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Silver Has Some Catching Up to DoGold/Silver spread is still strong with a Gold/Silver ratio around 83, indicating strong bias to gold. With incoming panic in the markets, debasement of the dollar, or both, we can expect the bullish move in gold and silver to continue in the long-term despite all attempts at suppression within the futures exchange. Silver has some serious catching up to do post price fixing in the futures exchange. "Bet against the debt, become your own central bank." - Gregory Mannarino
TVC:GOLDLong
by Derivati_Capital
Trading the Brent-WTI SpreadBoth UKOIL and USOIL are important in the energy sector, as they reflect the two most important types of Oil: UKOIL refers to the Brent crude which is extracted from the Oil fields in the North Sea, and USOIL refers to Western Texas Intermediary (WTI) which is extracted from the Oil fields in the United States. UKOIL is the reference Oil price for about two-thirds of the oil traded around the world, while WTI is, expectedly, the dominant benchmark in the US. The main differences between the two types relate to their API Gravity, i.e. how light or heavy they are, and their sulfur content. Both WTI and Brent are considered to be light crude oils, however, the former is lighter than the latter. In general, the lighter the crude oil, the higher the price as they produce a higher percentage of gasoline and diesel fuel per barrel of crude oil when converted into these products by a refinery. Regarding sulfur, WTI's content is lower than that of Brent's, even though both belong in the sweet crude oil category, making them easy to refine and safer to extract than sour. By contrast, crude produced by OPEC countries tends to be relatively sour. Overall, WTI is both lighter and sweeter than Brent, which should make it more expensive given that it can refined into fuel more easily. Given that WTI is mostly landlocked though, and thus not easily transferred, prices for both types of Oil have always traded at more or less the same levels, at least until 2011. Since then, the Shale Oil revolution has changed the world of refining by providing even lighter oils for processing. Remember that WTI was mainly refined within the US, given that the country had been a net importer of Oil for the past 75 years. This forced refineries to be built in a way that accommodated both Brent and WTI, where the former represented the bulk of foreign imports and the latter represented domestic production. The problem with Shale oil is that it is too light to be refined and thus they have to mix it with heavier crude (such as Venezuelan oil) in order to be able to process it. Given that exports from the US were not allowed, the boom in the Shale Oil production forced the country into overabundance, and thus pushed the WTI price lower. This was more or less resolved in December 2015, when the ban on US crude Oil exports was lifted. This pushed the Brent-WTI price differential close to zero, a level which was more or less maintained until mid-2017, whereas prices once again diverged by more than $5. Brent-WTI Spread (Image) After the effect from the lifting of the US Oil export ban subsided, what mattered most was proximity. Given that the US is not as close to the countries which have significantly increased demand (notably Asia and Africa) over the past years, the increased cost of shipping WTI from the US to China or Bangladesh would make it far cheaper to ship it from the Middle East, as travel time would be halved. As already noted, Brent prices are used in the Middle East. Thus, as demand for Oil increases in Asia, and given that the US is closer to Europe whose demand for Oil has been declining, Brent-based contracts are likely to dominate the markets in the coming years. As such, the spread between Brent and WTI is also likely to continue its increase, even though the level is likely to be affected by other factors as well. Still, that does not mean that the spread is always meaningful: there are times when the markets may overdo it with the spread which then returns sharply down. June 2018 is a good example, with the spread jumping to $10 in the first 10 days of the month, only to return to $3 in the first days of July. The inverse relationship is also statistically valid, as a regression analysis using daily data from January 2018 until now suggests that the spread's value in the previous day has a statistically significant negative effect on the Brent price, with the coefficient standing at 0.05. Note that any type of such statistical analysis is unlikely to be able to fully capture the extent of the relationship. The formula would interpret a drop in the Brent price following a decline in the spread as evidence of a positive relationship, something which could have just happened on a whim, or because the market realized that Brent was overpriced, or even that Brent declined by more than WTI on days during which the spread was high. This is what happened during the June-August 2018 period, when the price of WTI increased by more than the Brent price, in the lead-up to the end of June, with the spread between the two remaining relatively stable for a month. Then, after mid-July the spread rose again reaching around $7 by the end of August. Spread MAs (Image) Using the Brent-WTI spread and its 20-day, 50-day, and 200-day MAs, the 20DMA