 2% inflation target while maintaining employment levels. Furthermore, if Trump continues his pattern of public criticism of Jerome Powell, the Fed chair, the U.S. central bank may find itself under political scrutiny. The Federal Reserve officials have decided to lower interest rates by 25 basis points today, following a half-point reduction in September. The September forecasts indicate another quarter-point cut for December and a full one-percentage-point cut planned for 2025. Following the rate announcement, Powell is likely to address questions in a press conference about the impact of the election on Fed policies. During Trump’s first term, he faced repeated criticism from him, and recently, Trump has criticized Powell for delays in policy decisions.
FOREXCOM:XAUUSDShort
by Ali_PSND
$TOTAL Crypto Market Cap Trying to Breakout - Retail IS ComingOnly thing we’re waiting for is the Crypto Total Market Cap to breakout. Golden Cross on the horizon. That’s why we’ve seen lack of volume in breakouts for CRYPTOCAP:BTC and Alts. Means money is just switching from coin to coin, primarily from Tether in circulation, hence why CRYPTOCAP:USDT.D is going down. CRYPTOCAP:TOTAL breakout will be fueled by retail, which should slowly come in the next couple weeks leading into another round of rate cuts on the 14th, followed by Donald J. Trump being declared the President of the United States the very next day 🇺🇸❤️ YOU'RE NOT BULLISH ENOUGH 🎯
CRYPTOCAP:TOTALLong
by jonnieking
Event-Driven Strategy using Bitcoin Weekly FuturesCME: Bitcoin Weekly Futures ( MIL:BFF ) On Thursday, October 10th, The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2% on a seasonally adjusted basis, the same increase as in August and July. Over the last 12 months, the all-items index increased 2.4% before seasonal adjustment. However, the headline CPI came in ahead of the 0.1% monthly gain and 2.3% year-over-year rate expected by analysts polled by Dow Jones. As a result, both the US equity markets and cryptocurrencies slipped on Thursday. While the year-over-year headline CPI is the lowest since February 2021, digging into the category data reveals sticky inflation. Noticeable data includes: • Food: +2.3% YoY. However, Eggs jumped 39.6%, while “nonconcentrated juices + soft drinks” category was up 15.3%. • Motor vehicle insurance: +16.3% YoY • Video discs + other media: +11.6% YoY • Admission to sporting events: +10.3% YoY • Health insurance: +7.5% YoY High prices affect day-to-day life and contradict the notion of low inflation. The fact is that prices have gone up a lot in the past few years. Even though they rise more slowly now, the absolute price levels remain high. Examples from my personal experiences: • The $9 price tag for 1-1/2 dozen eggs caused me to reduce purchase to 1-dozon for $5. I still remember the good old days of 99-cent per dozen large eggs. • I watched a WNBC match featuring Indianapolis Fever and Catlin Clark in the summer. A seat close by the basketball court costs $200. Adding up hotel stay, fuel cost and a $50 T-shirt, this felt like a vacation budget. • A recent doctor’s visit required copayment of $100. Six months ago, the same clinic charged $75. This is a 33.3% increase. Event to Watch: The Next Fed Rate Decision Retrospectively, it appears that the Federal Reserve acted a bit too aggressively with the supersized 50-bp rate cut in September. With the sticky inflation data, the Fed’s next move on November 7th is uncertain. According to CME Group’s FedWatch Tool, as of October 11th, the futures market expects the Fed to cut 25 basis points at the next FOMC meeting, with an 88.4% probability. Gone are the odds of another supersized cut. Meanwhile, the probability of a no-cut increases to 11.6%. www.cmegroup.com Driven by the lowered expectation on Fed rate cuts, on Thursday, the Dow Jones Industrial Average closed down 0.14% to 42,454, and the S&P 500 slipped 0.21% to settle at 5,780. Meanwhile, the Nasdaq composite shaved up 10 points (-0.05%) and closed at 18,282. The cryptocurrency market has a more pronounced reaction. Bitcoin gave up the psychologically important $60K level, lost $1,442 (or -2.36%) and settled at $59,564. Meanwhile, ETHER gave up $57.2 (or -2.38%) and closed at $2,356. However, market sentiments are still very bullish. By Friday, strong Q3 earnings reported by JPMorgan and Well Fargo helped push the stock market up again, with the S&P 500 breaking 5,800 and making its 45th all-time high in 2024. In my opinion, Bitcoin futures would be a good instrument for event-driven trades on the Fed rate decisions, given its higher volatility. Introducing Bitcoin Friday Futures Bitcoin Friday futures ( MIL:BFF ) are weekly, USD-settled contracts that offer a more precise way to gain bitcoin exposure and manage risk relating to