bonds

March 28, 2022  $USD, BOJ, China, Currency Movement, German, Interest Rates, nuclear, Russia, Ukraine Overview: Yields are surging.  Canada and Australia's two-year yields have jumped 20 bp, with the US yield up 10 bp to 2.37% ahead of the $50 bln sale later today.  The US 10-year yield has risen a more modest three basis points to 2.50%, flattening the 2-10-year yields curve.  The 5–30-year curve has inverted for the first time since 2016.  European 10-year benchmark yields have risen 3-7 bp.  Tech stocks helped power the Hang Seng and Australia eked out a small gain, but most equity markets in the Asia Pacific region sold off for third consecutive session.  Led by financials, utilities, and communication, the Stoxx 600 has risen by about 0.75% in the European morning.  US futures are trading with a heavier bias.  The greenback is firm, with the yen again under the most pressure.  It is trading briefly above JPY125 in late morning activity in Europe, before pulling back.  The Australian dollar is the only major currency higher on the day.  Emerging market currencies are mostly lower.  The South Korean won, and Thai baht are hardest hit alongside the Polish zloty.  The jump in yields takes some shine off gold, which reached $1966 last week.  It is now straddling the $1930 area.  The $1900 area may offer important support.  The lockdown in Shanghai is sparking concerns about oil demand.  May WTI is off almost 4% after last week's 10.5% rally.  There is also speculation (hope) that OPEC+ agrees to boost output at this week's meeting.  US natural gas prices are little changed after rising in every session last week.  Europe's benchmark has risen by a little more than 8% today after falling 2.4% last week.  Iron ore is a little firmer, while copper is falling for the third session in a row.  May wheat is offered, giving back 2.4% after last week's 3.6% a rally.    Asia Pacific The Bank of Japan entered the market to reinforce the 0.25% cap of the 10-year yield.  Its first offer to buy an unlimited amount of bonds failed to draw any interest.  The second attempt had to buy JPY64.5 bln (~$525 mln).  The BOJ recognizes it is engaged in a struggle now and has pre-announced will be there for the next three sessions.  Separately, we note that according to the latest Nikkei poll, support for Prime Minister Kishida has risen six percentage points to 61%, with high marks given for handling the Russia's invasion of Ukraine.   On the one hand, China rejects the sanction regime against Russia, it says, because it is being imposed with a UN resolution.  On the other hand, reports suggest that Beijing and mainland companies are asking US officials for clarification with the idea in mind to understand what is permitted.  China and India purchases, for example, of Russian oil is not violating the sanctions.   There was thought that China would abandon its strict zero-Covid course.  Some suggested that the easing of restrictions in Hong Kong could be a prelude to a change by Beijing.  However, that does not appear to be the case.  Yesterday, Beijing announced a lockdown of Shanghai, China's largest city (population estimated around 25 mln).  The eastern half of city will be locked down for four days starting today.  This covers the financial district.  The purpose is mass testing.  The western half of the city will be locked down as of April 1.  Residents will be barred from leaving home and public transportation and ride-hailing services will be halted. A record 5500 cases were said to have been reported on Saturday. Recall that earlier this month, Shenzhen, an important tech hub was locked down. China is taking a new initiative though that has not been widely reported. It appears that China and the Solomon Islands are close to a security pact.  The leaked documents suggest that the pact could lead to a Chinese military presence there.  The Solomon Islands did not confirm the leaked details but did acknowledge that it was broadening out its security arrangements and China would be included in the changes.  This is a blow to Australia, which had seemingly secured the strategically located country into the Western alliance.  Solomon Islands had abandoned Huawei in 2018 and struck an agreement with Australia to build a 2500-mile internet cable to it. Last year, Australia sent some police to help quell riots in Honiara, the capital of the Solomon Islands, over economic problems, and anti-Chinese sentiment.  Yet, China has been making inroads.  For example, in 2019, Honiara dropped its recognition of Taiwan.  The US has acted belatedly.  Its embassy was closed in 1993 and not re-opened until last month.  As the map here shows, a Chinese presence in the Solomon Islands would compromise Australia's security.     The BOJ's defense of its Yield Curve Control policy in the face of surging global yields and especially US rates keeps the yen on the defensive.  The yen edged higher at the end of last week for the first time in six sessions, but its losses have accelerated today.  As we have noted the last significant high was in 2015 and then the greenback reached about JPY125.85. The notable high before that was in 2002, a little above JPY135.  The Australian dollar is firm.  It posted a marginal new five-month high near $0.7540.  It is approaching last October's high by $0.7550.  It is the fifth consecutive advance, if sustained, and it would be the ninth gain in the past 10 sessions.  The positive terms-of-trade shock seems to the be chief driver.  A pre-election due first thing Wednesday in Canberra is expected to include a cut in the fuel tax for six months, support for first-time home buyers, and boost funds for roads and rails.  The election is expected to be called by late May.  The greenback gapped higher against the Chinese yuan, reaching a little more than CNY6.3810, but has subsequently trended lower to fill the nearly fill the gap (the pre-weekend high) by CNY6.3680.  The PBOC's reference rate for the dollar was lower than the Bloomberg survey anticipated (CNY6.3732 vs. CNY6.3740).    Europe In an unexpected turn of events, Germany's Economic Minister Habeck, a member of the Green Party, suggested that he is open to re-examining the decision to close the county's remaining three nuclear plants later this year.  Previously, the Greens and Habeck ruled out this option.  Still, the surge in energy prices and the belated efforts to reduce its dependence on Russia is pushing the pragmatic Greens (realos) in this direction.  Merkel's push to close the nuclear energy plants after Japan's nuclear accident in 2011 resulting in increased reliance on Russia and spurred the Nord Stream 2 pipeline.  Among the scenarios that were bandied about before Russia's invasion of Ukraine was that it could pursue a limited objective of securing the entire regional claims Donetsk and Luhansk.  Since the war began, Western sources has played up different scenarios, one of total occupation of Ukraine.  The narrative it tells now is that after having suffered some significant setbacks, for which the higher range of estimates suggest Russia has lost as many soldiers (15k) in Ukraine as it did in 10 years in Afghanistan.  Russia admits to less than a tenth of those estimated deaths in Ukraine.  Even taking into account the number of injuries inflicted, the lower bottom of NATO's range is (7k).  It is quite clear that both sides have it in their interest to, shall we say, see what they want.  Still, the point now is that Russia's 1st Deputy General of the Chief of Staff suggested Russian forces will focus on gaining the full control of the Luhansk, for which it may be nearly there, and Donetsk, which is thought to be a little more than half secured.  The idea is that when the territory is militarily secure, a referendum would be held to formally join Russia.  Strategically, a land-bridge to Crimea will also be secured.   The euro was sold to an eight-day low near $1.0945 after holding above $1.0960 last week.  It popped up in early European turnover to the session of just below $1.10.  That is an important level in the coming days, with large options expiring there.  The nearly 585 mln euro expiry today is the smallest.  Tomorrow's expiring options are for almost 2.5 bln euros and the same for Wednesday ahead of Thursday's nearly 2.9 bln euro expirations.  If the upside is blocked, look for a test on $1.09 and below there is this month's low slightly ahead of $1.08.  Sterling is testing last week's low by $1.3120.  A break targets the $1.3070 area, and possibly $1.30, which was seen in the middle of the month. It last traded below there in late 2020, when it found a base around $1.2880.    America The US Treasury indicated that Russia could use frozen funds to make debt payments until May 25.   Next Monday, there is a $2.2 bln debt servicing payment due.  Some covenants allow for the rouble payments, but these reportedly do not.  After May 25, it needs to raise money other ways, including selling its oil and gas.  Over the weekend, President Biden implied relations with Russia cannot be normalized while Putin is in control.  It was later walked back by Secretary of State Blinken.  However, with the US claiming Putin is a war criminal, it is hard not to conclude that the US seeks regime change.  Some might find the US assertion of war crimes more powerful and compelling if Washington or Moscow were signatory members of the International Court of Justice.  If you are keeping records of such things, Beijing is not a member either.  The ICJ does not have authority over non-members.   President Biden is struggling in the polls.  His support is around 40%, near the levels that Trump experienced at the same time of his presidency.  One poll found that some 70% have little confidence in his handling of Russia and the war.  This suggests that his base has also softened.  Meanwhile, Biden is expected to unveil new budget proposals, which will include record spending for "peace" time.  He is expected to formally endorse the previous Senate Democrat proposal for a "billionaires' tax that would be extended to unrealized gains.  It is said to raise $360 bln over the next 10 years.  At the same time, without the Covid-related spending and income replaces, the budget deficit will be projected to fall.  The median forecast in Bloomberg's survey has the budget deficit falling to 5.1% of GDP this year form 10.8% last.   Lastly, there seems to be a misunderstanding about trend growth in the US.  Some observers talk about a growth recession as the most likely or best outcome that can be anticipated.  Yet the 2% pace or so bandied about can hardly be called a "growth recession” because for the Fed this would simply be a return to trend growth.  The Fed estimates that the long-term growth rate is 1.8%-2.0%.   On tap today is the US February advanced goods trade balance.  It was a record deficit in January.  Wholesale and retail inventories are also due.  Retail inventories rose by an average of 2.3% a month in Q4 21.  They are expected to have risen by about 1.4% after January's 1.9% increase.  Wholesale inventories rose by an average of 2.2% in Q4 21.   They are rising at about half that pace in the first two months of Q1 22.  We have noted that the inventory cycle is maturing, and it will not provide the tailwind as it did previously, and especially in Q4 21. The Dallas manufacturing survey is expected to have soften a little.     The US dollar has a nine-day drop in tow against the Canadian dollar coming into today's session.  It is pinned near the pre-weekend low around CAD1.2465.  It has not been above CAD1.2505 today.  We anticipate some near-term consolidation that could see the greenback trade toward CAD1.2520-CAD1.2540.  The US dollar is poised to snap an 11-day slide against the Mexican peso.  During that run, the greenback fell from around MXN21.06 to about MXN19.91.  It has been up to MXN20.12 today and since then it has found support ahead of MXN20.00.  We suspect near-term potential extends into the MXN20.20-MXN20.22 area.       Disclaimer