peaked on June 22, and indicated a turnaround from the June highs on July 05, at which point the 20DMA crossed the 50DMA. A further confirmation arose when the 20DMA crossed the 200DMA on July 13, however, this should have been viewed with caution as the spread closed on its 200DMA. At the moment, the spread appears to be heading downwards, with the 20DMA crossing the 50DMA on November 29, 2018. The two MAs appeared to have been converging, however, an unexpected decrease in the spread pulled the 20DMA down again. Importantly, the spread can provide valuable information for traders. As suggested above, an increase in the spread suggests either Brent is over-reacting or WTI is under-reacting to an overall Oil market movement. As such, if the spread is expected to increase, traders could position themselves to gain from this in a simple way: if Oil prices are increasing, knowing that the spread will increase suggests that UKOIL is expected to make a bigger move than USOIL and thus it would be more profitable to trade it. To sum this up, have a look at the following table: if we are seeing a bear market, then expectations of an increase in the spread would imply a USOIL over-reaction. On the other hand, if we expect that the spread will decrease, this would imply a UKOIL over-reaction.  On the other hand, if Oil prices are increasing and the spread is decreasing then USOIL is expected to make a larger move than UKOIL. Overall, understanding where the spread is headed can provide the trader with important information regarding the instrument which is likely to make the biggest move. Knowing this, can make the trader more equipped to pick an instrument for his/her position; at the same time, proper risk management is very important. Table for Spread (Image) Come join us today at HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
FX_IDC:USDBROLong
by HotForex
EURUSD Vs. Yields 10 - 5 years.High spreads between US10Y - DE10Y and US05Y - DE05Y, Can indicate some more downside risk for the euro. There is also some hidden divergence marked with green lines. European money is flowing into less riskier assets, as EU economic forecast have been slashed, while some banks are saying that the german economy is headed for a recession which is one of the largest economies in the EU. ECB´s ending of QE program have left the Central bank with less tools to stimulate the economy. A restart of the bond buying program will put questions on the politics taken from the CB and will place them in a situation where the market will think that they dont know what they are doing. If they choose to use some tools the only option they have is the "TLTRO" (Targeted longer-term refinancing operations) Which will give the banks some available liquidity to lend money out and push the economie for some growth. The risk of a possible recession in the EU can give some concerns if the CB will raise rates at Q4 2019. A slowdown in the Chinese economy will also affect the EU, as China is one of the biggest importer of the european products. At the same time IMF downgrades global economic growth, while U.S. economy also saw some downgrade of its growth forecast. I still see the U.S economy performing better than the European. Holding shorts on EURUSD - adding more at a break of 1.11060 with target at 1.0380 and 1.0600. Hedging from those levels and watching the price before going net long position. Break of these levels could result in a further move down to 0.9600. Closing of shorts, and entering long positions will be at 1.16700 with target of 1.21300
Short
by Fx-AlphaStrats
S&P500, US05Y and US02YLast couple of times we have had this tight spread between US05Y and US02Y a mayor decline in the S&P followed Before the declines, we saw some increase in volatility. The same kind of volatility happened last year. Could we see a mayor decline, or a correction this year, or will the S&P just keep moving up? Global growth forecast have been slashed across the border, while US till expects to hike rate, the US economy is also showing signs of slowing. ECB is also expected to raise rates in Q4 2019. EU have also adjusted its growth forecast. Time to buy gold and sell S&P. Watching is closely as if the price for S&P keeps moving up im closing my position, or i will be looking for a hedge position. If you look closely you can find a hidden divergence in RSI and S&P on the daily chart.
SP:SPXShort
by Fx-AlphaStrats
AUD/USD AU vs. US 10 -year bond yield.China Q4 GDP Growth is expected to be at the slowest pace since 2009 at 6,4% YoY. This will probably also drag AUD down because of the high export to China. Meanwhile the Australian rate will be unchanged for quite a bit, where the Housing market index is also due to fall over the curs of 2019. Australian Housing market have been rallying for long time, Now the banks are stepping in to make it harder for consumers to apply for a mortgage loan. The GDP growth is also expected to be at a steady level through out the year. The widening spread between the Bond yield´s is also an indicator of a weaker AUD. After the US 10Y bond yield crossed the AU10Y in start 2018 AUD declined throughout the year. While bond yield´s are still expected to widen, we could see a weaker AUD until mid-year. Holding short position and will add again at 0,70100 and around 0.68200 if it will go that far. meanwhile Monitoring closely the AU data.
