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10yr technical breakoutUS10yr is attempting a technical breakout. I never thought FedFunds would expand meaningfully beyond 3.5%, simply because the US Treasury could not handle rates that high. There is a major disconnect in IG/HY credit spreads. Duration is absolutely not reflecting the premium it should require. Everyone seems oblivious to the incoming pain, especially the US Treasury Secretary. See her on TV gushing over the “strong economy”. When asked about debt issuance she grins and says she isn’t worried at all. There will be buyers.. I would ask for how much longer at these rates. Price down yield up
TVC:US10YShort
by Jmenken
WHY RISING YIELDS ARE PROBLEMATIC FOR SP500Have you ever wondered why on Earth equity traders cannot take their eyes off from US10Y chart? The answer is the alternative trade. What does that mean? When you invest in a company, such as buying its stock, you are taking risk. However, US10Y are riskless. This means every time you take a risk, you have to look at what the other less risky investments promise in returns. This is why US10Y matters. As it rises, it puts lots of question and uncomfortable thoughts into investors mind. Should the investor take risk and buy the stock hopefully earning 10% or should just invest in US Treasury bonds and receive a yummy fat coupons? That is why US10Y matters a lot and it is telling us that the 2024 holds volatile for assets. -Signalwyse Team
TVC:US10YEducation
by Elbruks
2
US Treasury Yields Surge: Impact on Brazilian Markets📈🇺🇸 ON THE RISE! The 10-year Treasury bond yield surged by 15 basis points in a single day, reaching 4.85%, the highest level since 2007. The 2-year Treasury bond yields also climbed to 5.21% (+12 basis points), approaching levels not seen since 2006. This increase followed a surprising boost in retail sales last month, raising speculation that the Federal Reserve (FED) might raise interest rates again. Despite the FED's expectation of another rate hike later this year, several policymakers have indicated in recent weeks that they do not believe further rate hikes are necessary. This implies that Americans are likely to continue paying more for their mortgages, credit card balances, and bank loans, potentially curbing demand for goods and services as uncertainty grows. The rise in interest rates in the United States has a significant impact on the Brazilian stock market, exerting negative pressure on the markets. The increase in U.S. rates can lead to a phenomenon known as "risk flight," where foreign investors seek refuge in U.S. Treasury bonds, considered a safe haven in times of financial turbulence. This investor migration towards U.S. Treasury bonds may result in capital outflows from the Brazilian stock market, pushing down stock prices and generating volatility. "Brazilian risk" becomes a concern, as economic and political uncertainty in the country may prompt investors to reallocate their resources into safer assets, such as U.S. Treasury bonds. Therefore, it is crucial to closely monitor the relationship between U.S. interest rates and the behavior of financial markets in Brazil, as these events have significant implications for our investments and the economy. #Finance #Economy #Markets #FinancialMarkets #BrazilianRisk #Investments 💹🇧🇷🇺🇸💼💰
TVC:US10Y
by Barrosoo
1
Harnessing Gains from Yield Curve NormalisationNot too long ago, watching interest rates was as boring as looking at wet paint dry. Not anymore. Interest rates and currencies are as interesting as they get. The US dollar has been clocking moves more akin to an EM currency. The greenback has been on a rollercoaster ride over the past three months in line with market expectations of Fed’s interest rate policy path. This paper is set in three parts. First, the background to rising rates and spiking yields leads to a brutal bond sell off. Then, the paper evaluates the case for further Fed rate hikes. In the third and final part, it dwells into factors that support a rate pause. It is not just the rates but also the term structure of rates that’s gone off-the-chart. This paper posits a hypothetical spread trade inspired by the divergence in 30Y and 10Y treasuries with an entry at 13 bps and a target at 40 bps hedged by a stop at 5 bps delivering a reward-to-risk of 1.5x. RISING RATES AND SPIKING YIELDS Fed’s commitment to taming inflation with a higher-for-longer stance leads to a surging dollar. Spiking bond yields help reign in inflation through tightening monetary conditions. The US 10Y Treasury Bond Yields surged to their highest level since 2007, by 20% or 0.8 percentage points since July 17th. Chart 1: US 10Y and US 2Y Treasury Yields Yield and Bond prices