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Interestrates

US 10 YEARS - W1 - HARAMI !Last week price action triggered an "Harami" pattern, which is likely to trigger further sideways price action over the coming days ! Indeed, usually such kind of pattern, following a long black candle is normally bullish if the last candle is very small in comparison with the previous one, which is not the case now as the last weekly candle is pretty "big" which confirm some uncertainty about further development ! In addition, after having tested an intraweek low of 1.34% the week before, the 10 years recover again slightly above the top of the weekly clouds support which might be seen as a positive (yield) price action but... it is still below the Tenkan-Sen or Conversion line, currently @ 1.52 % and upcoming price action this week and more important its closing level will give more clues for the future. Globally, the ongoing (yield) bearish downtrend is still in place and only a clear upside breakout of this downtrend channel top, currently @ 1.69%-1.70% would force to a view reassessment of the expected ongoing downside pressure calling for lower yield towards the bottom of the clouds support zone around 1.15% - 1.10 % which also coincides with the ongoing former uptrend support line, currently around 1.12 % and which also was the former lows reached on July-August. On a daily basis, watch the clouds resistance area and the Mid Bollinger band as a good barometer too a clear and sustainable breakout of those areas would be the first signal for further upside (yield). Have nice trading week. Ironman8848 & Jean-Pierre Burki
TVC:US10Y
by Ironman8848
3
The Bond Marekt Awaits Inflation DataBonds have continued their slow decline trough support at 130'07 and are hovering just above 130'00. We are starting to see support form in the middle of the vacuum zone between these two levels, confirmed by two green triangles forming on the KRI. Both Kovach momentum indicators have dropped precipitously, which might indicate that we are staring to become oversold and that 130'00 is a floor for now. If we see a relief rally, watch 130'07 or 130'19 for a target. If we continue to decline and break 130'00 then 129'26 is the next target. ZN is likely not to make any significant moves until CPI data comes out this morning.
CBOT:ZN1!Short
by quantguy
Why Is The BoE Interest Rate Decision On A Knife’s Edge?The Bank of England (BoE) has a difficult decision ahead of it. Next week, on December 16, 2021, it must release its decision regarding its benchmark interest rate. The two options on the table are for the Bank to increase its interest rate or leave it as is. Why is the BoE interest rate decision on a knife’s edge? Inflation in the UK is at a 10-year high Consumer prices in the UK have increased YoY by 4.2% up to October. Prices increased most in energy commodities such as gas and liquid fuels. The BoE is tasked to keep inflation ~2% per annum. However, the BoE view is that inflation will return below 3% on average by the second quarter of 2022, and further downside movement in Q3 and Q4. This all means any intervention right now could turn out to be unnecessary or heavy-handed. As it stands, the BoE’s benchmark interest rate is a historically low, 0.1%. How long will ‘transitory’ UK inflation last? The US Federal Reserve and the US Treasury figureheads have recently dumped the categorisation of inflation as “transitory”. However, the BoE hasn’t been pressured as much as the US institutions to drop the transitory line. The BoE continues to hold out hope that the major drivers of inflation, such as energy prices, will subside by mid next year. The transitory nature of inflation, as the BoE see it, is concerning, as it means they run the risk of hiking interest rate before it is necessary. Yet, no matter how transitory the high price of energy may turn out to be, the Bank of England’s hand may be forced by other matters, such as UK workers demanding much higher wages in response to the prolonged transitory inflation. How possible is a wage-price spiral? UK workers are feeling the pinch of rising energy and consumer product and have been asking for wage increases to help mitigate the decrease in their disposable income. Average weekly wages (including bonuses) in the UK have risen 5.8% YoY to September. The BoE has graded the wage growth for the UK as moderate and has dismissed the possibility of a “wage-price spiral”. Yet, if the major drivers of inflation do not abate in a reasonable amount of time, the BoE run the risk of inflation becoming entrenched as UK workers demand further pay rises. Further exacerbating the issue is the tight labour market in the UK, with unemployment and under-employment currently at pre-pandemic lows, helping driving wage growth.
by BlackBull_Markets
Gold Hits Our Target!! What's Next??Gold has broken through to higher levels, punching through the resistance in the 1780's and edging toward 1795. We are starting to see some red triangles form on the KRI suggesting we are encountering some resistance here. Unless some serious momentum comes through, 1795 should provide prohibitive resistance. The Kovach OBV has tapered upwards but does not seem to suggest that we have sufficient momentum at this point to achieve higher levels. If we do, then there is a vacuum zone above to 1815. If not, we anticipate gold to establish value back in the 1780's, with 1777 being the min lower bound for now.