such exposure. Each contract represents 1/50 of a bitcoin, ensuring capital efficiency and accessibility. The contract size of BFF is 1/5 of that of Micro Bitcoin Futures ( NYSE:MBC ), which is 1/10 of a Bitcoin. These shorter-dated contracts expire and settle to the CME CF Bitcoin Reference Rate New York Variant (BRRNY) every Friday at 4:00 p.m. New York time and may track the spot price of bitcoin more closely. Futures contracts traditionally expire on a monthly or quarterly basis, such as BTC and MBT, whereas BFF will settle weekly every Friday. Because of this shorter duration, BFF will have a shorter cost of carry resulting in a price that may more closely track bitcoin’s spot price. Bitcoin futures price = bitcoin spot price + financing costs to carry the position to expiration Two consecutive Fridays will be listed at any time. A new BFF contract will be listed every Thursday at 6:00 p.m. New York time such that market participants will be able to trade the nearest Friday plus the next two Fridays giving traders the choice to hold or not hold exposure over the weekend depending on their preference. Trade Setup using BFF for the FOMC Event The Federal Open Market Committee will release its next rate decision at 2:00 PM Eastern Time on Thursday, November 7th. The BFF contract expiring Friday, November 8th will begin trading at 6:00 PM Eastern Time on Thursday, October 24th. A trade could be set up on or after October 24th, and closed by November 7th or 8th, after the market reacts to the Fed decision and before contract expiration. While the market overwhelmingly expects the Fed to cut 25 bps, new data could change the expectations dramatically in the next four weeks. The most important data points are: • BLS Nonfarmed Payroll and Unemployment, November 1st • US Presidential Election, November 5th Separately, the next BLS CPI release will be on November 13th, after the BFF November 8th contract. We could use the BFF November 15th contract to trade on that event. As an educational writeup, I do not offer a personal view on the future direction of BFF prices. With basic information provided here, traders could apply their own view to set up a trade on BFF. Generally, if the Fed cuts rates in December, stocks and cryptocurrencies could get a lifting as lower rates reduce the cost of capital. Meanwhile, if the Fed pauses and decides on no-cuts, the uncertainty on interest rate trajectory could cause risk capital to fall. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups 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
Editors' picks
CME:MBT1!Long
by JimHuangChicago
4
CNH: Chinese Currency Could Return to the 6.3-6.9 LevelCME: USD/Offshore RMB Futures ( CME:CNH1! ) Last week, I discussed how China’s huge stimulus package, coupled with the Fed’s supersized rate cut, could improve global energy demand and lift crude oil higher. As soon as the stimulus was announced, China’s stock market staged a huge rally. The Shanghai Stock Exchange (SSE) index moved from below 2,800 on September 24th to close at 3,336.5 on September 30th, up 19% in a week. One-month return for the SSE and notable Chinese stocks are listed here: • SSE: +17.5% • Yonghui Supermarkets: +59.9% • JD: +51.3% • BABA: +32.5% • BIDU: +25.5% China's stock market is closed on October 1st-7th for observation of the National Day holiday. Would the China rally continue when the market resumes trading on Tuesday? Goldman Sachs just released a research note, saying: Unless China does QE now, the current market rally will crash and burn, and the economy will be a crater. If China does do QE, oil will soar, and gold and bitcoin will be orders of magnitude higher. While this is presented as two alternative paths, there is only one way to go, in all practical purpose. After going all out last month with unprecedented fiscal stimulus, the Chinese government could not afford to see the stock market and the housing market to tank again. It really needs to finish the job by injecting fiscal stimulus into the economy. Now that the market sensation has already turned positive, government spending would trigger consumer spending as well as investment from the private sector. Such a multiplier effect could lift the Chinese economy higher. Everything looks bright, with one small problem: China-listed stocks are off-limited to most foreign investors due to financial regulations and the foreign currency control regime. China’s currency could strengthen as its economy recovers I hold the view that the China’s currency could appreciate as its economy improves. Outside of China, investors could invest in USD/RMB futures to hitch the economic hike. To start the discussion, let’s first make some clarification to the confusing terms in the FX market. The USD/RMB exchange rate is quoted as the