are inversely related. Surging yields have hammered bond prices lower resulting in a staggering record sell-off. Leveraged funds hold a record net short positioning in US 2-year and 10-year Treasury Futures. Chart 2: Record Net Short Positioning by Leverage Funds This brutal selloff has pushed yields to their highest levels in more than 15 years. Among others, portfolio managers and traders can position themselves one of the two ways: Risk Hedged Yield Harvesting: Harvest risk hedged treasury yield using cash treasury positions and Treasury futures to generate income over a long horizon, or, Gain from Yield Curve Normalisation: Deploy CME Micro Treasury Futures to engineer a spread trade to realise gains from a normalising yield curve. In a previous paper , Mint Finance illustrated the first. Distinctly, this paper covers spread trade using CME Micro Treasury Futures. THE CASE FOR HIKING The September FOMC meeting re-affirmed a higher-for-longer rate regime. Though there was no rate hike, the updated Fed’s dot plot signalled very different expectations for the rates ahead. The dot plot was updated to show a final rate hike in 2023 and fewer rate cuts in 2024. Chart 3: Contrasting US Fed’s Dot Plot between 14/June versus 20/September ( Federal Reserve ) The Fed has adequate grounds to crank up rates even more as highlighted in a previous paper . These include (a) American exceptionalism where the US Economy has been remarkably resilient, (b) Expensive Oil due to geopolitics & receding base level effects, and (c) Brutal Lessons from past on the folly of premature easing. THE CASE FOR PAUSE Factors described above have led markets to price another rate hike at Fed meetings later this year. Those views have started to tilt further towards a pause since the start of October as per CME FedWatch tool. Chart 4: Target Rate Probabilities For 13/Dec Fed Meeting ( CME FedWatch Tool ) Bond yields have surged, helping the Fed with their fight against inflation. Yields on US Treasuries surged to their highest since 2007. As yields are inversely proportional to bond prices, this is the equivalent of a major selloff in the bond market. Three reasons behind the selloff: 1. Steepening Yield Curve: Yields are finally catching up to market rates, especially for long-term treasuries; yield curve is steepening Chart 5: Yield Curve is Steepening 2. Rising Sovereign Risk Premia: The US national debt passed USD 33 trillion and is set to reach USD 52 trillion within the next 10 years. Investors are demanding higher risk premia as compensation for default risk by a heavy borrower. Chart 6: US Debt to GDP Ratio 3. Higher Yield to Compensate for Scorching Inflation: Investors are demanding higher real rates amid a high-inflation environment. Chart 7: Real Yields are marginally above zero Bond yields seem to be peaking. Solita Marcelli of UBS Global Wealth Management opines that the recent upward momentum in yields has been spurred largely by technical factors and is likely to be reversed given the overhang of uncertainty over underlying forces guiding the Treasury market. Higher bond yields support a case for a Fed pause. This is because rising treasury yields do part of the Fed’s job. Higher treasury yields tighten financial conditions in addition to being a drag on the economy. The Fed officials shared similar sentiments over the past week: San Francisco Fed President Daly noted the moves in markets “could be equivalent to another rate hike”. The Atlanta Fed chief opined that he doesn’t see the need for any more rate hikes. The Dallas Fed President remarked that such a surge in bond markets may mean less need for additional rate increases. The Fed has made it amply clear many times that it is data dependent. The data about the economy is positive. And that is concerning. Jobs data last week, and a sticky CPI print raise concerns that the Fed’s hand might be forced to hike despite US inflation being low among G7. Chart 8: US Inflation is among the lowest within G7s HYPOTHETICAL TRADE SETUP Are we witnessing peak rates? In anticipation of the peak, investors can use CME Micro Treasury Futures to harness gains in a margin efficient manner. Micro Treasury Futures are intuitive as they are quoted in yields and are fully cash settled. They are settled daily to BrokerTec US Treasury benchmarks for price integrity and consistency. As highlighted in a previous paper , each basis point change in yield represents a USD 10 change in notional value across all tenors, making spread trading seamless. Setting up a position on yield inversion between 2Y and 10Y Treasuries is exposed to significant downside risks from near-term rate uncertainty. Instead, a prudent alternative is for investors to establish a