COMEX:GC1!
by quantguy
Gold Establishes Value, Forms Narrow RangeGold has found stability in the exact range we identified: 1770 to 1775. We even discussed how it was likely to consolidate further between 1777 and the 1780's which is exactly what happened. In particular, 1777 and 1784 seem to be the lower and upper bounds respectively. Gold is likely to establish value further, but the range has narrowed significantly, and when this happens we are setting up for a breakout either way. Still, 1777 to 1795 should hold. Watch the vacuum zone above to 1815 and below to 1759. The Kovach OBV is still bearish but is starting to flatten a bit as momentum recedes.
COMEX:GC1!
by quantguy
Stocks hit by New Wave of FearStocks are edging lower in a zig zag pattern as every rally seems to get sold off. We have more risk off sentiment in the markets as Evergrande takes its turn as the center stage of fear stoking news. Evergande shares have tumbled as another debt payment deadline looms. We saw strong resistance from 4580, but rejected this, as confirmed by a red triangle on the KRI. We are roughly in the middle of a range between this as 4504. It could go either way, as we are still quite bearish and could see a relief rally. But we must definitively break 4580 in order to cross the vacuum zone above to 4632, which seems unlikely. From below, we should see support from 4504, then 4487 and 4462 would be the next targets.
FX:SPX500Short
by quantguy
1
US 30 YEARS - W1 - CLOUDS BROKEN !!!Last week price action triggered, as for the US 10 years, a long black candle which in this case also broke the weekly bottom clouds support level @ 1.85. The US 30 years is currently on an ongoing downtrend channel, very close to the 50 % Fibonacci retracement @ 1.6130 (0.71-2.5160); RSI below 50 @ 34.04. Watch closely price ongoing price action and monitor closely the Lagging line which for the time being, after having successively broken the Mid Bollinger Band and the Kijun-Sen is still above the clouds !!! A failure, for the Lagging line to close on the next weekly closing basis above the clouds would add further pressure to the downside in putting the focus for lower levels towards the next significant support area around 1.40% which is also the 61.8% Fibonacci retracement. CONCLUSION : As for the US 10 years, watch and monitor closely price action on a daily and intraday basis to detect early reversal signal (s) whihc for the time being should be seen as a corrective move in broad ongoing (yield) bearish trend. Ironman8848
TVC:US30Y
by Ironman8848
US 10 YEARS - W1 - WATCH THE CLOUDS !Last week price action triggered a long black candle which broke on a weekly closis basis, both the Mid Bollinger Band and the Kijun-Sen or Base line. Such kind of price action should be seen as a negative (yield ) signal, calling for lower levels. In addition, the former uptrend support line which stated at the beginning of August @ 1.1270 has also been broken which also should be seen as an additionnal warning signal calling for further downside move with the focus on the bottom of the weekly clouds, currently around 1.15% which also roughly coincides with the cluster of former bottom and the primary uptrend support line. Therefore, this 1.15%-1.10% next significant support area, on a weekly closing basis, should be seen as THE KEY PIVOT LEVEL !!! MONTHLY PICTURE : Looking briefly at this long term time frame, we can see that the cluster (Mid Bollinger Band and Kijun-Sen is also currently @ 1.1500 which corroborate my weekly view above mentioned. A failure to hold above this point, would open the door for lower level towards 1.0570 (50% Fib ret) ahead of 0.8870 (61.8% Fib ret) CONCLUSION : Watch and monitor closely price action on a daily and intraday basis to detect early reversal signal (s) which for the time being should be seen as a corrective move in a broad ongoing (yield) bearish trend. Ironman8848
TVC:US10Y
by Ironman8848
Bonds Consolidate, Breakout Soon??Bonds have consolidated as we have expected. We are seeing strong support at 130'19, and appear to be forming a flag pattern bounded by 130'07, and 131'02. The Kovach OBV is trending up slightly, suggesting a small bull bias. From here it could go either way. The Fed is discussing tightening, which would be bearish for bonds, but persistent risk off sentiment due to the Omicron strain could give ZN a lift, though it appears this may be priced in by now. We will see continued support from the upper and lower bounds of the range. Volatility has consolidated quite a bit so we expect a breakout either way potentially soon.
