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MACRO MONDAY 12 - Positive MOVE IndexMACRO MONDAY 12 A Positive MOVE Index - TVC:MOVE The U.S. Bond Market Option Volatility Estimate Index – the “MOVE” is similar to the VIX volatility index that lets us know when volatility/uncertainty is high or low in the stock market by monitoring options contracts. Instead the MOVE measures how much investors expect bonds prices to fluctuate in the future. The bond market is particularly sensitive to changes in interest rates thus the MOVE also can also advise of expectations of future interest rate volatility. The MOVE index calculates the implied volatility of U.S. Treasury options using a weighted average of option prices on Treasury futures across multiple maturities (2, 5, 10, and 30 years). It reflects the level of volatility in U.S. Treasury futures. When the MOVE Index is high, it means investors are worried and expect big price swings, which can be a sign of uncertainty or instability in the financial markets. When it's low, it suggests that investors are more relaxed and don't anticipate significant price movements. In essence, the MOVE Index helps us gauge how jittery or calm the financial markets are by looking at the expectations of future price changes. The MOVE Index can help inform us of the following: 1. A potential flight to safety: When the MOVE or Bond Option Market Volatility increases this can be a signal of a flight to safety as people exit riskier assets positions such as stocks and reallocate funds to less riskier government backed assets such as Bonds. - The chart illustrates that increases in bond volatility negatively impact the S&P500. 2. Future Interest Rates: By capturing investors’ expectations of potential future fluctuations in interest rates, the index serves as a proxy for the bond market’s overall sentiment regarding future interest rate movements. - The MOVE can provide insights into the bond market’s expectations about future interest rate volatility, thus providing a heads up of upcoming change to future interest rates. The importance of the MOVE index lies in its ability to provide insights into the bond market’s expectations about future interest rate volatility and market volatility. The Chart With an understanding of the MOVE Index we can now dive into the chart and the implications we can draw from it; - Above the 85 level is above average bond market volatility and below the 85 level is below average bond market volatility. - Historically when the MOVE Index increases higher than the 126 level it has resulted in significant S&P500 price decline (red on chart). - Conversely when we are below the 126 level this has corresponded with positive price action for the S&P500 the majority of the time (green on the chart). This makes sense as a MOVE below the 126 level would suggest the bond market volatility is reaching down to the average 85 zone or under suggesting stable financial markets with moderate bond & interest rate volatility expected. Under such circumstances there is certainty and an element of calm in financial markets allowing for capital to flow more freely into riskier assets (instead of the safer bonds). - When the MOVE Index falls back into the 126 – 100 zone (orange ) this zone has been a zone of indecision with a potential increase and bounce back out of the zone higher or a fall lower. I would consider this a zone a wait to see what happens next zone. - At present we appear falling into 100 – 85 level (green zone). Should we fall below the 85 level this could be considered a confirmation signal of stability returning to the bond market which could lead to a flow of capital to riskier assets such as those in the S&P500. In the period from 2007 – 2009 during the Great Financial Crisis bond volatility remained elevated above the 126 level for approx. 23 months (in the red zone on the chart) and this consisted of three peaks in bond volatility that reached a high of 265 on the MOVE Index. At present we have had 16 months of increased bond volatility reaching in and out of the 126 red zone. Similar to 2007 – 2009 period we have had three peaks in bond volatility however we only reached a high of 173 (in 2007-2009 it was a high of 265). We are currently moving back down towards the 85 level and this appears to be positive for markets however I would remain cautious until we make a definitive move below the 85 level. We are aware that bond volatility can remain elevated for up to 23 months and we have only been elevated for 16 months and did not reach the highs of 265 like in the 2007 – 2009 period. The chart does not have to play out the same, reach the same levels or follow a similar time pattern as the 2007 – 2009 period however we are aware that it can move higher and that it can remain elevated for longer therefore we can remain cautious until the volatility moves under the 85 level (below the historical average). Its hard to ignore that this chart looks bullish for the market as we move down into the green zone and into lower bond market volatility. This creates a stark argument to some of the charts I shared in previous weeks. I would be more comfortable in confirming the bull thesis from this “one” chart should we move below the average 85 level. Furthermore, it is one chart and for me it would not be enough to rely on alone. I was listening to market guru Raoul Pal this morning and he made an compelling argument to suggest that we are already in the deep trough of a recession and might be about to start climbing out of it. It’s worth considering as recessions are typically declared up to 8 months after they have started and with many countries having already established 2 quarters of negative GDP, we certainly could be in the trough. If there is one chart that would back up Raoul Pals thesis, it is the MOVE Index which is suggesting a move to lower than average bond volatility, suggesting we are potentially beginning to enter a period of stability and certainty which would allow for capital to feel more comfortable flowing towards riskier assets. This chart will be a great chart to keep an eye on for those with a positive or negative market lens. You can press play on the chart on trading view and it will update and tell you if we are moving into low risk levels or high risk levels, you also have boundaries for the extremes. This chart and the others I have completed on Macro Mondays are all designed so that you can revisit them at any point and press play and see if we are breaking new into higher or lower risk territory. I hope they all help towards your investing and trading frameworks. PUKA
TVC:MOVE
by PukaCharts
2
Bonds rolling over but what's up with $TNX?#Bond #yield has been moving well lately, but today. SO FAR, they're rolling over, and some hurting more than others. We've mentioned that steam has been running out for some time. Look @ the RSI negative divergence on almost all of the #yields 6M weakening. 1Yr RSI CRATERING. 2YR hurting & RSI DECIMATED It is at major support. TVC:TNX is the lone wolf. Must keep👀on this one to see how it plays out. See data posted. Did the 10Yr peak already?