number of RMB per dollar. The current USD/RMB rate is 7.09, meaning each dollar could exchange for 7.09 RMB. When the RMB appreciates against the dollar, the price quote would get lower, not higher. For example, the rate 6.50 means you now need 6.50 RMB to get one USD dollar. In RMB terms, this is 0.59 Yuan less than the current USD/RMB rate 7.09. In this scenario, the RMB gains value relative to the dollar. While the RMB appreciation equates to the dollar depreciation, in charts, the lines representing USD/RMB and the dollar index should move in the same direction. • For dollar index, the line moving up means dollar gaining value. • For the USD/RMB, the line moving up means the dollar appreciating against the RMB. • These two things usually occur at the same time. In 2023, as China’s economy did not rebound after the end of the pandemic closedown, the RMB depreciated more than 10% against the dollar, sending the rate from 6.69 to 7.37. In 2024, the two lines diverged due to different economic forces. • Dollar index moves down with the market expectation of the Fed cutting rates, reducing the interest earned from holding dollar asset. • The USD/RMB quote moves up because of the slowdown in China’s economy. In my opinion, the two lines will converge again, both moving down in Q4. Dollar index will get lower as the Fed continues rate cuts. The USD/RMB quote will also go lower, as improvement in China’s economy would strengthen the country’s currency. For someone with a bullish view of RMB, he could establish a short position in CME USD/Offshore RMB Futures ( NYSE:CNH ). Remember, shorting means the expectation of the quote to go lower, which actually means RMB appreciating against the dollar. The contract has a notional value of $100,000. At Friday closing price of 7.061, each December contract (CNHZ4) is worth RMB 706,100. CME Group requires an initial margin of RMB 14,000 for each CNH contract, long or short, at the time of writing. Hypothetically, if CNH bounced back to 6.70, its previous high in January 2023, the quote difference of 361 pips (=7061-6700) would produce a gain of RMB 36,100 (=0.361x100,000) for a short position. The risk of shorting the CNH is that the Chinese government did not follow through with a fiscal stimulus, and the market rally is short lived. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups 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
CME:CNH1!Short
by JimHuangChicago
Interest Rate Strategies: Trade Smarter with Fed Rate DecisionsInterest Rate Strategies: Trade Smarter with Fed Rate Decisions Trading interest rates may seem straightforward at first: buy when cuts end and sell when they fall. However, this approach often defies expectations, as determining when rate cuts truly end isn't as simple as pointing to a rate pause following a cut. While today’s Federal Reserve rate decisions are made during scheduled (and unscheduled emergency) Federal Open Market Committee (FOMC) meetings, this wasn’t always the case. Before the 1990s, the Fed often made changes outside of meetings. The shift to exclusively deciding rates during FOMC meetings was implemented to provide greater transparency and predictability for markets. Topics Covered: How Are Interest Rates Traded? Three Interest Rate Trading Strategies. Key Insights from Backtesting Interest Rate Trading Strategies. Interest Rate Trading Indicator (Backtest For Yourself). █ How Are Interest Rates Traded? This strategy focuses on trading around Federal Reserve interest rate decisions, including hikes (increases), cuts (decreases), and pauses. These decisions are believed by many to have both short- and long-term effects on the market. Key Strategy Concepts Backtested: Buy on Rate Pauses or Increases: Go long (buy) when the Fed pauses or raises interest rates, typically signaling market stability or optimism. Sell on Rate Decreases: Go short (sell) or close longs when the Fed cuts rates, often indicating economic concerns or slowing growth. Buy on Specific Rate Decreases: Enter trades when the Fed implements specific rate cuts, such as 50 basis points (bps) which represents 0.5%, and analyze market reactions over different time horizons. █ Strategy: Long during Pauses and Increases, Short during Decreases This section examines the effectiveness of going long on rate pauses or increases and shorting during decreases. This strategy performed well between 2001 and 2009, but underperformed after 2009 and before 2001 compared to holding positions. The main challenge is the unpredictability of future rate changes. If you could foresee rate trends over two years, decision-making would be easier, but that’s rarely the case, making this strategy less reliable in certain periods. 