CBOT:ZN1!
by quantguy
1
EURNZD - another shortBased on the daily chart, the N100 stock index has grown today and the oil seems to be stabilizing preparing for growth. Both of the two assets are anti-correlating to the EURNZD pair which I explained several times in both educational articles and pair-delegated ideas. Furthermore, NZD did increase its interest rates. This would normally lead to NZD growth, hence EURNZD's drop. However, the drop has not started yet and although it never has to, it just doesn't have to work like that single time, I do believe that the recent rally was driven by a lot of fear in the commodity markets as the following chart explains. The commodity index CRB has just started dropping. Baltic Dry Index has been for some time, which is an average for shipping costs calculated every day. I will be opening another short in this market at some point. I am waiting for price action now.
Short
by OrcChieftain
1
US Dollar Digests RisksThe US dollar has stabilized, and 95.82 seems to be providing good support. We have a green triangle from the KRI confirming the support, even though yesterday, we dipped slightly lower in an attempt to crack it. Some volatility came through after that, and the rally was finally thwarted by 96.65, the final level in the 96 handle. A red triangle on the KRI confirms the resistance here. We are likely to range in a sideways correction after such a large rally that took us from the 92's all the way to the low 97's. We should be able to hold the range from 95.82 to 96.65, but beware of the vacuum zone down to 95.26.
TVC:DXY
by quantguy
1
An opportunity in the making on EURNZDEURNZD broke above a recent swing high in spite of NZ Bank's raising of interest rates by 0.25 points. I think there is an opportunity in the making. There might have been a lot of liquidity above the recent high. People are putting stop-orders in this area - whether the intention is to enter in the opposite direction or to exit their shorts. If it reverses now, there won't be a technical reason why Euro would rise further since the big money are expected to load their orders in this alleged liquidity-dense area. Central Banks Rates are in the bottom: Black ~ EUR, Red ~ NZD Further technical view dictates the importance of moving averages. Guess what, EURNZD has just approached its 5 EMA and bounced off around midday today (Central European Time). To support my thesis correlatively, I chose Oil and Euronext 100 which both have high anti-correlation against this pair. You can view both Oil and Euronext under the chart. Candles are colored as follows: Purple ~ anti-correlation, Yellow ~ correlation The oil has produced two relatively big yellow candles for an anti-correlating asset. From this perspective, EURNZD has some catching up to do in the downward direction. I guess the logic could be that the EU needs to be spending more money to buy oil and as a result, there is more in circulation. But correct me if I am wrong - I've adopted the relational analysis only recently and I write this with the hopes that someone will help improve via insightful comments/PMs. With Euronext, and this I am not completely sure either, I think its that the cheaper currency means easier exports for European companies. But again, I was mostly a technical guy not so long ago. Anyway, from the technical perspective, it just bounced off its 50 EMA. I will be watching the market closely tomorrow and at some point, I would like to enter a short if the market shows some follow-up (bearish engulfing on 1D or 1H). Good luck!
Short
by OrcChieftain
2
Inverse Head and Shoulders in Bonds??Bonds have seen a bit of a relief rally as we predicted yesterday. They hit the exact target we identified, 130'00, before settling near support at 129'26. We anticipate a quiet market as we go into the US hoiday for Thanksgiving. The Kovach OBV is still solidly bearish, suggesting that this rally may be just a relief rally. That being said, we do have an inverse head and shoulders pattern forming with a neckline at 130'00. If we break out further, we could easily hit 130'07, or 130'19. If the selloff continues, our next target is 129'11.
CBOT:ZN1!