spread with a short position in 10Y rates and a long position in 30Y rates. The 30Y treasury rates demand a higher term premium due to their longer maturity. Presently, this premium is just 0.15%. In the past, this premium has reached as high as 1% during periods of monetary policy shifts with yield curve steepening. Chart 9: US Treasury Inverted Spreads Furthermore, downside on this spread is limited as the 30Y-10Y premium scarcely falls below 0% unlike the 10Y-2Y premium which has been in deep inversion for the past year. A long position in 30Y Treasury and a short position in 10Y Treasury with: Entry: 0.130 (13 basis points) Target: 0.4 (40 basis points) Stop Loss: -0.05 (5 basis points) Profit at Target: USD 270 (27 basis points x USD 10) Loss at Stop: USD 180 (18 basis points x USD 10) Reward to Risk: 1.5x Chart 10: Hypothetical Spread (Long 30Y & Short 10Y) Trade Set Up MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. 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 DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Editors' picks
TVC:US30YLong
by mintdotfinance
11
US 10Y TREASURY: weight interest rate outlookThe US Treasury yield eased a bit during the previous week, after a sharp move to the upside, during the past two weeks. This comes as a result of market expectations that the Fed might skip further rate increases during the course of this year. Latest published inflation figures are indicating that the inflation is clearly on its down-path, but still there are some uncertainties which might impact its short reversal, especially due to geopolitical tensions. The 10Y Treasury yields started the previous week around 4.8% level, but soon eased and reached level of 4.5%. Still, yields are finishing the week around 4.6% level. As markets are now increasing probability for Fed to pause its further rate hikes during both November`s and December`s meetings, it could be expected for US Treasury yields to further ease. They will start the week ahead around 4.6%, with a high probability for 4.5% to be tested one more time, but there is no indication on charts that 4.4% might be reached in the week ahead.
TVC:US10Y
by XBTFX
US10Y Bullish as long as the 1day MA50 holds.The 10year Bond Yields / US10Y is trading inside a Channel Up since May 1st. The last two weeks the price is pulling back after a Higher High rejection and Double Top on Resistance A (4.888), aiming at the bottom of the Channel Up. That is a buy opportunity to target 4.888 again. If on the other hand the 1day MA50 breaks (is untouched since July 20th), sell and target 4.222 (Support A). Keep an eye on the Rising Support of the 1day RSI also for early bearish signals. Follow us, like the idea and leave a comment below!!
TVC:US10Y
by TheCryptagon
5
Markets embrace the Higher-for-Longer themeIt has been a big week of central bank policy announcements. While central banks in the US, UK, Switzerland, and Japan left key policy rates unchanged, the trajectory ahead remains vastly different. These central bank announcements were accompanied by a significant upward breakout in bond yields. Interestingly most of the increase in yields has been driven by higher real yields rather than breakeven inflation signifying a tightening of conditions. The bond markets appear to be acknowledging that until recession hits, yields are likely to keep rising. Connecting the dots The current stance of monetary policy continues to remain restrictive. The Fed’s dot plot, which the US central bank uses to signal its outlook for the path of interest rates, shows the median year-end projection for the federal funds rate at 5.6%. The dot plot of rate projections shows policymakers (12 of the 19 policymakers) still foresee one more rate hike this year. Furthermore, the 2024 and 2025 rate projections notched up by 50Bps, a signal the Fed expects rates to stay higher for longer. The key surprise was the upgrade in growth and unemployment projections beyond 2023, suggesting a more optimistic outlook on the economy. The Fed’s caution is justified amidst the prevailing headwinds – higher oil prices, the resumption of student loan payments, the United Auto Workers strike, and a potential government shutdown. Quantitative tightening continues on autopilot, with the Fed continuing to shrink its balance sheet by $95 billion per month. Risk assets such as equities, credit struggled this week as US yields continued to grind higher. The correction in risk assets remains supportive for the US dollar. A hawkish pause by the Bank of England In sharp contrast to the US, economic data has weakened across the board in the UK, with the exception of wage growth. The weakness in labour markets is likely to feed through into lower wages as