2001-2009 Trade Result: 67.02% Holding Result: -31.19% 2019-2021 Trade Result: 19.28% Holding Result: 25.22% 1971-Present Trade Result: 444.13% Holding Result: 5694.12% █ Strategy: Long 50bps Rate Cuts This section evaluates trading around 50 basis point (bps) rate cuts, which is a 0.5% decrease. Large cuts usually respond to economic stress, and market reactions can vary. While these cuts signal aggressive economic stimulation by the Fed, short-term responses are often unpredictable. The strategy tends to perform better over longer timeframes, as markets absorb the effects. 1971-Present Trade Duration: 10 trading days — Average Return: -0.19% Trade Duration: 50 trading days — Average Return: 2.41% Trade Duration: 100 trading days — Average Return: 2.46% Trade Duration: 250 trading days — Average Return: 11.4% 2001-Present Trade Duration: 10 trading days — Average Return: -2.12% Trade Duration: 50 trading days — Average Return: -1.84% Trade Duration: 100 trading days — Average Return: -3.72% Trade Duration: 250 trading days — Average Return: 1.72% 2009-Present Trade Duration: 10 trading days — Average Return: -15.79% Trade Duration: 50 trading days — Average Return: -6.11% Trade Duration: 100 trading days — Average Return: 7.07% Trade Duration: 250 trading days — Average Return: 29.92% █ Strategy: Long Any Rate Cuts This section reviews the performance of buying after any rate cut, not just large ones. Rate cuts usually signal economic easing and often improve market conditions in the long run. However, the size of the cut and its context greatly influence how the market reacts over different timeframes. 1971-Present Trade Duration: 10 trading days — Average Return: 0.33% Trade Duration: 50 trading days — Average Return: 2.65% Trade Duration: 100 trading days — Average Return: 4.38% Trade Duration: 250 trading days — Average Return: 8.4% 2001-Present Trade Duration: 10 trading days — Average Return: -1.12% Trade Duration: 50 trading days — Average Return: -0.69% Trade Duration: 100 trading days — Average Return: -1.59% Trade Duration: 250 trading days — Average Return: 0.22% 2009-Present Trade Duration: 10 trading days — Average Return: -3.38% Trade Duration: 50 trading days — Average Return: 3.26% Trade Duration: 100 trading days — Average Return: 12.55% Trade Duration: 250 trading days — Average Return: 12.54% █ Key Insights from Backtesting Interest Rate Trading Strategies The first assumption I wanted to test was whether you should sell when rate cuts begin and buy when they end. The results were inconclusive, mainly due to the difficulty of predicting when rate cuts will stop. A rate pause might suggest cuts are over, but that’s often not the case, as shown below. One key finding is that the best time to be fully invested is when rates fall below 1.25% or 1.00%, as this has historically led to stronger market performance. But this can be subject to change. █ Interest Rate Trading Indicator (Backtest For Yourself) Indicator Used For Backtesting (select chart below to open): The 'Interest Rate Trading (Manually Added Rate Decisions) ' indicator analyzes U.S. interest rate decisions to determine trade entries and exits based on user-defined criteria, such as rate increases, decreases, pauses, aggressive changes, and more. It visually marks key decision dates, including both rate changes and pauses, offering valuable insights for trading based on interest rate trends. Historical time periods are highlighted for additional context. The indicator also allows users to compare the performance of an interest rate trading strategy versus a holding strategy.
SP:SPXEducation
by TanHef
$BTC Going For It! $65k Next UpJust as expected Bitcoin is being rejected from the 200MA. Bulls still appear to be in control, so we should test the .618 Fib ~$65k. The real line in the sand is breaking through the trendline ~$68k. IF we close above that, the bulla will be in full swing! I'm still keeping 10% cash on the sidelines regardless for one last generational buy opp, although those days are looking numbered. There's still a lot of macro conditions that are concerning, hence the Fed 50 bps rate cut.
Long
by jonnieking
Lower Rates Expected by 9/27/24Ahead of the Fed meeting Wednesday the market was pretty much 50/50 split on whether the fed funds rate would be cut by 25 or 50 basis points. After the 50bps announcement the counter intuitive move occurred, which was rates began rising, but this should have been a surprise. This was as straight forward "buy the rumor, sell the news" gets. Today however it appears the rates attempted to rally past 3.76% but failed. 3.76% happens to be the 50% fib level from the recent highs to lows and now we'll look to see the 10-yr break below 3.70 for a sustained move lower. Marking this as a "Long Investment Idea" since lower rates imply higher bond prices, don't be fooled by the rate chart.
