MOVE trade ideas
Bond market option volatilityMOVE is spiking again. We're nearly up to the levels last seen in March 2020.
What is happening that is causing what we see nowThis is the Move index.
It measures the volatility in the Bond market.
The higher it goes, the more volatility.
It was said a reading above 150 means Fed losing control. It has now approach level seen in 2020.
Market may be hoping that the Fed will step in to save the day, either with QE or RATE CUT.
But the question remain if Fed will do so with current INFLATION. My guess is NOT as Powell had said repeatedly.
Lets be cautious. If Fed remain steadfast, EURUSD will fall.
Is 158 the magic number for the fed to cut rates ? ....Is 158 the magic number of the MOVE index (bond volatility) for the fed to cut rates ? .... A simple analysis... just a pity this index hasn't a bigger historical price range....
Bond Market Volatility & EconomyBond yields serve as a leading indicator of economic performance, with major headwinds in the form of inflation and labor shortages, short-term yields have begun to invert demanding higher premiums than longer-term bonds.
As the bond market moves in anticipation, volatility increases and serves as a signal to the broader economy.
$MOVE provides a benchmark with bond market volatility, with an uptrend and spikes nearing Feb/Mar 2020.
The chart presents measurements going back to lat 2002, reflecting a dramatic uptick in volatility as the housing market collapsed in 2008.
The uptrend reflected now is serving as another warning to the markets that turbulent times lay ahead.
Rate volatility breaks March 2020 high!Here we have the MOVE index.
This expresses the volatility in bond yields, and to an extent, 'fear' in the bond market.
It seems to be quite under the radar right now, but I want to outline why this is important.
The index is currently above the March 2020 settlement high...
And yet US equities haven't necessarily reacted to this move just yet.
But we're seeing signs of stress now in the credit market...
This chart is showing the BAML high yield options adjusted spread FRED:BAMLH0A0HYM2 .
This is important, as it's showing the difference in yield between the treasury curve and all bonds rated BB and below, weighted by market cap...
And we can currently see that this is rising, trading at the highest price since December 2020.
This is where the real risk degradation will come from, and it is starting to follow the overall move in sovereign bond yields (identified by the MOVE index) as global central banks become more and more hawkish.
For firms with a lot of high yield debt, this is not good, considering their margins are likely to be very thin and they could be defined as 'zombies', or firms that are only surviving because they can service their current debt levels.
If this debt cost increases, they will face even more hardship.
Make sure to keep an eye on both of these indices going forward.
Volatility StorytellersThe Bond volatility index MOVE, shot up towards the end of today's trading session. Will VIX catch up?
Good luck!
(Not a trading or investing advise to anyone)
MOVE - What being on the edge looks likeMOVE is to bond markets what VIX is to equity markets.
It has been moving very close to trend line lately. Chart experts will see patterns playing out.
Where to next?
This is not an investment or trading advise to anyone.
The Fed Pivot ZoneThe federal reserve uses a large set of indicators to measure the risk premium in US economy asset prices. The ICE MOVE index which measures the volatility of the US Treasury market is one of those indicators, as government bonds theoretically provide a "risk free rate" to market participants
I believe that the infamous Fed put can be more readily measured in the UST market, then in equity index prices, which makes the ICE MOVE index a better leading indicator on where the Fed may or may not pivot from whatever their current course is
Bond VX IncreasingFar too many SELLERs in Bonds, which remains Bullish for the 007s.
Bond VX is seeing its higher ROC for a very long time.
A boat ready to Capesize.
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Wood Panerlers will be rejoicing Momentarily.
Not our trade until it is a SELL and that is not now, March perhaps.
For now, the other greatest Offsides... is VX
We prefer this SandBox as the amount of kitty litter clean up is
minimal.
Move vs Vix 30 day Negative Correlation analysis ...Move vs Vix 30 day Negative Correlation analysis ...
Credit - Bonds Volatility MegaphoneIdea for MOVE:
- Bond markets seeing volatility after the Quad Witching and FOMC double whammy.
- US02Y 2x ATR spike:
- Expecting turbulence the rest of the month.
GLHF
- DPT
MOVE bond index and Stock index ... MOVE bond index and Stock index ... Looking for significant divergence in price action
MOVE breakout correlation to SPY/UVXYMost of my ideas have been outlined in detail in prior posts which can be quickly viewed through my profile.
I wanted to add this as another possible interesting indicator of a possible upcoming market crash.
You can see the last bull flag in 2020 that led to the SPY COVID-19 market crash and ridiculous UVXY rally.
Will we see a repeat of the everything bubble popping in July/August?
Have a lovely day.
S+S
TTT