By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC). The latest COT data is updated through Tuesday March 29th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. Highlighting the COT bonds data is the surge in the 10-Year Bond bets this week. The speculative position in the 10-Year Bond saw a sharp jump in bearish bets this week (by -212,723 contracts) that marked the largest one-week bearish gain in the past two hundred and seventy-eight weeks, dating all the way back to November 29th of 2016. The 10-Year had shed bearish bets in the previous two weeks but has now seen higher bearish bets in four out of the past six weeks. This rising bearish sentiment has pushed the current net speculator standing (total of -476,557 contracts) to the most bearish level in the past one-hundred and seventy-seven weeks, dating back to November 6th of 2018 when positions were over -500,000 contracts. The 10-Year Bond price has also been dropping sharply and the 10-Year Bond yield rose to the highest level since April of 2019 above the 2.50 percent level this week (interest rates rise as bond prices fall). The outlook for Central Bank interest rate increases likely signals that there is much more weakness ahead for bonds (and gains in bond yields) and speculator sentiment will likely become more bearish. The bonds markets that saw higher speculator bets this week were Eurodollar (233,321 contracts) and the Ultra 10-Year (17,885 contracts). The bonds markets that saw lower speculator bets this week were 2-Year Bond (-11,754 contracts), 10-Year Bond (-212,723 contracts), Long US Bond (-16,550 contracts), Fed Funds (-1,024 contracts), 5-Year Bond (-65,052 contracts) and the Ultra US Bond (-25,035 contracts). Data Snapshot of Bond Market Traders | Columns Legend Mar-29-2022 OI OI-Index Spec-Net Spec-Index Com-Net COM-Index Smalls-Net Smalls-Index Eurodollar 10,936,414 43 -2,423,401 4 2,851,684 96 -428,283 10 FedFunds 2,130,653 81 -14,406 38 35,287 64 -20,881 7 2-Year 2,251,100 18 -59,202 70 161,882 55 -102,680 0 Long T-Bond 1,109,506 33 16,001 90 -3,123 19 -12,878 42 10-Year 3,669,449 41 -476,557 0 657,549 100 -180,992 36 5-Year 3,756,307 35 -361,390 20 598,864 86 -237,474 16   3-Month Eurodollars Futures: The 3-Month Eurodollars large speculator standing this week totaled a net position of -2,423,401 contracts in the data reported through Tuesday. This was a weekly increase of 233,321 contracts from the previous week which had a total of -2,656,722 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 4.5 percent. The commercials are Bullish-Extreme with a score of 95.9 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 10.2 percent. 3-Month Eurodollars Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 4.1 74.7 3.9 – Percent of Open Interest Shorts: 26.2 48.6 7.9 – Net Position: -2,423,401 2,851,684 -428,283 – Gross Longs: 447,292 8,166,593 431,468 – Gross Shorts: 2,870,693 5,314,909 859,751 – Long to Short Ratio: 0.2 to 1 1.5 to 1 0.5 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 4.5 95.9 10.2 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -2.5 2.2 2.2   30-Day Federal Funds Futures: The 30-Day Federal Funds large speculator standing this week totaled a net position of -14,406 contracts in the data reported through Tuesday. This was a weekly decline of -1,024 contracts from the previous week which had a total of -13,382 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 37.8 percent. The commercials are Bullish with a score of 64.2 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 6.6 percent. 30-Day Federal Funds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 8.1 77.1 1.3 – Percent of Open Interest Shorts: 8.8 75.4 2.3 – Net Position: -14,406 35,287 -20,881 – Gross Longs: 172,450 1,642,231 27,817 – Gross Shorts: 186,856 1,606,944 48,698 – Long to Short Ratio: 0.9 to 1 1.0 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 37.8 64.2 6.6 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -4.6 4.7 -4.0   2-Year Treasury Note Futures: The 2-Year Treasury Note large speculator standing this week totaled a net position of -59,202 contracts in the data reported through Tuesday. This was a weekly reduction of -11,754 contracts from the previous week which had a total of -47,448 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 70.3 percent. The commercials are Bullish with a score of 55.2 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 0.0 percent. 2-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 14.0 76.4 6.2 – Percent of Open Interest Shorts: 16.6 69.2 10.8 – Net Position: -59,202 161,882 -102,680 – Gross Longs: 314,664 1,719,719 140,420 – Gross Shorts: 373,866 1,557,837 243,100 – Long to Short Ratio: 0.8 to 1 1.1 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 70.3 55.2 0.0 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 11.4 -4.9 -15.1   5-Year Treasury Note Futures: The 5-Year Treasury Note large speculator standing this week totaled a net position of -361,390 contracts in the data reported through Tuesday. This was a weekly fall of -65,052 contracts from the previous week which had a total of -296,338 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 19.8 percent. The commercials are Bullish-Extreme with a score of 86.3 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 15.8 percent. 5-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 8.2 82.6 7.2 – Percent of Open Interest Shorts: 17.9 66.6 13.5 – Net Position: -361,390 598,864 -237,474 – Gross Longs: 309,236 3,101,800 270,067 – Gross Shorts: 670,626 2,502,936 507,541 – Long to Short Ratio: 0.5 to 1 1.2 to 1 0.5 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 19.8 86.3 15.8 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -29.8 21.9 -2.7   10-Year Treasury Note Futures: The 10-Year Treasury Note large speculator standing this week totaled a net position of -476,557 contracts in the data reported through Tuesday. This was a weekly decrease of -212,723 contracts from the previous week which had a total of -263,834 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bearish with a score of 36.5 percent. 10-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 7.5 80.2 9.0 – Percent of Open Interest Shorts: 20.5 62.2 13.9 – Net Position: -476,557 657,549 -180,992 – Gross Longs: 276,588 2,941,177 328,695 – Gross Shorts: 753,145 2,283,628 509,687 – Long to Short Ratio: 0.4 to 1 1.3 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 0.0 100.0 36.5 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -46.0 26.3 18.9   Ultra 10-Year Notes Futures: The Ultra 10-Year Notes large speculator standing this week totaled a net position of -73,436 contracts in the data reported through Tuesday. This was a weekly boost of 17,885 contracts from the previous week which had a total of -91,321 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 8.4 percent. The commercials are Bullish-Extreme with a score of 97.6 percent and the small traders (not shown in chart) are Bearish with a score of 35.8 percent. Ultra 10-Year Notes Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 9.7 80.7 9.0 – Percent of Open Interest Shorts: 15.2 65.2 18.9 – Net Position: -73,436 205,679 -132,243 – Gross Longs: 128,735 1,071,757 119,198 – Gross Shorts: 202,171 866,078 251,441 – Long to Short Ratio: 0.6 to 1 1.2 to 1 0.5 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 8.4 97.6 35.8 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -23.1 20.1 7.5   US Treasury Bonds Futures: The US Treasury Bonds large speculator standing this week totaled a net position of 16,001 contracts in the data reported through Tuesday. This was a weekly lowering of -16,550 contracts from the previous week which had a total of 32,551 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 89.8 percent. The commercials are Bearish-Extreme with a score of 19.1 percent and the small traders (not shown in chart) are Bearish with a score of 42.4 percent. US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 9.1 73.1 14.6 – Percent of Open Interest Shorts: 7.7 73.4 15.7 – Net Position: 16,001 -3,123 -12,878 – Gross Longs: 100,986 810,834 161,498 – Gross Shorts: 84,985 813,957 174,376 – Long to Short Ratio: 1.2 to 1 1.0 to 1 0.9 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 89.8 19.1 42.4 – Strength Index Reading (3 Year Range): Bullish-Extreme Bearish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 13.3 -14.7 4.1   Ultra US Treasury Bonds Futures: The Ultra US Treasury Bonds large speculator standing this week totaled a net position of -323,558 contracts in the data reported through Tuesday. This was a weekly decline of -25,035 contracts from the previous week which had a total of -298,523 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 53.2 percent. The commercials are Bullish with a score of 56.4 percent and the small traders (not shown in chart) are Bullish with a score of 53.1 percent. Ultra US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 5.3 82.2 11.9 – Percent of Open Interest Shorts: 30.4 59.8 9.2 – Net Position: -323,558 288,970 34,588 – Gross Longs: 68,282 1,059,413 152,895 – Gross Shorts: 391,840 770,443 118,307 – Long to Short Ratio: 0.2 to 1 1.4 to 1 1.3 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 53.2 56.4 53.1 – Strength Index Reading (3 Year Range): Bullish Bullish Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 2.7 -4.7 2.2   Article By InvestMacro – Receive our weekly COT Reports by Email *COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