Short
by Fx-AlphaStrats
2
EUR/USD 3-month LIBOR vs EURODOLLAROverall there is bad data out for U.S. and the Euro zone. The bad data might not stop yet as we will be continuing seeing bad economic data in 2019 as global growth slow down. USD and JPY is known as safe heaven, and could be the reason we have seen large moves in the JPY over the past couple of weeks. U.S 30 year mortgage rate declined to 4,75% and could give USD a push next time data of Mortgage application and house sales is released. this will also support the inflation, while commodities will also likely support a stronger dollar against the Euro. The 3M Euro money supply is down from previous numbers and could also support a decline in the Euro. On the Chart you see a widening spread between EURIBOR(the red line) rate and EURODOLLAR rate (The blue line). This means that Deposits of the euro gives you a -0,33% While holding EURODOLLAR´s give an interest rate of 2,68%, and with the widening spread, the Highest rate is always the winner. Short from 1,15700 And adding more to my Short at 1,13650 and again at 1,12900. Remember that ECB is about to end QE and bond buying program, which means that the liquidity that ECB gave to the Euro and the market is slowly fading.
Short
by Fx-AlphaStrats
RECESSION CLOCK STARTED An inverted yield curve means a market situation in which the yields offered, for longer maturities, are lower than the yields of the short-term portion of the curve (in this case the "short" is usually considered as the rates up to 2 years). This is a situation that is at first sight counter-intuitive. Those who have studied Finance will certainly remember the mantra for which 1 euro today is better than 1 euro tomorrow; an inverted curve, instead, says exactly the opposite: better 1 euro tomorrow. This means that investors, on average, are moving towards long-term investments, despite lower yields than short-term investments.
TVC:US05YShort
by albertus76
Spread national US bund 3 and 5 years, medium signal An inverted yield curve means a market situation in which the yields offered, for longer maturities, are lower than the yields of the short-term portion of the curve (in this case the "short" is usually considered as the rates up to 2 years). This is a situation that is at first sight counter-intuitive. Those who have studied Finance will certainly remember the mantra for which 1 euro today is better than 1 euro tomorrow; an inverted curve, instead, says exactly the opposite: better 1 euro tomorrow. This means that investors, on average, are moving towards long-term investments, despite lower yields than short-term investments.
TVC:US05YShort
by albertus76
Possible Recession comparison US02 yield 5 and 10 yearsI think that, It is in action a possible regression market where bit investor are more interested in long term 10 years that in 2 one. This means that on the contrary, one dollar tomorrow are better than a dollar today, this is real on opposite meaning regarding the contrary one where thanks to inflaction and many different economical situation, a dollar today was always better than a dollar tomorrow. Anyway follow my next chart where a comparison between US yield treasury with 2 and 5 years show us a real ratio below 1, this mean that this recession power limit is in act to beginnig First of all after last 10 years of history in Central bank economical situation, we can consider this first signal a prediction considered a previous feedback but when spread US02Y/US10Y will inverted and will go in negative range we'll have a real signal and confirmation about real recession and when this event had realized it anticipates the recession and it will be bigger than 20s period of 20th century Thanks for what my thoughts
TVC:US02YShort
by albertus76
10Y US/DE : Bond market distortion at historical bounderies...This is loooong term chart here, but the process in motion is a really dangerous one because it concerns the bond market that is supporting every bit of the investment process and credit liability throughout the market. This spread between german and US yielding is reaching long term dangerous levels of distortion and may lead to some credit troubles. Hope this idea will inspire some of you ! Don't forget to hit the like/follow button if you feel like this post deserves it ;) That's the best way to support me and help pushing this content to other users. Kindly, Phil
TVC:US10Y
by PRO_Indicators
1