by quantguy
EUR/TRY SKYROCKETS AFTER INTEREST RATE CUTSEUR/TRY skyrocketed today after Turkish President Recep Tayyip Erdogan defended the massive and continuous interest rate cuts amid double-digit inflation. He said this is part of an “economic war of independence,” rejecting calls from investors and analysts to adopt a different strategy. Turkey's short-term external debt stock rose to $124.4 billion, an increase of +8.8% since the end of 2020. The rise in USD/TRY and EUR/TRY rates will exacerbate Turkey's debt problems over the coming months. According to data released by the CBRT, nearly 43% of the country’s debt was denominated in US Dollars, and just over 25% was denominated in Euros. Inflation is near 20% in Turkey, and the Turkish central bank has cut interest rates by 400bps since September, with the latest one being 100bps, delivered last week. This, combined with investors' fear over the lack of independence of Turkey’s central bank, has resulted in a 40% drop in the lira this year and 20% since the start of last week alone. From a technical trading perspective and looking at our oscillator indicators, we notice that MACD is above zero, and the trigger line and RSI is strongly in the overbought zone. The price yesterday stopped at 2.00 Fibo level, and it would be interesting how it will react in the following days. According to the experts, the rate would continue conquering fresh highs, and the price could reach the next Fibo level 2.272 at a price around 15.50. But if it starts correction from this key point, it is possible to drop down to 1.618 Fibo level at price levels around 13.50, and if the price breakthrough the following story, it is possible to see the rate dropping all the way back around 11.50 levels. Risk Disclosure: Trading Foreign Exchange (Forex) and Contracts of Difference (CFD's) carry a high-risk level. By registering and signing up, any client affirms their understanding of their own personal accountability for all transactions performed within their account and recognizes the risks associated with trading on such markets and such sites. Furthermore, one understands
by legacyFXofficial
1
One little observationAs I was updating the Interest Rates indicator, one thing that caught my eye was the negative correlation with bitcoin price. Increasing rates make "currencies" more expensive. After the increases, Bitcoin price was making great gains. Decreases in interest rates make "currencies" cheaper. After the decreases, not long after, the rally started. I don't know if there is a correlation but there might be. Interest Rates used to be a key indicator in the currency markets. Since Bitcoin is denominated in US Dollars, it would make some sense.
BITSTAMP:ETHUSD
by OrcChieftain
1
The Road To Normalcy Begins (06 November 2021)Fed starts tapering! The long-awaited taper meeting has finally arrived! The Federal Reserve announced during their monetary policy meeting on Thursday that it will begin slowing down its net asset purchases by $15 billion per month which comprises of $10 billion Treasury bonds and $5 billion agency mortgage-backed securities. The first round of tapering will begin later this month and the second round will take place at the beginning of December. Moving forward, the monthly pace of quantitative easing (QE) tapering will be similar to these two months and may be adjusted depending on the economic outlook. Regardless of the pace, the Fed is expecting QE to end by mid-2022. The following illustration shows that under the same tapering pace, QE will end in June 2022. Nov 2021: $70b Treasury Bonds + $35b Agency MBS Dec 2021: $60b Treasury Bonds + $30b Agency MBS Jan 2022: $50b Treasury Bonds + $25b Agency MBS Feb 2022: $40b Treasury Bonds + $20b Agency MBS Mar 2022: $30b Treasury Bonds + $15b Agency MBS Apr 2022: $20b Treasury Bonds + $10b Agency MBS May 2022: $10b Treasury Bonds + $5b Agency MBS Jun 2022: End of QE A small step back on “transitory” With the recent comment made by Fed Chairman Powell that supply bottlenecks will take longer to ease, thus expecting prices to remain high for a longer period of time, the Fed has taken a small step back from its view on inflation being transitory. The previous confidence that the elevated inflation “largely reflecting transitory factors” has now been revised to “largely reflecting factors that are expected to be transitory”. During the press conference, Powell also clarified the definition of “transitory” that the central bank adopts after highlighting that the word has different understanding to different people. For the Fed, “if something is transitory it will not leave behind permanently – or very persistently higher – inflation”. With the ongoing supply chain disruptions, the central bank Chief is expecting inflation to continue its rise into 2022 before easing back down during mid-2022. Maximum employment still quite a distance away Although tapering of the massive $120 billion per month QE programme has begun, Powell warned that the Fed’s decision to do so does not imply a rate hike is underway. The central bank held its interest rate unchanged at the targeted range of 0-0.25% and would like to see the labour market achieve maximum employment before considering a hike. As of the October’s jobs report, the U.S. job market is still some 5 million jobs away from the pre-pandemic level. The Fed is likely going to consider a rate hike only when the jobs lost during the pandemic have been fully recovered. Even so, the central bank may wait a little longer to be certain that jobs growth is indeed consistent before committing.
TVC:DXY
by GH_Lee
3
Bonds Establish ValueBonds have dipped but have found support at the levels we identified yesterday. ZN retraced from relative highs at 131'02 to 130'19. It has since rebounded and is currently testing 130'26. The Kovach OBV was quite strong, but has dipped with the retracement. We appear to be forming value between 130'19 and 131'02. If this is the case, then expect further support at 130'19 and resistance at 131'02. Beware of the vacuum zone below to 130'07. The next target above is 131'12.