The Swing Overview - Week 14 Equity indices weakened last week on news of rising interest rates and a tightening of the US economy. The euro is also weakening not only because it is under pressure from the ongoing war in Ukraine and sanctions against Russia, but also from the uncertainty of the upcoming French presidential election. The outbreak of the coronavirus in China has fuelled negative sentiment in oil, where the market fears an excess of supply over demand. The US dollar was the clear winner in this environment.  The USD index strengthens along with US bond yields According to the US Fed meeting minutes released on Wednesday, the Fed is prepared to reduce its balance sheet by the USD 95 billion per month from May this year.  In addition, the Fed is ready to raise interest rates at a pace of 0.50%. Thus, at the next meeting, which will take place in May, we can expect a rate increase from the current 0.50% to 1.00%. This option is already included in asset prices.     As a result of this the yields on US 10-year bonds continued to rise and has already reached 2.64%. The US dollar in particular is benefiting from this development and is approaching the level 100. Figure 1: US 10-year bond yields and USD index on the daily chart   Equity indices under pressure from high interest rates The prospect of aggressive interest rate hikes is having a negative impact on investor sentiment, particularly for growth stocks. However, it is positive for financial sector stocks. High yields on the US bonds are attractive to investors, who will thus prefer this yield to, for example, investments in gold, which does not yield any interest. Figure 2: SP 500 on H4 and D1 chart   The US SP 500 index is currently moving in a downward correction, which is shown on the H4 chart. Prices could move in a downward channel that is formed by a lower high and a lower low. The SP 500 according to the H4 chart is below the SMA 100 moving average, which also indicates bearish tendencies.   The nearest resistance according to the H4 chart is in the range of 4,513 - 4,520. The next resistance is around 4,583 - 4,600. A support is at 4 450 - 4 455.   German DAX index A declining channel has also formed for the DAX index. The price is below the SMA 100 moving average on the H4 chart, where at the same time the SMA 100 got below the EMA 50, which is a strong bearish signal. Figure 3: German DAX index on H4 and daily chart According to the H4 chart, the nearest resistance is in the range between 14,340 - 14,370. There is also a confluence with the moving average EMA 50 here. The next resistance is at 14,590 - 14,630. A support is at 14,030 - 14,100.   The DAX is influenced by the upcoming French presidential election, the outcome of which could have a major impact on the European economy.    The euro remains in a downtrend The Euro is negatively affected by the sanctions against Russia, which will also have a negative impact on the European economy. In addition, uncertainty has arisen regarding the French presidential election. Although the victory of the far-right candidate Marine Le Pen over the defending President Emmanuel Macron is still unlikely, the polls suggest that it is within the statistical margin of error. And this makes markets nervous.   A Le Pen victory would be bad for the economy and France's overall international image. It would weaken the European Union. That's why this news sent the euro below 1.09. The first round of elections will be held on Sunday April 10 and the second round on April 24, 2022.    Figure 4: EURUSD on H4 and daily chart. The nearest resistance according to the H4 chart is at 1.0930 - 1.0950. The significant resistance according to the daily chart is 1.1160 - 1.1190.  A support is at 1.080 - 1.0850.   According to the technical analysis, the euro is in a downtrend, but as it is currently at significant support levels, any short speculation could be considered only after the current support is broken and retested to validate the break.   The crude oil continues to descend The oil prices fell for a third straight day after the Paris-based International Energy Agency (IEA) announced it would release 60 million barrels of its members' reserves to the open market, adding to an earlier reserve release of 180 million barrels announced by the United States. In total, 240 million barrels would be delivered to the market over six months, resulting in a net inflow of 1.33 million barrels a day.   That would be more than triple the monthly production additions of 400,000 barrels per day by the world's oil producers under the OPEC+ alliance led by Saudi Arabia and controlled by Russia.   Adding to the negative sentiment on oil was a coronavirus outbreak in Shanghai, the largest in two years, which forced a more than week-long closure of China's second-largest city. This raises concerns about demand among oil consumers in the Chinese economy, which has a significant impact on prices. Figure 5: Brent crude oil on the H4 and daily charts. Brent crude oil is thus approaching support, which according to the H4 chart is at around USD 97-99 per barrel. The nearest resistance according to the H4 chart is at the price of USD 106 per barrel. The more significant resistance is at USD 111-112 per barrel of the Brent crude.   

