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Wellcome to the new wolrd order: DXY GOLD Bond Yields The FED QEThis is a shortened version of our April report. Let us start with a summary: The Fed announced Friday morning that it would purchase later in the day roughly half of some $80 billion in Treasury securities that it had said Thursday would be purchased over the next month. Repurchase Agreement Operational Details In accordance with the most recent Federal Open Market Committee (FOMC) directive, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York will conduct a series of overnight and term repurchase agreement operations (repos) to ensure that the supply of reserves remains ample even during periods of sharp increases in non-reserve liabilities, and to mitigate the risk of money market pressures that could adversely affect policy implementation. Securities eligible as collateral for both overnight and term operations include Treasury, agency debt, and agency mortgage-backed securities. ibb.co You can find the details of the operations: NYFED Domestic Market Operations Let us keep one thing in our minds which would play an important role in Gold prices near term. This is a domestic market operation. If the FED limits the operation inside the US and keeps the liquidity domestic, Gold prices may remain under pressure. DXY/GOLD chart gives us a similar view. In the 2008 crisis, Gold prices went down at the beginning of the crisis. Then a rally has started. As I have mentioned in my previous report, the Global demand to Dollar will increase. ( I m referring to EUBSC .. or cross-currency basis swaps) Few Details from Pozsar’s Covid and Global Dollar Funding Notes: “What are some of the dynamics that could start pushing rates around in the repo and FX swap markets before too long? There are at least three: (1) U.S. banks gradually starting to pull back from lending in the repo market and starting to monetize Treasuries to fund the drawdown of corporate credit lines. (2) Tech companies starting to monetize their bond portfolios to roll the lifeline they extended to their strategic suppliers in various corners of Southeast Asia. (3) Foreign central banks starting to tap into their FX reserves to help local banks, and the pressures these flows might cause to repo and FX swap markets.” The FED dislikes negative rates: What markets are telling us is that the US Federal Reserve’s recent emergency 50 basis point rate cut and its decision to pump trillions of dollars into the financial system on Thursday have failed to do the trick. Further cuts in the policy rate, right down to almost zero, may also not be enough to stabilize the economy and return inflation to the 2 per cent target. When the problem of the zero lower bound on rates first reared its head a decade ago, the major central banks initially thought rates could never go into negative territory, because this would induce a stampede out of bank deposits into notes and coin, which of course yield zero. Former Fed chairman Ben Bernanke has suggested that negative policy rates in the US could be useful in some circumstances, but this has not seemed to persuade Mr Powell or current Federal Open Market Committee members. Reasons: First, it is not clear that the central bank is permitted under legislation to take this action, as Michael Feroli of JPMorgan and others have pointed out. Second, the specific institutional features of the US financial system make it difficult to go negative. In particular, the existence of money market funds, which hold about $4tn in assets and are sometimes treated by depositors like bank accounts, could be a problem. Back in 2008, it caused enormous turmoil when one such fund “broke the buck” and was no longer able to protect investors’ principal. Third, and most importantly, the experience with negative policy rates in Japan and the eurozone does not provide conclusive evidence that such a dramatic change actually restores confidence and economic activity. This occurs because negative rates act as a tax on the banking system. Banks may respond by restricting credit rather than making the additional loans needed to get money out into the real economy. Although the evidence on these effects is mixed, the Fed certainly does not see a conclusive case for action. Source: Article by Gavin Davies – published in Financial Times Here we have another issue: The real interest rates. This is an important determinant of Gold prices. St Lois FED: The producer price index for final demand fell by the most in five years in February, declining a seasonally adjusted 0.6% after climbing 0.5% in January . See the details: PPI for Final Demand If the US CPI declines due to coronavirus, the Dollar's real interest rate may stay in the positive territory even if the FED cuts the rates on March 18th. This is pressure for Gold prices. Why the USD may remain stronger: If policy rates stay close to zero for long periods, but never go negative, there would be important consequences for the likely future shape of the yield curve, the optimal mix of bonds and equities in investors’ portfolios, and the dollar. Several of these consequences have already become apparent in Japan. The bond yields would remain very low but positive if short rates stay close to zero. The implication is that long duration bond yields could fall no further and would no longer play any useful role in hedging equity risk in a balanced portfolio. Another implication is that quantitative easing or other similar measures would no longer tend to reduce policy rates or bond yields, so may not send the dollar lower. In fact, in a risk-off situation where there is a flight to quality in global markets, the dollar would be likely to rise, even if the Fed is trying to ease monetary policy. Source: FT/ Gavin Davies We drew attention to this issue at the beginning of March. DXY rally was inevitable. What can happen next? It is not only the FED who pumps liquidity into the financial system. ECB, BoE, BoJ are hitting the record highs in their balance sheets. See the Central Banks BS Chart: - Source Bloomberg - ibb.co We predict a new rally in the DXY medium term. The EURUSD pair is trying to hold 1.10400 support. The bearish move would be accelerated by the breakout of the support. 1.08800, 1.07400 and 1.05600 could be tested medium term. XAUUSD: On the downside, we see a strong support zone between 1479-1450. Potential bearish price actions can be used as a buying opportunity targeting 1700 and 1880 medium term. FOMC Statement of March 18th would show us the path of the shorter term. Global Indices? ... There will be times to buy...Sorry but not now! Have a nice weekend!