CBOT:ZN1!Long
by quantguy
1
A Rate Hike Before 2024? (04 November 2021)The Reserve Bank of Australia (RBA) concluded its monetary policy meeting on Tuesday with no change in its weekly A$4 billion bond purchases, aka quantitative easing (QE), while holding interest rate unchanged at 0.10%. What has changed during this meeting is the ending of the central bank’s yield curve control (YCC). Dropping the YCC It all began when the RBA carried out an unscheduled purchase of A$1 billion of April 2024 Australian government bond back in 22 October in an attempt to tame the rising yield, bringing it back down to the central bank’s 0.10% target. Towards the end of October, yield on the April 2024 bond sky-rocketed to 0.75%, the biggest monthly increase since 1994. This time round however, the RBA did not attempt to bring down the yield to its target through any purchase of bonds, leaving the market to speculate that the RBA may be discontinuing its YCC during its November meeting. The decision to end the YCC “reflects the improvement in the economy and the earlier-than-expected progress towards the inflation target” as explained in the rate statement. With the rise of interest rates from other markets, the central bank felt that the efficacy of the YCC has vanished. An earlier rate hike timeline The RBA has repeatedly emphasized that an interest rate hike will be considered only when inflation is sustainably achieved within its 2-3% target. Prior to the November’s meeting, the central bank forecasts that this condition “will not be met before 2024”. However, it has revised this forecast somewhat optimistically in yesterday’s statement, indicating that: “The Board is prepared to be patient, with the central forecast being for underlying inflation to be no higher than 2½ per cent at the end of 2023 and for only a gradual increase in wages growth.” With this revision, the RBA is now implying the possibility of inflation coming into the 2-3% targeted range at the end of 2023. This means it is fair game for the central bank to carry forward its rate hike timeline. Overall positive economic projections The RBA’s quarterly economic projections for 2022 and 2023 have underwent positive revisions. Specifically, inflation projection has been revised upwards which is good as it is the main deciding factor of a rate hike from the central bank. The RBA now expects inflation to fall within their 2-3% target for 2022 and 2023. For year 2022, GDP: 5.50% (a little over 4.00%) Unemployment: 4.25% (4.25%) CPI Inflation: 2.25% (1.75%) For year 2023, GDP: 2.50% (2.50%) Unemployment: 4.00% (4.00%) CPI Inflation: 2.50% (2.25%) *Figures shown in parentheses refers to projections from August 2021
by GH_Lee
2
US 10 YEARS - W1 - BEARISH ENGULFING !Weekly (W1) After a RSI bearish divergence detected the week before, the last week price action triggered a "Bearish Engulfing pattern" which should be seen as a second warning signal calling for a trend reversal ! Indeed, looking back we can see 2 clear trends and in monitoring the ongoing uptrend we can easily see the failure to confir m an upside breakout of the ongoing uptrend channel. So, looking forward, it is likely to see further downside towards 1.4850 % first (38.2 % Fib ret & Tenkan-Sen), ahead of 1.4170 % (50% & Kijun-Sen). Mid-Bollinger Band, slightly below and currently @ 1.40 % should again be seen as the barometer indicator, having in mind the following mood : Above 1.4000 % bullish (yield) and below 1.4000 % ( bearish yield) Interesting to note that a failure to stay and hold above 1.4000 % on a weekly closing basis would confirm a downside breakout of this ongoing uptrend channel and potentially open the door for a new downtrend move, calling for 1.35 % - 1.25 %. On the upside, only a clear breakout of the former high @ 1.7060 would neutralise the downside risk and would open the door for higher level towards 1.80-1.90 (former congestion top) Daily (D1) : Failure to recover both above TS and Mid Bollinger band on a daily closing basis should also be seen as a negative signal, calling for further downside. In addition, the 10 Years US Treasury is currently flirting with the Kijun-Sen important level support @ 1.550 %. A daily closing level below 1.55 % would also add further selling pressure (yield) which would open the door for the levels above mentioned in my W1 analysis. On this time frame, very interesting to note that the clouds support area coincides with the Fibonacci retracement, 1.4170 % and 1.3480 %, being respectively the 50 % and 61.8%. CONCLUSION : Watch the clouds on shorter intraday time frames which will help you to get intermediate signal (s) for validation or invalidation of the scenarios above mentioned. H 4 : below the clouds H1 : bottom of the clouds under attack M30, M15, M5 : below the clouds Do you like my analysis ? If yes, do not hesitate to like it and if it is not done yet, please do not forget to add Ironman8848 in your following list. Many thanks in advance All the best and take care. Ironman8848 :-)
TVC:US10YShort
by Ironman8848
1