The Swing Overview - Week 13 Equity indices closed the first quarter of 2022 in a loss under the influence of geopolitical tensions. The Czech koruna strengthened as a result of the CNB raising interest rates to 5%, the highest since 2001. The US supports the oil market by releasing 180 million barrels from its strategic reserves. War in Ukraine   The war in Ukraine has been going on for more than a month and there is still no end in sight. Ongoing diplomatic negotiations have not led to a result yet. Meanwhile, Russian President Putin has decided that European countries will pay for Russian gas in rubles. This has been described as blackmailing from Europe's point of view and is not in line with the gas supply contracts that have been concluded. A way around this is to open an account with Gazprombank where the gas can be paid for in euros. Geopolitical tensions are therefore still ongoing and are having a negative effect on stock markets.   Equity indices have had their worst quarter since 2020 US and European equities posted their biggest quarterly loss since the beginning of 2020, when the COVID-19 pandemic broke out and the global economy was in crisis. Portfolio rebalancing at the end of the quarter boosted demand for bonds and kept yields lower.   On Tuesday, the yield curve briefly inverted, meaning that short-term bonds yields were higher than  long-term bonds. An inverted yield curve is a signal of a recession according to many economists. It means that future corporate profits should be rather behind expectations and stock prices might reflect it.    On Thursday, the S&P 500 index fell 1.6%. The Dow Jones industrial index also fell by 1.6% and the Nasdaq Composite index fell by 1.5%. The European STOXX 600 index closed down by 0.94%. Even after last week's rally, as investors celebrated signs of progress in peace talks between Russia and Ukraine, the S&P 500 index is still down 5% for the first three months, its worst quarterly performance in two years.  Figure 1: SP 500 on H4 and D1 chart   The SP 500 index reached the resistance level at 4,600, which it broke, but then closed below it. This indicates a false break. The new nearest resistance is in the range of 4,625 - 4,635. Support is at 4,453 and then significant support is at 4,386 - 4,422.   German DAX index The DAX index has rallied since March 8 and has reached the resistance level which is in the 14,800 - 15,000 range.  However, the index started to weaken in the second half of the week. The news that Russia will demand payments for gas in rubles, which Western countries refuse, contributed to the index's weakening. The fear of gas supply disruption then caused a sell-off.    Figure 2: German DAX index on H4 and daily chart Resistance is between 14,800 - 15,000 according to the daily chart. The nearest support according to the H4 chart is at 14,100 - 14,200.   The euro remains in a downtrend The euro was supported at the beginning of the week by hopes for peace in Ukraine. However, by the end of the week, the Ukrainian President warned that Russia was preparing for more attacks and the Euro started to weaken. News of Russia's demand to pay for gas in rubles had a negative effect on the euro as well. Figure 3: The EURUSD on the H4 and daily charts. From a technical point of view, we can see that the EURUSD according to the daily chart has reached the resistance formed by EMA 50 (yellow line). The new horizontal resistance is in the area of 1.1160 - 1.1180. Support is at 1.0950 - 1.0980. The euro still remains in a downtrend.   CNB raised the interest rate In the fight against the inflation, the CNB decided to further raise the interest rate by 0.50%. Currently, the base rate is at 5%, where it was last in 2001. The interest rate hike is aimed at slowing inflation by slowing demand through higher borrowing costs.   Figure 4: Interest rate developments in the Czech Republic In addition, a strong koruna should support the slowdown in inflation. The koruna could appreciate especially against the euro due to higher interest rates. However, the strengthening of the koruna is conditional on the war in Ukraine not escalating further.  We can see that the koruna against the euro is approaching a support around 24.30. The low of this year was 24.10 korunas for one euro. Figure 5: USD/CZK and EUR/CZK on the daily chart. The koruna is also strengthening against the US dollar. Here, however, the situation is slightly different in that the US Fed is also raising rates and is expected to continue raising rates until the end of the year. Therefore, the interest rate differential between the koruna and the dollar is less favourable than between the koruna and the euro. The appreciation of the koruna against the dollar is therefore slower.   Currently, the koruna is at the support of 22 koruna per dollar. The next support is at 21.70 and then 21.10 koruna per dollar, where this year's low is.   Oil has weakened Oil prices saw the deep losses after the news that the United States will release up to 180 million barrels from its strategic petroleum reserves as part of measures to reduce fuel prices. US crude oil fell 5.4% and Brent crude oil fell 6.6% on Thursday after the news. Figure 6: Brent crude oil on a monthly and daily chart We can see that a strong bearish pinbar was formed on a  monthly chart. The nearest support is in the zone 103 – 106 USD per barel. A strong support is around 100 USD per barel which will be closely watched.  