TVC:US10YLong
by jpoma13
Federal Reserve Cuts Interest Rates by 50 BPS, Crypto RalliesMarket Update - September 20th, 2024 Takeaways The Federal Reserve cuts rates:  The Federal Reserve announced Wednesday it will cut the federal benchmark interest rate by a half-percentage point (50 basis points), lowering the range to between 4.75% and 5%. Crypto markets responded well to the move, with the price of bitcoin pushing past $63,000. US crypto legislation still possible this year:  US senator Cynthia Lummis (R-WY) said in an interview Tuesday she thinks crypto legislation could be passed during the lame-duck session of Congress. US spot bitcoin ETFs pull in $187 million in inflows:  US spot bitcoin ETFs drew $187 million in inflows Tuesday, marking the fourth consecutive day of inflows after a significant drawdown. Republicans ask for clarity on crypto airdrops:  US representative Patrick McHenry (R-NC) and other top Republican lawmakers sent a letter to SEC chair Gary Gensler asking for clarity on crypto airdrops. Federal Reserve Cuts Interest Rates by 50 BPS, Crypto Rallies The Federal Reserve announced Wednesday it is lowering the benchmark federal funds rate by a half-percentage point (50 basis points) to between 4.75% and 5%. It marked the first interest rate cut in more than four years and signaled the Federal Reserve is ready to ease up on its fight against inflation. The move marked the first time since 2008 the Federal Reserve had cut interest rates by 50 basis points at one meeting. Many analysts had expected a quarter-point percentage cut, but cooling inflation and a soft labor market allowed Federal Reserve chair Jerome Powell to be more aggressive. In August, the Consumer Price Index (CPI), a key inflation metric, dropped to 2.5% year-over-year, roughly hitting Powell’s 2% inflation target. The long-anticipated move sparked the broader markets. And crypto prices also rallied, with bitcoin pushing to roughly $63,500 and ether increasing to roughly $2,350 respectively. A low interest-rate environment is widely viewed as a greenshoot for risk assets including crypto, but it remains to be seen if a rate-cutting campaign will ultimately shoot bitcoin and other cryptocurrencies to all-time highs. 🌐 Topic of the week: Global Stablecoin Ecosystem 🫱 Read more here
GEMINI:BTCUSD
by Gemini
S&P 500 forecast: Outsized rate cut music to bulls’ ears. S&P 500 forecast: The US stock market has shown impressive resilience following the recent volatility. Investors, thrilled by the Federal Reserve’s outsized rate cut, have pushed index futures higher. However, there are mixed opinions about what lies ahead. For now, it looks the S&P 500 will finish the week at a fresh record high. Fed’s Rate Cut and Its Impact on Markets The Federal Reserve’s decision to deliver a 50-basis point rate cut was largely welcomed by investors. The move was seen as a bold but necessary step to ease economic concerns without sending panic signals reminiscent of the 2008 financial crisis. Fed Chair Jerome Powell emphasised that the cuts are not part of a long-term strategy but rather a proactive measure aimed at stabilising growth, now that inflation appears to be on the path of returning to its target. Markets initially sold off but quickly rebounded, with S&P 500 futures suggesting a potential new record high is on the horizon at the cash open today. The Dot Plot projection also boosted investor confidence, showing a possible 50 basis points of cuts this year and 100 next year, with the terminal rate expected to hit 3.0% by 2026. But what now? Can the S&P 500 Rally Continue? With the S&P 500 up nearly 19% year-to-date, investors are wondering if the rally can be sustained. On the surface, it appears that market sentiment is bullish, bolstered by the Fed’s actions and a series of robust earnings reports. Yet, looming risks, such as global economic slowdown in the Eurozone and China, may challenge this optimism. Moreover, seasonal trends indicate that September is typically a tough month for equities, adding a potential headwind to the current rally – although so far this hasn’t held investors back. With the US presidential election approaching, market volatility could spike, leaving investors hesitant to dive into new rallies without a clear trend. S&P 500 forecast: Technical Analysis and Key Levels to Watch Despite some volatility after the Fed’s rate cut, the S&P 500’s bullish trend remains intact. Traders should keep an eye on the support range between 5613 and 5670, with the upper end of this range marking the high from July. As long as the index holds above this support area, the short-term path of least resistance will remain upwards, potentially keeping the market on course to head towards 5800 or even the 127.2% Fibonacci extension level of 5827, derived from the drop in July. However, a dip below 5613 