TVC:GOLD
by chartreader_pro
5
TLT LongTLT has pulled back to a very key trend line with additonal supports coming in below. On the hourly chart, we have positive divergence on TLT meaning we should see upside soon in the short term. Given the postures of the markets and how treasuries act as a flight to safety asset, it is reasonable to assume they will go up in price as stocks fall. For this trade, I advise picking up TMF (x3 leverage) with a stop anywhere from 28.00 to 26.60. I also recommend scaling into the position with 2 or 3 batches comprising your total allocation that you are willing to invest.
NASDAQ:TLTLong
by BigMouse777
2
Rates Down For a Few More Months...Then Up, Up and AwayThis leading diagonal ended as called earlier appears to be making an ABC correction that should end when C = A at 1.75 Then, the longer term upward correction should continue in a third wave, which I think will be a C wave ending this sub-minuet level correction of the larger minute correction of the larger trend. C should be equal to A as measured from the end of the ongoing sub-minuet ABC correction. Long 10 year for a couple months, then short 10 year (as rates rise and price falls) for the next year or so... Good luck!
TVC:TNXShort
by broughro
10 year T Note: New long term bull cycle emerging?TNX has been trading within a 1M Channel Down since 2000 up until January 2018 when it broke the pattern upwards. The mini uptrend found Resistance on the MA200 and has been declining for the past 7 months. We are currently on the most support tests of all, as it has touched the 2000 Channel's Lower High trend line and will test it as a Support for the first time. If that provides a bounce then we may be at the very beginning of a new very long term bull cycle. A Golden Cross formation should come as confirmation. ** If you like our free content follow our profile (www.tradingview.com) to get more daily ideas. ** Comments and likes are greatly appreciated.
TLong
by InvestingScope
S&P 500, Yeild Curve, Recessions, and BitcoinThe chart below shows the yield spread between the 10yr and 3mo and 10yr and 2yr. When the spread is below 0 (colored in red), the yield curve is inverted. This has been an indicator for coming recessions. The red areas on the SPX are the recession periods. As you can see we saw an inversion last month (march). The next recession is just around the corner and this one is going to be big. With the Fed experimenting with interesting rates and propping the stock market up, and tech stocks, FANG, and the Get Big Fast strategies startups are using, the market is extremely overvalued. I think with the awareness of bitcoin now and the upcoming halving, money could pour into cryptos when stocks start to fall. The confluence of all this makes me think bitcoin will moon. The timing of the halving with a possible market crash is amazing to me. I feel excited for cryptos. I want to buy gold and bonds, safe places for my money, but the prospect of HUGE gains from the crypto market is to enticing. Either bitcoin goes to zero and I lose all my money (all the money I can afford to lose, not my savings or monthly spending) or I become much richer than my parents. Lol. Let me know what your take is on all this!
SP:SPX
by AnotherAnalyst
7
Long US 10year Treasury Bond $ZNWith WTI declining nearly %30 in a short time span and global growth slowing. Investors are long US TBONDS as they are willing to tolerate lower yields from bonds in anticipation of lower inflation and slowing growth. Bonds rising will have a wide ranging market influence. From yields falling, to equities under performing to Japanese investors seeking domestic risk investment and therefore halting capital exports. This will mark a turning point in the business cycle for month to come and will challenge active and passive investors and money managers to rethink their portfolios, possibly even rotate into other assets. We are still in the infancy of this turning point , tops and bottoms are ripe for picking.
CBOT:ZN1!Long
by SpeculatorsTrading