TVC:TNX
by ROYAL_OAK_INC
2
TIP off... Just want to show an anomaly observed here... sort of a tip off on what is most likely to happen. You see, I read Russell Napier's Anatomy of the Bear back in 2009 (not easy to get it as it is out of print!), and he describes TIP as one of the/a leading indicator ahead of the equity market. Superimposed on the TIP daily chart is the SPY (blue line), NASDAQ (cyan line). You can see that it does lead the SPY and NASDAQ. However, there is a deviation from the pattern since two weeks ago. TIP has been falling hard, and the technical indicators are all bearish no doubt; but the SPY has been cranking upwards, furthermore so the NASDAQ. So, here is the deal... either TIP rockets back up, or the equity markets dive down. Which would it be, you think???
AMEX:TIP
by Auguraltrader
2
The US debt ceiling - A path to inevitable market volatilityThe US debt ceiling should be firmly on the radar and getting an understanding of the risks it poses could help us better recognise the trades which could serve us well. It is incredibly painful for all market participants, but it can radically alter our trading environment and reverse the low volatility regime, we have found ourselves in recently. Like most of the traders I speak to we know the debt limit will be lifted; it must be – the question is when we get the volatility, and what will be the duration and to what extent. Understand the ‘X-date’ The issues at hand are incredibly complex – most public policy experts and economists when they work together struggle to have any conviction on forging an exact date around when the US Treasury’s funds will be so depleted that they must prioritise essential outgoing payments – these include social security, Medicare, Medicaid, veteran payments, and its debt obligations. This ‘X-date’ is critical in our ability to time debt ceiling trades (and hedges) and as it stands both Treasury Secretary Janet Yellen and the non-partisan CBO have said it's early June. The sell-off in US Treasury bills maturing over this date suggests the market puts faith in this call. What the market is looking at closely is the Treasury’s daily cash balances, which can be found here - fsapps.fiscal.treasury.gov . As it stands, the US Treasury (UST) Department has $215b in the kitty, but this will be drawn down as we head to June and perhaps even below $50b. This would be worryingly low, especially as in the first two weeks of June we understand that the UST must make a $80-100b payment for social security and Medicare. You’ll hear a lot about ‘prioritisation’ in the coming weeks and this is where the UST must make choices on which payments to make – it is highly political. There will be a huge hit to confidence if 58m Americans don’t get their social security and both the Democrats and Republicans will be keen to avoid that at all costs. Can Treasury make it to 15 June? If the UST can make it to 15 June, then they will receive a boost from corporate tax inflows and then a chunky maturity from a maturing investment fund in late June. I guess if we still haven’t seen an agreement by then, they then draw down on these funds and we start to consider what payments may be missed and the impact on economics through July. The big issue, in a word – ‘growth’. Either certain payments are missed and that significantly impacts consumer and business confidence, at a time when US economics is already fragile and the US is headed towards recession. Or we see an agreement, that despite the Democrat's strong disdain for spending cuts, includes measures which could be a drag on growth. What happens in a technical default? The idea that we may see the UST miss a payment on its bond obligations is the elephant in the room. The UST will look to defend this above all else – Biden has even stated he will use the 14th Amendment and strong arm a lift in the debt ceiling – an extreme measure and one that will see conservative Republicans taking legal action. He made talk of it in the prior session, so we know it's on the table. If it even looks like a technical default, or best coined as a deferred payment, is on the cards – then markets will light up – I’d say the markets are pricing this possibility at around 4-5% at this stage. UST bills are already showing stress and Treasury auctions of late have been poor – no none is buying T-bills that mature in June and why would they? If you hold this paper and the UST can't pay on maturity you need that cash – US bills are the highest form of collateral and the knock-on effects through markets would be huge. Fitch has already said they will downgrade the US credit rating and as we saw in 2011 most of the risk aversion came after S&P downgraded the US rating to AA+. Making matters worse is the fact there is that the path to negotiate is so tight – with the recess calendar for the Senate, House and Biden’s own schedule, there are JUST 7 days to get this down. Knowing the REP’s have a 4-seat advantage in the House gives them very little room to and if a bill is put to the floor, it will fail if 4 of the 222 REP votes against it – it will be shot down straight away. A rabbit needs to be pulled out of the hat. I see 5 actions playing out: 1. Congress agrees on a short-term extension to raise the debt limit to Sept or Oct. 2. We see an agreement to raise the debt ceiling on the X date, potentially extending for 2 to 3 years. 