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The 2-year beckons USD higher ahead of PCE inflation, risk-off tone in Asia

If the 2-year yield is right, it suggests the USD could be set to rise over the near term. And I suspect that PCE inflation could be the trigger. For now, risk off tones are in the air.

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May 30, 2024 07:11 AM
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How US government bond auctions work and why they’re important to financial markets

Bond markets make the financial world go round, helping to grease the wheels of commerce, allowing the economy activity to expand. But when too much debt is issued, it can overwhelm demand, causing borrowing costs to spike which can be detrimental to the economy.

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USD/JPY: Toppy US bond yields, BOJ intervention threat mean the game has changed

The suspected intervention from the BOJ this week has changed the game for USD/JPY, placing a rather large barrier in the way of further upside at a time when US bond yields were already looking toppy.

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May 3, 2024 02:00 AM

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US dollar correction kicks in, AUD/USD firm ahead of CPI: Asian Open

The US 2-year bond yield remains support, which is capping the yield at 5% and weighed on the US dollar. And that helped AUD/USD rise for a second day ahead of a key AU CPI report.

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EUR/USD, Gold, Crude Oil, 2-year note analysis: COT report

EUR/USD futures traders are on the cusp of flipping to net-short exposure, and managed funds are increasing their short exposure to gold and crude oil.

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US dollar ponders correction as bond prices approach support

The US dollar has risen around 6% from the late December low. And with bond prices approaching support which could send yields lower, the US dollar rally could at least find some headwinds - if not a retracement.

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April 18, 2024 07:20 AM
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USD/JPY, AUD/USD: Bonds just delivered a message to traders about the US inflation report

Bond markets make the financial markets go round, so when they provide a strong signal on how Wednesday’s US consumer price inflation report may be interpreted, every trader should sit up and take notice.

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April 10, 2024 02:09 AM
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Bad news for long bond bulls following bearish break

Long bond bulls will not like the message coming from the recent price action in the TLT ETF, warning of the potential for higher yields and increased capital losses. With little technical support below where it currently sits, it places even more importance on the Fed chooses to signal this week.

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Fed must commit to finishing the inflation fight to prevent gold upside

Gold traders have a decision to make with fundamental headwinds building from a stronger US dollar and higher bond yields with the price yet to meaningfully respond. What the Fed signals next week looms as crucial for directional risks.

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March 15, 2024 01:38 AM
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US inflation report key for potential bullish bond breakout

Longer-dated US bonds are threatening to break higher into what’s arguably the most important US CPI report in nearly a year. What happens next will be important for broader financial markets given the implications for global borrowing costs.

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This might be the most important chart in the financial world right now

Especially for those traders who like to dabble in markets exposed to currency or interest rate risk.

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March 7, 2024 05:03 AM
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Gold eyeing record highs as inflation expectations heat up

Gold is contemplating a thrust towards record highs after logging the highest close on record last Friday. With little visible technical resistance evident on the charts, whether it gets there will likely come down to what happens with the US dollar and bond yields over the coming days.

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March 4, 2024 01:38 AM
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USD/JPY reclaims 150 as US yields push higher into producer price inflation report

Look no further than relative central bank interest rate expectations if you’re wondering what’s driving USD/JPY right now. The pair is moving in lockstep with US two-year Treasury note yields, running with a positive correlation of 0.96 on the daily over the past month.

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February 16, 2024 02:15 AM
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US bond yields threatening to break higher in blow to soft landing beneficiaries

US two-year Treasury yields are at risk of breaking back into the higher range they traded in prior to the Federal Reserve’s policy pivot last year, creating opportunities in markets sensitive to shifts in US rate expectations such as Australia’s ASX 200, USD/JPY and gold.

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February 12, 2024 12:39 AM
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Gold outlook: Home on the range with significant risk events ahead

Gold held up well last week despite rising US yields, assisted in part by continued geopolitical tension in the Middle East. But in week with key inflation reports in the United States and United Kingdom, there are plenty of catalysts looming on the horizon that could shake gold from its slumber.

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February 9, 2024 06:02 AM
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Range highs for US yields brings reversal risk for Gold, USD/JPY

A blowout payrolls report, another pushback from Jerome Powell against excessive rate cut bets and a surprise reacceleration in US service sector activity has seen the short end of the US Treasury curve come roaring back to life with yields surging higher.

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February 7, 2024 04:12 AM
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Gold Forecast: Bond yields and geopolitics on the radar as traders’ eye fresh highs

Gold’s outlook looks set to be dictated by geopolitical tensions along with the US rate outlook. Having broken its downtrend, the directional risks appear skewed to the upside near-term, putting a retest of the highs hit last year on the radar.

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February 3, 2024 02:00 AM

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Gold isn’t responding to shifts in US interest rate like it used to

Gold’s inverse relationship with US real bond yields weakened late last year as geopolitical tensions ramped up, delivering less upside than what would have typically occurred in the past, according to Morgan Stanley.

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January 10, 2024 03:57 AM
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Strong payroll data doesn’t deter equity bulls with Nasdaq up and Russell 2000 down

Today’s payroll data reiterated the run of strong labor market data with wages growing at 4% a key concern for the Fed. Futures markets reduced the probability of early rate cuts, but traders made few changes to their bullish stance on equities, bonds, gold or the dollar.

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Dow challenges peak, Bitcoin’s mainstream moment is expected

The Dow Jones has quickly shaken off yesterday’s late losses is challenging record highs despite the comedown of the Fed minutes yesterday. The market remains optimistic over the state of the US economy, supported by today’s various jobs sector data releases; the flip-side is that too much strength could slow the pace of interest rate cuts with the Fed “likely at or near its peak rates” according to December policy meeting minutes yesterday. The Bitcoin rally will be tested pretty soon, as the SEC is intended to approve (or not) Bitcoin ETFs.

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Oil prices rallies above $70 support, Russell 2000 dips on profit-taking

Oil prices appear to have found support at $70 per barrel, with news of US stock building, further OPEC+ production cuts and Middle East tensions spurring buying action. The Fed’s December meeting minutes were cagey on the outlook for interest rates in 2024. JOLTS labor market data pointed to further weakness, good news for inflation.

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Nasdaq tumbles as bonds sell off, Gold holds historic highs

Equity, bond, and gold investors are pricing in large rate cuts in 2024, starting in March, but this week’s jobs data could spoil the fun. A bullish December for stocks might have pulled forward the typical January rally, spurred by the belief that the Fed is about to pivot. US Treasuries sold off in morning trade, with worries about the appetite to digest the major volume of new issues. There is some risk of disappointment in the interest rate outlook, notably with commodity prices indicating persistent inflation so there is less chance of a rate-cutting bonanza.

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Russell 2000 leads US stocks, Gold hits another all-time high

The Russell 2000 was again the strongest US index, continuing a trend evident for two months. Gold prices touched $2,082.5 per ounce this morning, buoyed by a mixture of risk aversion and the anticipation of lower interest rates. This morning’s economic data showed strong durable goods demand and a modest decline in a key inflation gauge, the ‘PCE deflator’, generally supporting rate cuts early next year.