discussed here. After 14 straights rate hikes, the weaker economic backdrop in the UK coupled with falling inflation influenced the Bank of England’s (BOE) decision to keep rates on hold at 5.25%. The Monetary Policy Committee (MPC) was keen to stress that interest rates are likely to stay at current levels for an extended period and only if there was evidence of persistent inflation pressures would further tightening in policy be required. By the next meeting in November, we expect economic conditions to move in the MPC’s favour and wage growth to have eased materially. As inflation declines, the rise in real interest rates is likely to drag the economy lower without the MPC having to raise interest rates further. That said, the MPC is unlikely to start cutting rates until this time next year and even then, we only expect to see a gradual decline in rates. Bank of Japan maintains a dovish stance Having just tweaked Yield Curve Control (YCC) at its prior Monetary Policy Meeting (MPM) on 28 July, the Bank of Japan decided to keep its ultra easy monetary settings unchanged. The BOJ expects inflation to decelerate and said core inflation has been around 3% owing to pass-through price increases. Governor Ueda confirmed that only if inflation accompanied by the wages goal was in sight would the BOJ consider an end to YCC and a rate shift. With its loose monetary policy, the BOJ has been an outlier among major central banks like the Fed, ECB and BOE which have all been hiking interest rates. That policy divergence has been a key driver of the yen’s weakness. While headline inflation in Japan has been declining, core inflation has remained persistently higher. The BOJ meeting confirmed that there is still some time before the BOJ exits from negative interest rate policy which is likely to keep the Yen under pressure. The developments in US Monetary Policy feeding into a stronger US dollar are also likely to exert further downside pressure on the Yen. This year global investors have taken note that Japanese stocks are benefitting from the weaker Yen, relatively cheaper valuations and a long-waited return of inflation. Japanese companies are also becoming more receptive to corporate reform and shareholder engagement. Adopting a hedged Japanese exposure Taking a hedged exposure to dividend paying Japanese equities would be a prudent approach amidst the weaker yen. This goes to a point we often make - currency changes do not need to impact your foreign return, and you can target that local market return by hedging your currency risk. A hedged Japanese dividend paying equity exposure could enable an investor to hedge their exposure to the Yen. This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
Editors' picks
TVC:US10Y
by aneekaguptaWTE
1
$DXY & $TNX & Rates show signs of exhaustionThe US #Dollar has pulled back a bit: At MAJOR SUPPORT At Green Moving Avg = Support RSI is at 50 (neutral bullish unless crosses lower) Weekly TVC:DXY is 50-50 The RSI is curling over but the MACD is now above 0 = down trend over Hmmm, interesting scenario Not sure what to make of it Monthly #currency ------------------------------- The 2Yr #Yield broke the recent up trend. While it has performed better than shorter term #interestrates it's gotten weaker recently. The RSI & MACD have been trending lower for some time and it's much easier to see on a weekly! Look @ that Severe Negative Divergence! Could rates be DONE? ------------------------------- The 10 Yr #Yield on the other hand has built good deal of steam lately. Weekly it is overbought. Monthly it's overbought as well. But what is interesting is that the MACD has only been higher 1x than current scenario. MACD histogram lower (arrow) = future MACD neg crossover? However, it's nowhere near as weak as short term #interestrates TVC:TNX
TVC:US10Y
by ROYAL_OAK_INC
5 Steps:Turn Your US02Y Into A Asset#1-This Is The US02Y Your Broker Doesnt Want You To Know About Trading these bonds can be a challenge if you dont know technical analysis. #2-What Everybody Ought To Know About The US Government Bonds 2 Year Yield Business Getting a yeild on your trade is the most important factor especailly when it comes to ttrading for profit. #3-These Must Be Some Of The Best Kept US02Y Secrets In The World The secret is always to know when the right time to buy is, once you know that then you can make a good profit on your trades. #4-WARNING:Do Not Try Another US02Y Trade Until You Get This If you dont know how to trade TVC:US02Y this kind of set up then better yet do not do it without past experience or knowledge. #5-How To Trade US02Y Minute By Minute Trading this set up is something so simple.So take a look at the chart above you - have you noticed that the candle stick is below the bollinger band? what does that tell you about this price momentum? Disclaimer:This is not financial advice do your own research before you trade Rocket boost this content to learn more