3. We hit the X date with no agreement and depending on cash on hand, Treasury may have to prioritise payments until 15 June, potentially impacting economics. 4. Treasury muddle through to July before cash levels deplete and must prioritise payments in July. 5. If the US looks destined to miss a bond payment the President uses the 14th Amendment to solve the Debt Ceiling. I am seeing some signs of hedging activity in S&P500 options, with S&P 1-month put/call implied vol ‘skew’ on the rise. Some have focused on a spike in US credit default swaps (CDS), and we’ve seen UST bills blowing up, but our core markets are yet to react – it’s still too early to buy JPY, CHF or gold just yet. In 2011 – which is our best-case study – the JPY, CHF and gold were the best hedges, with traders piling into short US bank exposures. I see those working well this time around too, but with the Fed having 5.25% to play around with on the fed funds rate and QT still in play, if we start to head past the ‘X date’ without signs of reconciliation and the USD will be taken down. Like everyone else we know the debt ceiling will be raised – it must be – but it doesn’t mean we can’t have a solid bit of volatility in between.
PEPPERSTONE:USDXShort
by Pepperstone
Opportunity for the altseason To date, the market has consolidated after a monthly pullback and there are new opportunities for growth for individual coins to turn the weekly candle into a bullish one. Unfortunately, the topcoins did not check the support with daily pinbars, as we would like, and were delayed, which greatly reduces the further growth dynamics. However, the goals are still 2250-2500 on the ETH and 32.5-35k on the BTC, and there should be at least a second attempt to grow on the retest of the previous week. But the most attention is now attracted by the dominance of bitcoin. The powerful level of 47.5% was successfully broken through and there is a trade around the intermediate 47.25. In the case of a departure below and especially a breakdown of 46.75, there is a high probability of a stable trend with test targets of 44, 43.5, 42.5 and a possible departure below by the end of the year. Even against the background of sluggish dynamics of the tops, such a decrease in dominance will give the violas an opportunity to double-check the hai. If the fall of dominance is superimposed on a new wave of top growth, then we will see very powerful breakouts on the alt. While I continue to work with uft pros vib cvp torn perl for pnt ooki and asr atm fantokens, which retain the highest technical goals for growth. Today, torn has every chance to turn the weekly candle into a bullish one again in the 12.5-13.5 area with sufficient volatility.
CRYPTOCAP:BTC.DShort
by Strateg_
Bank outflow vs Money Market Fund inflowThe bank deposit outflow started since the Fed tightening cycle from March last year until now but got triggered more after the banking crisis a couple of weeks ago. Most of the deposit outflow ended up in the Money market fund assets, of which 80% are US T-bills, cash, or repos collateralized by government securities. This flee-to-safety trend triggered a buy in those government securities and pushed T-yields back in the last couple of weeks. Suppose this deposit-drain trend continues as the Fed keeps focusing on inflation and raising the terminal rate above 5% and keeps it till the year's end. In that case, there are risks for small and medium-sized banks that they will later have to correct their mistakes by aggressively easing the rate. However, in the short term, this downward repricing for treasury yields may continue for a while as long as the deposit-drain trend stops, and it supports gold for the time being, but I don't think this will last for long and Gold is going to correct itself till the end of the year. 
TVC:DXY
by DatTong
✴️ Barnbridge 645% Potential IncomingBONDUSDT (Barnbridge) is producing a volume breakout this week with the highest volume since July 2022. This volume comes in as EMA21 gets reconquered as resistance, this week very likely to close above it and thus green. The strong bullish action in July is a giveaway of what's to come. On the next bullish wave, BONDUSDT can do 222% easy and up to 645% on a medium strength jump. If the pair goes really strong, there can be additional growth. See the numbers on the chart. Namaste.