Image credit: All images belong to Aleph Blog This should be a brief post. At the end of 2021, the S&P 500 was poised to nominally return -1.53%/year over the next 10 years. As of the close yesterday, that figure was 0.73%/year. The only period compares with this valuation-wise is the dot-com bubble. We are near dot-com level valuations, in the 98th percentile. And if you view the 10-year returns from the worst time of the dot-com bubble to now, you can see that the results they obtained are worse than what I forecast here. Of course, a lot of what will happen in nominal terms will rely on the actions of the Fed. Will the Fed: Allow a real recession to clear away dud assets that are on life support from low rates? (Collapsing the current stock/junk bubble.. they would never do this unless their hands were tied.)Risk the 1994 scenario where the compressed coupon stack in the Residential Mortgage Backed Securities [RMBS] market begins a self-reinforcing interest rate rise cycle on the long end as mortgage rates rise, prepayments drop, mortgage durations extend, leading to bond managers selling RMBS and long bonds with abandon to bring their duration risk down. The Fed chases the yield curve up, and the stock and housing markets both fall. The Fed chokes on their policy, and gives up tightening to save both markets.Or, if not the 1994 scenario, does the Fed dare to stop tightening before the yield curve inverts, and just wait for a flat curve to do its work? (Nah, that would be smart. The Fed always inverts the curve to prove their manliness, and blows some part of the market up in the process.)Or do they just accept financial repression, and punish savers to benefit wage earners (Will it really work? Dubious.), as the Fed keeps their policy rate low. I posed those scenarios to Tom Barkin, President of the Richmond Fed when he came to speak to the CFA Institute at Baltimore last week. He gave answers that were either evasive, or he didn’t get it. Anyway, this is an awkward market situation, but the one thing that is clear to me is that investors should be at the lower end of risk for their asset allocation. PS — As for me, I am living with value stocks, small stocks, and international stocks. Very little in the S&P 500 here.

Image Credit: Aleph Blog with help from FRED || Believe it or not, I used FRED before it was a web resource — it was a standalone “bulletin board” that I woul dial into on my computer modem I’ve talked about this here: Estimating Future Stock Returns, December 2021 UpdateTime for Another Convexity Crisis?The First Priority of Risk Control (2009, this tells the story of what I did during the 1994 crisis.) And recently I have tweeted about it. Mortgage rates are surging faster than expected, prompting economists to lower their home sales forecasts https://t.co/IiX2gPlAnI 1994 scenario re-occurring. Falling prepayments makes MBS lengthen, leading indexed bond managers to sell low-coupon MBS forcing rates still higher— David Merkel (@AlephBlog) March 22, 2022 We may be in the 1994 scenario where mortgage durations are extending, dragging the long end of the yield, as those that hedge duration are forced to sell, setting up a self-reinforcing move up in yields.— David Merkel (@AlephBlog) March 22, 2022 The MBS coupon stack is a lot flatter in 2022 than in 1994. There is more than 4X the mortgage debt now than in 1994. Lots of pent-up negative convexity. I lived through that in 1994, and made money off it.— David Merkel (@AlephBlog) March 22, 2022 Then from the piece Classic: Avoid the Dangers of Data-Mining, Part 2 “In 1992-1993, there were a number of bright investors who had “picked the lock” of the residential mortgage-backed securities market. Many of them had estimated complex multifactor relationships that allowed them to estimate the likely amount of mortgage prepayment within mortgage pools. Armed with that knowledge, they bought some of the riskiest securities backed by portions of the cash flows from the pools. They probably estimated the past relationships properly, but the models failed when no-cost prepayment became common, and failed again when the Federal Reserve raised rates aggressively in 1994. The failures were astounding: David Askin’s hedge funds, Orange County, the funds at Piper Jaffray that Worth Bruntjen managed, some small life insurers, etc. If that wasn’t enough, there were many major financial institutions that dropped billions on this trade without failing. What’s the lesson? Models that worked well in the past might not work so well in the future, particularly at high degrees of leverage. Small deviations from what made the relationship work in the past can be amplified by leverage into huge disasters.“ Finally from the piece What Brings Maturity to a Market: Negative Convexity: Through late 1993, structurers of residential mortgage securities were very creative, making tranches in mortgage securitizations that bore a disproportionate amount of risk, particularly compared to the yield received. In 1994 to early 1995, that illusion was destroyed as the bond market was dragged to higher yields by the Fed plus mortgage bond managers who tried to limit their interest rate risks individually, leading to a more general crisis. That created the worst bond market since 1926. ================================================== I am not saying it is certain, but I think it is likely that we are experiencing a panic in the mortgage bond market now. Like 1994, we have had a complacent Fed that left policy rates too low for too long. Both were foolish times, where policy should have been tighter. This led to massive refinancing of mortgages, and many new mortgages at low rates. But when that happens with most mortgages being low rate, if the Fed hints at or starts raising rates, prepayments will fall and Mortgage-Backed Securities [MBS] will lengthen duration while falling in price. Bond managers, most of whom are indexed and want a fixed duration, will start selling long bonds and MBS, leading long rates to rise, and the cycle temporarily becomes self-perpetuating. This is likely the situation that we are in now, and it very well may make the Fed overreact as they did in 1994. All good economists know the monetary policy acts with long and variable lags. But the FOMC for PR reasons acts as if their actions are immediate. Thus they become macho, and raise their rates too far, leading to a crash. (Can we eliminate the Fed? Gold was better, if we regulated the banks properly. Or, limit the slope of the yield curve.) I’m planning on making money on the opposite side of this trade if I am right. I will buy long Treasuries after the peak. I am watching this regularly, and will act when it is clear to me, but not the market as a whole, which in late 1994 to early 1995 did not know which end was up. Anyway, that’s all. The only good part of this environment is that my bond portfolios are losing less than the general market.

Picture Credit: Kailash Gyawali || There are times when despair is rational “There are two hard things in trading — buying higher, and selling lower.” Currently I am selling out my position in an illiquid stock. I am patient, but I can tell that my selling is having an impact on the market. Back when I was a corporate bond manager, I quickly learned that I had to scale in and out of positions. Even for the most commonly traded bonds, the market isn’t that liquid. While not lying to the brokers, learning to disguise your intentions, or at least frame them properly took some effort. One method I commonly used worked like this: “We need some cash. If you have someone wanting to buy $2-5 million, we will offer these at the 10-year Treasury + 150 basis points, $6-10 million T10 + 140 bps, and if they want to buy the whole wad (say 20-30 million), T10 + 125 basis points. Prices would ascend with size in selling. Prices would descend with size in buying, particularly for troubled bonds that we liked. Usually the brokers appreciated the supply or demand curves that I gave them. Frequently I ended up selling the “the wad,” which we were usually selling because our credit analyst had a reason. But life is not always so happy. Sometimes you have an asset that either you or the organization has concluded is a dud. Many people think it is a dud. How do you sell it? Should you sell it? There are options: you could hold an auction, but I will tell you if you do that, play it straight. Your reputation is worth far more than if the auction succeeds or not. You can set a reservation price but if the auction doesn’t sell, you will lose some face. Or you can test the market, selling in onesies an twosies ($1-2 million) seeing if there is any demand, and expand from there if you can. What I tended to do was go to my most trusted broker on a given bond and say, “I don’t have to sell this, but we need cash. Could you sound out those who own the bonds and see what they might like to buy a few million?” If we get an interested party, we can sound them out on buying more a an attractive price. But life can be worse, imagine trying to sell the bonds of Enron post default. Yes, I had to do that. And I had to sell them at lower and lower prices. (Kind of like the time I got trapped with a wad of Disney 30-year bonds.) And there is the opposite. You want to have a position in an attractive company, and you can’t get them at any reasonable price. You could give up. You could “do half.” Or you could chase it and get the full position, only to regret it. If you invest with an eye toward valuations, this will always be a challenge. All that said, if you focus on quality, these issues probably won’t hurt you as much. In any case, do what must be done. If something must be bought, buy it as cheaply as possible. If something must be sold, sell it as dearly as you can. Hide your intentions, while offering deals. In doing so, you may very well realize the most value.