TVC:US02YLong
by lubosi
US 10Y TREASURY: is it over?The US Treasuries were in the market spotlight during the previous week. Their sell-off continued also during the week, when yields reached their highest level at 4.88% for 10Y benchmark, which was its highest level for the last 16 years. The yields started to relax a bit on Thursday, however, Friday’s strong jobs report supported market sentiment on potential for another Fed's rate hike during this year, and yield slipped back toward the 4.80% where they are finishing the week. As US inflation figures for September will be posted in the week ahead, the current question is whether the market has fully priced another rate hike by the Fed during the previous week or it will need some more time? Current yields are in a range of those from the 2008 financial crisis, and potential higher levels of 10Y Treasury bonds from those in 2008 would certainly send a negative sentiment to many holders of the US Treasury bonds all over the world, let aside consequences which many institutions could have due to negative valuations. At this moment some precaution could be advisable for the US Treasuries. Charts are pointing for some time on potential for reversal and so is for the week ahead. The level of 4.6% is pointed on the charts as a potential next stop of 10Y yields, however, markets might easily decide to act in a different way in the week ahead.
TVC:US10Y
by XBTFX
Did the 10 year yield break in 2008?Good day Traders and investors, The 10 year yield on the 6 month chart. This is the entire history on one chart. What is going on with the 10 year yield? It is getting very, very volatile. It all started in 2008 with the financial crisis just looming around the corner. At the same time it broke the .236 on the Fibonacci sequence and has been diving ever since. That is until the next major crisis of the pandemic where is seems to have bottomed and took a strong bounce off a cliff dive. What does all this mean? did something break in 2008 like a lot of economist are saying? It's very possible. When we look at the chart, the 10 year yield compared to the last decade has been very stable. Even during the Volker years (late 70's early 80's) when interest rates spikes it barely made a move out from the norm and then rode the top of the trend as support for years until 2008. This volatility break out does look deferent and kind of scary. What will the volatility lead too, massive spike? or massive plunge? Could it also just bounce around sideways for years? What we have to keep in mind is, these are historically long-term trends. 20 to 40 years. Could this move up be a fake out? Yes, I think it's possible, however a fake out is on this chart 5 to 10 years, so it's of no major concern at the moment. THE INDICATRORS Right away, when look at the chart and the RSI, we see clear weakening and bearish divergence on the trend. We can see it playing out (bearish divergence) from 1968 to 1981, when the yield made a higher high but the RSI made a lower low. As we can see the divergence did play out, but it took almost 2 generations in 40 years. Also the ASO has been showing that the sentiment over the yield has been lessening over the years on the up swings and down swings, but it just had a major cross, so is that over now? Time will tell, a lot of it. Touching on the Historical volatility again, we clearly see a sense of somewhat controlled or stable volatility for close to 100 years until 2008. Could this new volatility be the new trending range for the next hundred years? Possibly, if so, it shouldn't concern us. For now, we should just focus on the next 5 to 10 years and see what happens. I have included a couple of scenarios in the chart. If the RSI gets rejected from this down trend, then yes, this is the chance that it could be a fake out move and then reverse and go lower. If volatility stays high and the trend is to go up for 20 to 40 years then I do believe the RSI would have to break this down trend. both of those in my opinions are scary, the 2nd one than the first. There is also sideways action for a decade and possible a cool down of the volatility before the next move, I would prefer this one, as it seems less scary to me. THE FLUFF AND EXTRA I think the yields being a fake out and go lower is the least likely scenario. However, (and here is the Fluff) my conspiracy mind has one scenario where this could happen. It all hinges and plays on CBDC's becoming a thing during this time frame. The theory is if CBDC's are introduced within the next 5 to 10 years then the yields could reverse, go back and make new lows at some point. The reason being is I don't think we can go negative yields without CBDC's. That doesn't mean it's a given if CBDC are implemented, it means the doorway would be opened for it. Remember, this is just FLUFF and opinion and means nothing. Kind regards & Have great day Demetrios