BLong
by AlanSantana
9
Bond Market Signals Potential Trouble for the Federal ReserveIn recent weeks, the bond market has been sending a strong signal to the Federal Reserve: it may be making a serious mistake. The yield curve, which measures the difference in interest rates between short-term and long-term bonds, is currently more inverted than it has been since the early 1980s. An inverted yield curve occurs when short-term interest rates are higher than long-term interest rates. This can be a cause for concern because it can indicate that investors are expecting economic growth to slow in the future. When investors expect the economy to slow, they are less likely to lend money for long periods of time, leading to higher interest rates on short-term bonds and lower interest rates on long-term bonds. The current yield curve inversion has many experts worried. In the past, an inverted yield curve has often been a reliable predictor of a recession. In fact, every recession in the past 50 years has been preceded by an inverted yield curve. One reason for the current inversion may be the Federal Reserve's recent interest rate hikes. The Fed has raised interest rates several times in recent years in an effort to prevent the economy from overheating. However, these rate hikes may have had the unintended consequence of slowing economic growth. Despite the potential risks, experts believe that the current yield curve inversion may not be as concerning as it seems. They argue that other factors, such as the strong job market and low unemployment rate, suggest that the economy is still in good shape. In the end, only time will tell if the bond market's concerns are justified. However, the Federal Reserve will need to closely monitor the situation and be prepared to take action if necessary to prevent a potential recession.
FRED:T10Y2Y
by JoelWarby
2
US Dollar Index ForecastDemand for the dollar is usually high as it is the world's reserve currency. Other factors that influence whether or not the dollar rises in value in comparison to another currency include inflation rates, trade deficits, and political stability. The dollar has been gaining strength against the currencies of other major economies. The dollar is strong because the US economy is healthier than those of many other countries and because the Federal Reserve keeps raising interest rates. Does the dollar get stronger with higher interest rates? But the overriding reason for the strong dollar is the fight against inflation. The Federal Reserve is ratcheting up interest rates to attack the current near-constant rise in prices and said last week it expects more hikes this year. As it continues to raise rates, the dollar will strengthen. <-- https:// tradingeconomics.com/ united-states/ interest-rate ---> How do bond yields affect the dollar? Bond yields actually serve as an excellent indicator of the strength of a nation's stock market, which increases the demand for the nation's currency. For example, U.S. bond yields gauge the performance of the U.S. stock market, thereby reflecting the demand for the U.S. dollar. <--- https:// ycharts.com/indicators/ 10_2_year_treasury_yield_spread --->
TVC:DXYLong
by domotswiri
GOLD & US10YFundamental: 10/17/2022 | 06:28 The price of gold rose on Monday after falling more than 1% in the previous session as a pause in the dollar's rally eased pressure on green-priced bullion, although looming U.S. rate hikes have limited additional earnings. The Dollar Index remained stable, while benchmark 10-year US Treasury yields eased away from the 14-year high hit last week. "Gold has rallied slightly from Friday's low, but buyers are lacking conviction, which looks more like a technical repositioning," said City Index analyst Matt Simpson. “The US Dollar and yields will be a key driver for gold, and if they continue to rise, then a move and test of $1600 is likely only a matter of time.” Consumer sentiment improved further in October, but inflation expectations deteriorated a bit, keeping expectations of another 75 basis point rate hike intact. Gold is very sensitive to rising US rates, which increases the opportunity cost of holding non-performing gold. Holdings of SPDR Gold Trust, the largest gold-backed exchange-traded fund, fell 3.18 tonnes on Friday, their biggest one-day outflow since September 26. US retail sales held steady in September, against all expectations. Gold is very sensitive to rising US rates, which increases the opportunity cost of holding non-performing gold. Holdings of SPDR Gold Trust, the largest gold-backed exchange-traded fund, fell 3.18 tonnes on Friday, their biggest one-day outflow since September 26. Australian stocks fall on recession fears and lower commodity prices. 10/17/2022 | 08:40 Australian stocks fell during Monday's session amid recession fears and falling oil and metal prices. Gold prices gave up their gains as the US dollar remained resilient. Technical: Temporisation area between 0.32 and 0.23 Fib and large sales volume over 1665.0$. Decreasing ADX and under 25.0 (16.30) + Bearish divergence on Momentum + Stochastic over 80.0 (overbought asset) + MMA50 tending to cross MMA 20. There's a positive correlation between BOND PRICE and GOLD PRICE (safe-haven assets) but a negative correlation between BOND YIELD and GOLD PRICE because of opportunity costs. US10Y is reaching the 3.957% point which could lead to a rebound on the resistance resulting on the increase of the price targeting (at least) the 4.000 %. Money management : 1 position BUY on US10Y 1 position SHORT on GOLD
CAPITALCOM:GOLD
by thefrenchsniper