would signal a shift towards bearish sentiment, potentially pushing the index down to its next support and short-term trendline around the 5480-5500 area. Bearish Risks and Market Sentiment While the bulls are currently in control, bearish traders are watching for signs of a reversal. A drop below recent lows, as suggested above, could signal the end of the short-term bullish bias, reminiscent of the July sell-off when overbought conditions led to a sharp decline. Then, the signal came in the form of a bearish engulfing candle on 17 July. Bearish traders need to wait for a similar confirmation before making any significant moves, given the overall bullish structure of this market. Risk Management in a Volatile Market Regardless of whether you're bullish or bearish, managing risk is critical in today's market. With heightened uncertainty surrounding the economy and upcoming elections, volatility is expected to remain high. Traders should stay nimble and be prepared for sudden shifts in the market’s direction. In conclusion, while the S&P 500 forecast remains cautiously optimistic, several factors could derail the current rally. Staying informed and agile will be essential for navigating the coming weeks. We will, of course, highlight any major shifts in the trends, if observed. Stay tuned. -- Written by Fawad Razaqzada, Market Analyst
ULong
by WHSelfInvest
Fed Kicks Off Rate-Cutting Cycle. Why the Muted Market Reaction?Central bank bros met traders’ loftiest expectations with a half-point cut to interest rates on Wednesday. But is that too good to be true and maybe even a signal of some problems with the US economy and looming fears over at the Fed? Trading today isn’t the same as trading yesterday. Even though prices don’t really confirm it — there wasn’t a super-duper rally in stocks. Maybe gold XAU/USD flickered a bit, but it was mostly froth . And here we are — the first day of trading in an environment with lower interest rates. Jay Powell, head of the Federal Reserve, announced on Wednesday the first trim to borrowing costs in four years. The move ushers in a new normal where US interest rates USINTR are projected to continue moving lower from their 23-year high of 5.5%. The easing cycle kicked off with a jumbo-sized 50 bps (basis points) slash. Surprisingly, the Fed went for the juicier, bolder and more aggressive option, leapfrogging the less interesting and exciting cut of 25 bps. First reactions across the board showed investors were hyped to get what they wanted — the broad-based S&P 500 hit an intraday record . Shortly after, however, stocks across the board pulled back and markets became anxious over the outlook as the realization kicked in. If the economy is doing fine, why go big on cuts from the get-go? What’s more, central bankers are keen to ax interest rates by another half point in 2024, ultimately wrapping up the year with the benchmark rate sitting at 4.25% to 4.5%. Christmas may come early — the Fed meets twice more this year, on November 7 and December 18. Better Safe Than Sorry? A super-sized half-point cut could actually be a pre-emptive measure to alleviate a strained economy. But if inflation is now largely in the rearview mirror , what could the problem be? The other mandate. The Fed has a dual mandate of keeping prices in check (inflation) and upholding a stable labor market (jobs). “We will do everything we can to support a strong labor market as we make further progress towards price stability,” Jay Powell said at the annual Jackson Hole gathering last month. And indeed, America’s jobs have seen a pronounced slowdown over the past few months. In July, markets added just 89,000 jobs (revised from an initial estimation of 114,000 ). In August, hiring had picked up modestly to 142,000 , but below expectations for 164,000. Pros and Cons of Bumper Cut Essentially, this big-boy cut of 50 bps is a double-edged sword. It cuts into borrowing costs, making money more affordable, potentially stimulating businesses to add more jobs and grow their gig. And it also prompts consumers to take on debt and get that house. But on the flip side, a cut of that magnitude risks stirring up price pressures again. To get to full employment, the Fed faces the challenge of knocked inflation waking up from its slumber. The size of the cut at this particular time doesn’t mean anything without the markets’ reaction to it. Apparently, investors were unimpressed and shrugged it off as no big deal. Looking ahead, however, the stakes are high because stocks are at all-time highs. The S&P 500 touched a record, Big Tech is leading the charge into artificial intelligence and investors can’t own enough of the highflyers Nvidia NVDA , Meta META , Apple AAPL , etc. The actual picture will become clear once markets figure out what the Fed’s rate-cutting cycle means and what to do about it.