  If the current market phenomena were to star in a Shakespeare drama, they would be ideal candidates for the Three Witches. Can you guess who would play who? Have you ever heard of Shakespeare’s mythological characters, the Three Witches? They are depicted as prophets who represent evil, darkness, chaos, and conflict. If you look at the market today, you will find ideal candidates for these dark roles. However, while rising commodity prices and inflation have a casting win in their pocket, there is no certain actor to play the third witch. Would the recession stand a chance?   Related article: Deutsche Bank Shook DAX! French Election, Inflation And ECB Are Factors Which Shaped DAX (GER 40), CAC40, FTSE 100 And IBEX35 - Top Gainers, Top Losers     No Easter eggs today – instead, here is a story that may provide food for thought. (Credit: Macbeth meets the three witches; scene from Shakespeare's 'Macbeth'. Wood engraving, 19th century. Wellcome Collection. Public Domain Mark) Let’s start by representing an economic cycle with its different phases: Global commodity prices – in particular energy prices – surged at a fast pace following the COVID crisis. Notably, as major central banks responded to the economic slowdown by printing money, rising levels of inflation were observed as a result of accommodating monetary policy combined with accelerating oil and gas demand. The context was tight supply and high volatility triggered by (geo-)political unrest around the world (crises, wars, etc.). In fact, those inflationary periods of surged prices (foremost, fuel prices are often those pulling the trigger) are usually followed by a sudden drop in consumer confidence and, therefore, a sudden fall in demand, which may lead to a recession phase.   Article on Crypto: Hot Topic - NEAR Protocol! Terra (LUNA) has been seeing a consistent downward price trend, DAI Should Stay Close To $1   To predict those phases, some analysts tend to spot the inverted bond yield curves. In one of its articles, Investopedia explains The Impact of an Inverted Yield Curve as the following: “The term yield curve refers to the relationship between the short- and long-term interest rates of fixed-income securities issued by the U.S. Treasury. An inverted yield curve occurs when short-term interest rates exceed long-term rates. Under normal circumstances, the yield curve is not inverted since debt with longer maturities typically carry higher interest rates than nearer-term ones. From an economic perspective, an inverted yield curve is a noteworthy and uncommon event because it suggests that the near-term is riskier than the long term.” Now let’s have a look at the mystic US government yield curves over the past 30+ years: US 10 YR in Orange versus US 2 YR in Blue US 30 YR in Red versus US 5 YR in Indigo (Source: TradingView) The inversion of yield curves – typically with a two-year rate higher than the ten-year rate or even a five-year rate higher than the thirty-year rate – has occurred prior to each of the last US recessions. This phenomenon also briefly happened last week and lasted for almost two trading days. (Credits: Small Exchange, Inc. Newsletter Apr 11, 2022) As you can see, the above charts demonstrate that US treasury yield curve inversions may sometimes be followed by a sudden drop in equity prices. Alternatively, David Linton was also showing how big falls in bonds were preceding big falls in stocks in a recent tweet: (Source: Twitter) Okay, now let’s ask ourselves a few questions. Do you think that the Federal Reserve (Fed) will be able to tighten its monetary policy as planned? Will stocks collapse? Will this trigger a recession? If so, when? In what phase of the economic cycle do you think we are? 3, 4 or in between, maybe? The first speculative scenario Growth will continue for now, and so will demand... However, as soon as the Fed begins to tighten as planned, the S&P will plummet. So, the Fed will either be forced to stop to prevent a crashing stock market and falling risk sentiment from hitting growth, or just go ahead with tightening to keep inflation at bay and face the consequences. In the latter case, Powell loses his job... The second speculative scenario Following ongoing inflation, there could be a recession with a collapse in demand in about 6 months or so. On the energy side, despite the drop in demand, prices shouldn't drop too much as they might still be supported by limited supplies. Any ideas about a projected time horizon? Regarding the Fed, I don't believe much in rate hikes. If they do so, they will plunge off their looming debt cliff. Maybe the Fed could keep communicating about future hikes if the markets are crashing. However, if they do any actual hikes, I bet they would probably be tiny ones, just to show some signals, but in the end, the actual rates wouldn't be much changed. J. Powell seems to be pretty much stuck. (Source: Giphy) Anyway, it is a moment of truth for central banks. Let me know what you think in the comment section. That’s all, folks, for today. I hope you’ve had a great Easter weekend! Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Sebastien BischeriOil & Gas Trading Strategist * * * * * The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Forex 2022-04-19 10:30 Summary:  The Japanese yen has seen a relentless decline over the last few weeks, underpinned by a widening yield differential between the US and the Japanese government bonds. As verbal interventions from the Bank of Japan and Ministry of Finance fail to be heard, we are looking at a subtle policy shift with the aim to manage volatility, or a real physical intervention. The JPY continues to run away to the downside, with USDJPY surging above 128.00 for the first time since 2002. The next major chart point is the early 2002 high near at 135.00. AUDJPY has also surged to fresh record highs of 94.50+ as the AUD was slightly firmer following the hawkish tilt in RBA minutes. Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun The big why? US 10-year treasury yields have notched a new cycle peak and will soon threaten the 3.00% level if they continue to rise, widening the policy divergence with the Bank of Japan (BOJ), that continues to stick with its yield-curve-control (YCC) policy that caps 10-year Japanese government bond yields (JGB) yields at 0.25%. Both the BOJ and the Japanese Ministry of Finance (MoF) have stepped up their verbal interventions against JPY volatility as recently as overnight, but these have hardly had any effect. The BOJ conducted unprecedented four-day purchase plan into the end of its financial year on March 31 after the JGB yields had hit 0.25%, a ceiling the central bank had made clear in March last year. This further highlighted their commitment to capping yields. While the BoJ may be concerned about the volatility and the pace of JPY decline, the Bank is unlikely to be worried about its direction. In fact, BOJ rhetoric repeatedly suggests that it sees JPY weakness as good news for the economy and exports as well as a factor helping to spur imported inflation pressures. This is especially important if we note that GDP is still well below pre-COVID levels and core inflation is negative. Is inflation a concern? The rise in JGB yields has little to do with expectations that Japanese inflation is moving sustainably higher. CPI is expected to increase above the BOJ’s 2% (from 0.9% currently) target, but the central bank expects the move to be temporary. Much of the gains in inflation are on the back of base effects and higher energy prices, and underlying price pressures remain muted. Stripping out energy prices and fresh food clearly shows that core inflation is still very benign at multiyear lows at -1% y/y. Will the YCC be tweaked? We are probably starting to see the limit of the yield curve control program, as sustained BOJ purchases could be a problem for a central bank that already owns around half of government issues. Would the BOJ go Australia’s way that clumsily abandoned its peg in November? That would need more domestic demand for JGBs which is unlikely to be achieved. Historically, BoJ has been open to adjusting targeting range of bond yields. It widened the range to +/-0.25% from +/-0.20% in March 2021, which was changed in July 2018 from +/-0.10% before that. The BoJ could tweak its YCC policy to target 10-year yields form +/-25bps to +/-30bps to give itself more flexibility and manage volatility. This move, if effected, will be communicated as a measure to manage the increased volatility in bond markets, to ensure that it is not taken as a sign of any shift in policy thinking. Article on Crypto: Hot Topic - NEAR Protocol! Terra (LUNA) has been seeing a consistent downward price trend, DAI Should Stay Close To $1 What to watch next? Our sense is that until a policy shift is spotted, or real intervention is mobilized, the market is content to continue driving the JPY lower. Ironically, in the past, the MoF has mobilised intervention in the yen in the direction of avoiding further JPY strength, not weakness. These interventions may not achieve more than temporary success if the underlying policy and market dynamics don’t shift (i.e., the BOJ sticking to its current policy while inflationary pressures and yields elsewhere continue higher). But the risk of tremendous two-way, intraday volatility should be appreciated. Japan’s Finance Minister Suzuki is heading for a bilateral meeting with the US and comments would be on watch. Next BOJ meeting is scheduled for April 27-28, but focus will still be tilted more towards the Fed’s May meeting where a 50bps rate hike is expected along with the start of quantitative tightening. The only other way could be to hope that the yen would find a floor, and wait for BoJ governor Kuroda’s tenure to end in April 2023. This may then be followed up with rate hikes.