TVC:US10Y
by WeAreSat0shi
1
We've seen the top on yields in the US DollarENG: Very basic and simple info: Bond yields go UP when no one is interested in buying bonds. It's a way to entice market participants to buy in. - We saw yields on the 10 year paper go up in quite a quick move. - No one was buying long term US treasuries. - All of the sudden we saw an intervention by big money last week that went hand in hand with the Yen (I'll explain separately). - There hasn't been any explanation by anyone about this mysterious opportunistic buyer that made yields cap at around 4.88%. MY THEORY: The United States intervened and made these purchases themselves. WHAT IT TELLS ME: They want to keep the rates/yields right there and not be forced into more rate hikes. WHAT DO I EXPECT? I expect yields to start dropping and face value for the bonds to go up. ESP: Información muy básica y simple: Los rendimientos de los bonos suben cuando nadie está interesado en comprar bonos. Es una forma de atraer a los participantes del mercado para que compren. Vimos que los rendimientos en los papeles a 10 años subieron rápidamente. Nadie estaba comprando bonos del Tesoro a largo plazo de EE.UU. De repente, vimos una intervención por parte de grandes sumas de dinero la semana pasada que fue de la mano con el Yen (lo explicaré por separado). No ha habido ninguna explicación por parte de nadie sobre este misterioso comprador oportunista que hizo que los rendimientos se limitaran alrededor del 4.88%. MI TEORÍA: Los Estados Unidos intervinieron y realizaron estas compras ellos mismos. LO QUE ME DICE: Quieren mantener las tasas/rendimientos justo ahí y no verse forzados a incrementar más las tasas. ¿QUÉ ESPERO? Espero que los rendimientos comiencen a bajar y que el valor nominal de los bonos suba.
TVC:US10Y
by salomondrin
A Traders’ Playbook; The markets doing the work of central banksAfter a strong tightening of US financial conditions – primarily led by higher real rates and USD – we hear increasing acknowledgement that the markets are doing the heavy lifting of central banks and replacing the need for them to hike the Fed funds rate. That was the message we heard last week from Fed members Daly, Goolsbee and Bostic. This suggests that if we get a hot US CPI print this week then market players will increase exposure to yield curve steepeners trades, with reduced interest to short US 2yr Treasuries - In turn, this should limit the upside in the USD, given the near-zero correlation between the USD and the 2s v 10s Treasury curve. With a focus on the US bond market, consider the US Treasury department will be issuing $101b in 3-, 10- and 30-year Treasuries this week and that could move markets around. Technically, we are seeing that the USD appears to be consolidating, and while it comes with a hefty dose of risk, momentum accounts are again looking at the JPY shorts. NZDJPY longs look interesting for a potential breakout, especially with China coming back online, where we can see ‘green shoots’ appearing in economics. For those whose strategy thrives in higher vol regimes, then cast their eyes to LATAM FX, where outsized moves in the COP, CLP and MXN have come up on the day trader's radar. US CPI aside, it will be a central banker fest this week, where an extensive list of Fed, BoE and ECB officials will be speaking at NABE (National Association of Business Economics) and IMF conferences. It feels like the market has made up its mind that the ECB and BoE hiking cycle is over, so Fed officials could move markets more intently. We also get US Q3 earnings roll in, with the big money centres in play, and this puts the US30 index front and centre for index traders this week. For the political watchers, the process of finding a new House speaker will evolve and that could have big implications for the next shutdown negotiations from 17 November. Amid rising geopolitical concerns crude remains front of mind, and we watch the reaction for the futures open, with S&P 500 and NAS100 futures skewed modestly lower on the re-open. Marquee economic data to navigate: US CPI (12 Oct 23:30 AEDT) – arguably the marquee event risk of the week. The economist’s consensus is we see both headline and core CPI increase 0.3% MoM. This should take the year-on-year clip on headline CPI to 3.6% headline (from 3.7%), and core CPI at 4.1% (4.3%). The