Another 25 bps cut in interest ratesAnother 25 bps cut in interest rates This analysis predicts a FED 50 bounce cut. The chart shows the yield curve of the two-year US government bond and its future path. The current analysis attempts to predict the next three months' interest forecast. Let's look at the chart. It can be seen that in the shorter term, the market once again ran ahead. It can be seen that the intervention was a hurry for the Fed to announce a further cut in interest rates at the open market committee meeting on March 18. In my opinion, this can happen if the market prices future rates in the 0.5% range within a few days. In the event that the futures interest rates continue to fall as a "falling knife", it can be stated with certainty that, in addition to interest rate cuts, additional asset purchase incentives may be announced.
US03MY
US03M chart before another plunge.US03M chart before another plunge. The chart shows the forward rate curve for US 3-month government bonds. I've analyzed this curve many times. It can be seen that the chart makes small movements. Furthermore, it can be seen that the anti-movement ATRs (white rectangle) have a strong pressure on the exchange rate. In the event that the exchange rate falls out of this narrow-band siding, another sharp drop would occur. What it means. That the three-month forward dollar rates are coming under pressure again. The market expects another interest rate cut. This could lead to a weakening of the dollar. I note that forward rates on 2-year and 10-year government bonds are already falling. They are around 1.3%. Which tells me that maybe not in the short term, in the next 2-3 years the market can expect another dollar cut in interest rates.
10's & 03's to invert again in 2020?FRED:FEDFUNDS 01:37:23 (UTC)
Fri Jan 3, 2020
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The market expects another cut of 25 basis points... The market is expecting another interest rate cut. Construction of the declining double fractal at US03M may begin. This means that the short-term interest rate forecast may fall to 1.25%. These forecasts have been relatively stable so far. It can be seen that the peaks of the exchange rate wave sequence follow the auxiliary axis projected to the moving average curve. As a result, I expect another dollar to weaken.
3 additional interest rate cuts... This chart has recently projected the rate of interest rate cuts very precisely. In case the chart analysis is correct, it predicts an additional 3x FED interest rate cut. This may be a rising factor for the euro. Therefore, I expect the current appreciation of the euro to be the start of a longer process.
Sept Fed MeetingI really so no reason for the Fed to cut rates in Sept, considering that the China meeting doesn't happen until Oct and the market is at the top. Wage inflation is starting to creep up as well which will eventually lead to real inflation.
Rate cut is already priced in so look for the market to react negatively if they don't get what they've already priced in. It also depends on what the dot plot shows for Oct and what Powell says.