Summary: EUR/USD and Monetary Policy. Bank Of England's Speech on Thursday effect on the GBP related currency pairs. AUD/CHF as a reflection of investor risk sentiment. Related article: Japanese Yen (JPY) Weakens Against The Dollar, USD/CAD Stable And The Inevitable Strengthening Of The USD, IMF/World Bank Events Monetary Policy driving the EUR/USD price action. Since the market opened this morning, the EUR has strengthened against the USD and the market sentiment is bullish, the rise in price is small but significant given the current economic conditions. With the differing monetary policy of the European Central Bank (ECB) and the US Federal Reserve (Fed) the EUR/USD currency pair price is low. In the coming weeks it is likely to see the dollar strengthening thanks to the expectations of the Fed to tighten monetary policy. Whereas, there is no certainty on when the ECB will begin rising interest rates. EUR/USD Price Chart Value of the GBP Awaits BOEs Speech Since the market opened this morning the price of the currency pair has increased, however, market sentiment for the EUR/GBP has changed from bullish yesterday to a mixed today. The strengthening EUR against GBP comes in light of the Bank of Englands (BOE) announcements tomorrow regarding the future monetary policy of the country, investors are expecting more hawkish actions. EUR/GBP Price Chart  Read next: Altcoins' Rally: Solana (SOL) Soars Even More, DOT and SHIBA INU Do The Same! | FXMAG.COM AUD/CHF Since the market opened this morning, the value of the AUD/CHF has increased, and has a bullish market sentiment. This currency pair can be used as a good reflection of risk sentiment, this is because the AUD is risk-on and the Swiss Franc is considered as a safe-haven currency. AUD/CHF Price Chart GBP loses some ground on the JPY The price of the GBP/JPY currency pair has (in general) been on the rise as a result of the rapidly depreciating value of the Yen. However, since the market opened this morning the price has decreased despite the bullish market sentiment, possibly due to the uncertainty regarding the future of the GBP and the upcoming BOE’s announcements. GBP/JPY Price Chart Sources: Finance.yahoo.com, teletrade.eu, dailyfx.com

Summary: The price of gold fell to the lowest price in almost 2 weeks. Volatility in U.S Wheat futures due to the Weather. Palladium Prices driven down by the rising dollar index. Gold Prices Hit Lows - elevated U.S treasury yield affecting the demand of the commodity The price of gold hit its lowest value in almost 2 weeks as a result of the elevated U.S treasury yield affecting the demand of the commodity. The increase in the yields also increases the opportunity cost for investors who hold gold because the commodity is not yielding. Investor expectations of the Fed's hawkish outlook could be the reason for the price fall, especially inlight of the expected Fed Speech this week. Price Chart of Gold Read next: Altcoins' Rally: Solana (SOL) Soars Even More, DOT and SHIBA INU Do The Same! | FXMAG.COM Chicago SRW Wheat Futures - terrible weather conditions in the US and Canada are causing supply fears The price of Wheat has been volatile over the past week, the terrible weather conditions in the US and Canada are causing supply fears, however market sentiment for this commodity has struggled to shake its bearish tone. Chicago SRW Wheat Futures Price Chart Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun Palladium Price - the war continues, the industrial activity is taking strain The price of Palladium saw an increase in price as an initial market reaction to the start of the Russia-Ukraine war, and as the war continues, the industrial activity is taking strain. However, on Tuesday, the price of palladium fell as a result of the rising dollar index. Palladium Futures Price Chart Sources: Finance.yahoo.com, economies.com

Commodities 2022-04-20 14:00 Summary:  Gold, currently up around 7% so far this year, continues to perform strongly despite persistent headwinds from rising real yields and a stronger dollar. Instead the yellow metal has increasingly been focusing on multiple uncertainties, some of which were already present before Russia invaded Ukraine. Inflation and growth concerns have both been turbocharged by war and sanctions, and together with elevated volatility in stocks and not least bonds, these developments have seen investors increasingly look for safe havens in tangible assets such as investment metals. Impressive, is the word best describing gold’s performance so far this year. Currently up around 7% during a time where normal drivers such as US real yields and the dollar have risen, normally a development that would see gold struggle. The prospect of aggressive tightening by the US Federal Reserve has driven ten-year real yields higher by more than 1% while supporting a near 4% rise in the dollar against a broad index of currencies. Last year’s relatively weak performance, especially against the dollar, despite emerging inflationary concerns was driven by portfolio managers cutting back on the holdings they accumulated during 2020 as stock markets rallied and bond yields held relatively steady, thereby reducing the need for diversification. Fast forward to 2022 and we are now dealing with multiple uncertainties, some of which were already present before Russia invaded Ukraine. Inflation and growth concerns have both been turbocharged by war and sanctions, and together with elevated volatility in bonds and not least stocks, investors have sought safe havens in tangible assets such as investment metals. During the past year, gold and ten-year real yields have struggled to follow their usual inverse paths, and the dislocation accelerated further during Q1 when gold increasingly managed to ignore rising yields. At current levels gold is theoretically overvalued by around 300 dollars, and highlights a major shift in focus. The net reduction in bullion-backed ETFs that was seen throughout last year came to halt in late December, and since then total holdings have risen by 282 tons to 3325 tons. During the same time leveraged funds, primarily operating in the futures market, given the ability to trade lots valued at $195,000 for a margin of less than $8,000, have been much more dependent on the directional movements in the market. Following the March 8 failed attempt to reach a fresh record high they spent the following weeks scaling back exposure. An exercise that was not completed until the week of April 12 when they returned as net buyers, thereby aligning them with the mentioned ongoing demand for ETFs. Source: Saxo Group While inflation was something we talked about last year, the actual impact of sharply higher prices of everything is now increasingly being felt across the world. In response to this investors are increasingly waking up to the fact that the good years which delivered strong equity returns and stable yields are over. Instead the need to become more defensive has set in and these changes together with the risk of what Russia, a pariah nation to much of the world now, may do next if the war fails to yield the desired result. Instead of real yields, we have increasingly seen gold take some its directional input from crude oil, a development that makes perfect sense. The ebb and flow of the oil price impacts inflation through refined products such as diesel and gasoline while its strength or weakness also tell us something about the level of geopolitical risks in the system. In our recently published Quarterly Outlook we highlight the reasons why we see gold move higher and reach a fresh record high later this year. Source: Saxo Group