market’s pricing of headline CPI (in CPI fixings) is 0.25% MoM and 3.54% YoY. A 3-handle on core CPI would be welcomed news and see USD longs cover and see XAUUSD and NAS100 push higher. Above 4.3% could see pricing for the November FOMC increase to around 40% (currently 29%) and see bond yields rise, putting renewed upside into the USD. US swaps pricing per FOMC meeting US PPI inflation (11 Oct 23:30 AEDT) – final demand is expected at 0.3% MoM, with core PPI eyed at 2.3% yoy. The market is less sensitive to PPI than the CPI print, but a big beat/miss to consensus could hold implications for how economists estimate PCE inflation (due 27 Oct) China new loans (no set day this week) – While incredibly hard to forecast, the market sees a rebound in credit with new yuan loans eyed at CNY2.5t (1.35t). Above consensus numbers could see China/HK equity build on Friday’s impressive rally and see AUD & NZD outperform. China CPI/PPI inflation (13 Oct 12:30 AEDT) – The lowflation regime in China continues but should gently rise to 0.2% (from 0.1%) on consumer prices and -2.4% on producer prices. USDCNH has consolidated through China’s Golden Week holiday, but should we see a trend emerge, the direction of this cross could influence G10 pairs. China trade data (13 October no set time) – The modest improvement seen in the China economic data flow should continue with exports expected at-7.3% (from -8.8%) and imports at -6% (from -7.3%). Better-than-feared numbers could see China equity push higher. BoE credit conditions report (12 Oct 19:30 AEDT) – we get the UK monthly GDP and industrial production (both due at 17:00 AEDT) and both should remain weak. The BoE’s credit data should also be lowball, notably given what we’ve seen in recent mortgage approval numbers. Traders will be paying attention to BoE speeches this week with swaps pricing essentially pricing the BoE to have finished its hiking cycle. Mexico CPI (9 Oct 23:00 AEDT) – the market eyes headline CPI at 4.5% (from 4.64%) & core CPI at 5.75% (6.08%). The MXN finds few friends – largely due to weaker crude prices – but local data could play a greater role this week. USDMXN has found supply into 18.40, but swing traders may look at the 17.90 area to buy pullbacks for another leg higher. US Q2 earnings this week – Citi, JP Morgan (13 Oct), Bank of America, Wells Fargo, UnitedHealth This week we get the US big money centres out with earnings. The focus falls on asset quality, loan demand, net interest margins (NIM) and any commentary on the recent tightening of broad financial conditions. A focus on the US30 index When we look at the companies included in the US30, there are only two banks (of the 30 constituents) - Goldman's and JP Morgan. However, the US30 holds an incredibly high relationship with the XLF ETF (S&P financial sector ETF), with a 10-day correlation of 93%. With so many of the major financial institutions reporting, assuming this relationship holds up, the US30 should mirror the movement in the US banks. Another important risk for US30 traders this week is how the market reacts to earnings from United Health (UNH - report on 13 October). UNH commands a massive 10% weight on the US30, arguably the biggest weight on the index. UNH is not a stock that CFD traders look at as closely as a say Tesla or Nvidia, given its more defensive price action. It’s one for the range traders, where buying into $460 and shorting into $520 has worked well over the past 12 months. However, given the weighting, US30 traders should be aware of the influence the stock can offer. The market prices an implied move of 2.6% move on the day of UNHs reporting, which is in fitting with the average price change over the past 8 quarterly reporting periods. UNH has seen some large percentage moves over earnings and recall in the last earnings report the stock rallied 7.2% - so a sizeable rally/decline would influence the US30 given the weight. While macro factors such as moves in bond yields, the USD and oil prices will influence the US30, one can see that earnings this week could also play a major role – time to buy the dip, or are we about to see a leg lower in the index? Central bank speakers Fed speakers – on first blush Fed governor Christopher Waller may be the marquee speech to listen to ECB speakers – A big week of ECB speakers to navigate – EUR traders, how do you like your noise? As said, the market is fairly sure that the ECB are on hold for a lengthy period. BoE speakers – with the markets feeling the BoE wont hike further, comments from BoE officials Mann, Pill and Bailey will be closely watched to increase confidence on that pricing RBA speakers – Assistant governor Christopher Kent (11 Oct 12:00 AEDT)
TVC:US10Y
by Pepperstone