Editors' picks
SP:SPX
by TradingView
25
THE KOG REPORT - FOMCTHE KOG REPORT – FOMC This is our view for FOMC, please do your own research and analysis to make an informed decision on the markets. It is not recommended you try to trade the event if you have less than 6 months trading experience and have a trusted risk strategy in place. The markets are extremely volatile, and these events can cause aggressive swings in price. We’re expecting some volatility this Session with the pending FOMC statement so for this report we’ll again look at the extreme levels. We’ve done well already this week, no need to risk anything trying to capture tops and bottoms, so keep an eye on the levels but remember, the trade comes after the event. The move started early in the week with the price hitting our resistance level and then making the move we wanted completing our first target. This has however left the completion of the move on the table, so we’ll stick with Sundays KOG Report idea for now, but expect a move to the upside potentially into that 2602-5 region and above that 2610! It’s 2610 as the extension that needs to reject the price in order for it make that move downside, as breaking above that will take us further into the 2625-30 region before any breather. So, as the chart shows, if we get 2602-5 and reject, we could see price move downside to clear the liquidity sitting first at 2550-55 and below that 2525-30. 2525-35 if visited, we feel would represent an opportunity to capture the swing low and then attempt to target that 2550-55 region as the first target. We’re going to play it safe this time and say if it works it works, if it doesn’t, it doesn’t. If you followed us this week, again we’ve done what we needed to for the week, everything else here is a bonus and should be treated with minimal risk on the markets, until they have settled. Please do support us by hitting the like button, leaving a comment, and giving us a follow. We’ve been doing this for a long time now providing traders with in-depth free analysis on Gold, so your likes and comments are very much appreciated. As always, trade safe. KOG
FX:XAUUSD
by KnightsofGold
3
$BTC Massive Move In Anticipation of 50 Bps Rate Cut!Massive 6% move up today for Bitcoin in anticipation for a 50 bps rate cut tomorrow. CRYPTOCAP:BTC smashed through the 50D MA and back into the BMSB. However don’t be fooled; we are still very much in a downtrend as you see the 50MA is well below the 200MA. We could see price break through the BMSB and reject from the 200MA in the next 48 hours. There’s still a lot of liquidity <$50k that needs to be claimed for the next leg up. Either way, I would not be trading leverage here. Expect massive volatility.
by jonnieking
20
50-50 Odds for Big Rate Cut this Wednesday The Federal Reserve’s upcoming rate decision is teetering on a knife’s edge, with the odds of a significant cut climbing. According to the CME’s FedWatch tool, the chances of a 25 or 50-basis-point reduction are now evenly split at 50-50. The decision from the cental bank comes in on Wednesday. Former New York Fed President Bill Dudley, speaking last week, bolstered the case for a more aggressive move, stating the federal funds rate could be up to 200 basis points above neutral. Dudley argued there’s a “strong case” for the Fed to start big. However, major banks are possibly leaning toward the Fed starting small. In a note, Bank of America’s analysts suggested “a small chance” of a 50bps cut, while UBS’s Brian Rose also acknowledged the possibility, though was not factoring it into his baseline.
TVC:DXY
by BlackBull_Markets
09/09/24 Weekly outlookLast weeks high: $59,829.20 Last weeks low: $52,551.34 Midpoint: $56,190.27 More sell-off last week in the crypto markets, very tough market conditions continue, hitting the $52,000 bullish OB+ again, the first time being exactly one month before. This area had held as support previously but it needs to hold this time around too, failing that $50,000 is the bottom of the daily downtrend channel. US CPI (Wednesday) & PPI (Thursday) this week, as with big news events we can potentially see volatility, this will be the last US CPI before rate cuts begin in the US, in Europe rate cuts are forecast to begin on Thursday, predicted to drop from 4.25% to 3.65% according to invesing.com, a 60bps cut. Another major news event this week is the Trump v Harris Presidential debate. I'm not expecting a whole lot of crypto talk in this debate, if I'm being completely honest I can't see it being an adult debate about political policy at all. However, I do think it will have an effect on the markets one way or another, obviously Trump is the better outcome for crypto if he stays true to his plans set out during the Bitcoin conference compared to the plans for the Harris administration to tax un-realized gains which is not very pro-investment. Again, I'm not holding my breath for any information on crypto but it is a major news event all the same. So in conclusion this week is full of news events that could create volatility, with BTC at its current level nearer the bottom of the daily trend. It does feel like we're maybe coming to an end of the chop with monetary policy pivot taking place soon.
by ProR35