Summary: Market sentiment for the EUR/USD currency pair showing bearish signals. Bullish outlook for the EUR/GBP as the EUR strengthens against the GBP. UK retail sales saw a large decrease, causing investor confidence for the currency to fall. USD gains ground on the EUR in light of further expected increases in yields in May The Dollar has strengthened against the EUR since the market opened this morning, in general the dollar is strengthening against all currencies at the moment. After the prelims on private sector PMIs this morning, the EUR originally gained some ground against the USD but has since fallen again, possibly as a result of the new expected increases in U.S yields in May, causing more investor confidence in the USD. EUR/USD Price Chart EUR gains on the GBP as expectations arise for ECB to increase yields. Since the market opened this morning, market sentiment for this currency pair is bullish. The Euro has gained ground on the GBP inlight of the Private sectors PMIs announcements this morning as well as the expectations that the European Central Bank could increase yields in July. EUR/GBP Price Chart GBP Weakens against the USD Since the market opened this morning, market sentiment for this currency pair is bearish. The GBP has weakened against the USD inlight of the announcement of the Feds intentions to increase the U.S yields by a further 50bps, at the same time, UK retail sales saw a large decrease. This fall counteracted the strengthening seen after the increased expectations of the BoE’s interest rates. GBP/USD Price Chart   Related article: https://www.fxmag.com/forex/ecb-announcements-to-possibly-tighten-monetary-policy-strengthens-the-euro-eur-usd-eur-gbp-aud-nzd-and-eur-chf-all-increased The Japanese Yen strengthened against the AUD today. Market sentiment for this currency pair is showing as mixed. In general the JPY has been weakening in the past days. This weakening had pushed the value of this currency pair higher, however, since the market opened this morning, the AUD has weakened against the JPY. AUD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com

Gold first support at 1927/24 but longs need stops below 1920. A break lower targets 1915/12. Below 1910 look for 1900, perhaps as far as 1890. Strong resistance at 1940/45. Shorts need stops above 1950. Read next (By Jason Sen): British Pound To Canadian Dollar (GBP/CAD) Bounces To Ease Severely Oversold Conditions As Predicted, EUR/USD again holds important 5 year trend line support at 1.0850/20 | FXMAG.COM Silver best support for this week at 2390/80. Longs need stops below 2365. A break lower is a medium term sell signal. Minor resistance at 24.50/60. Strong resistance at 2485/95. Shorts need stops above 2505. WTI Crude JUNE first support at 102.00/101.50. Longs need stops below 101.00 (a low for the day here again on Friday). A break lower however targets 9900/9850 & 9750/9700. We could fall as far as very strong support at 94.50/9400. Longs need stops below 9350. Read next: Euro To US Dollar (EUR To USD): That's An Amazing USD Performance, Will USDCAD (Canadian Dollar) Stay Close? USDJPY (Japanese Yen) Beats Records! | FXMAG.COM Holding support at 102.00/101.50 allows a recovery to minor resistance at 104.50/105.00. Above 105.50 however look for 106, perhaps as far as 107.30/70. Shorts need stops above 108.50. Please email me if you need this report updated or Whatsapp: +66971910019 – To subscribe to this report please visit daytradeideas.co.uk or email jason@daytradeideas.co.uk

USDJPY running out of steam in severely overbought conditions as predicted but there is no sell signal yet so I cannot suggest shorts. A break above 129.50 however targets 129.90/95 then 130.25/35, perhaps as far as 130.75/85. First support again at 127.80/70. Expect strong support at 127.10/126.90. Longs need stops below 126.70. A break lower can target 126.00. EURJPY no sell signal yet despite overbought conditions but less than positive candles for the last 3 days probably signal a consolidation ahead. Having held the next target of 139.95/99 perfectly, if we do continue higher look for 140.40/50 & 140.85/95. Minor support at 138.70/50 but below 138.30 can target 137.70/50. ON further losses look for 137.20/10 with best support at 136.50/30 this week. Longs need stops below 136.10. Read next (By Jason Sen): Can (XAUUSD) Gold Price Plunge To $1800!? Silver Price (XAGUSD) To Decrease As Well? | FXMAG.COM NZDJPY holding below 8540 is a sell signal for today targeting 8500 & perhaps as far as strong support at 8450/30. Longs need stops below 8410. First resistance at 8545/65. Shorts need stops above 8485. EURUSD holds 37 YEAR TREND LINE SUPPORT AT 1.0760/20. Longs need stops below 1.0670. Obviously there is nothing more important than this level this week. Again we must beat 1.0840/20 to target 1.0920/40. A break above 1.0960 is a buy signal targeting 1.1030/50. USDCAD messy as we trade sideways for 9 months. We are back above the February lows & the sideways 100 & 200 day moving averages. Further gains test the strongest resistance for this week at 500 day & 100 week moving average at 1.2775/85. Shorts need stops above 1.2800. A break higher should be a medium term buy signal. Read next (By Jason Sen): Euro To US Dollar (EUR To USD): That's An Amazing USD Performance, Will USDCAD (Canadian Dollar) Stay Close? USDJPY (Japanese Yen) Beats Records! | FXMAG.COM First support at 1.2660/40. Longs need stops below 1.2620 GBPCAD support at the April low of 1.6293/81 held again. Strong resistance at 1.6400/20. Shorts need stops above 1.6450. A break higher is a buy signal initially targeting 1.6530/50. A break below 1.6265 is a sell signal. Look for 1.6190/80. Please email me if you need this report updated or Whatsapp: +66971910019 – To subscribe to this report please visit daytradeideas.co.uk or email jason@daytradeideas.co.uk

The price of gold appears to be back above $1,900 per ounce on Tuesday, after a 3-day decline. The rise seems to have taken place with a slight weakening of the US dollar and a drop in US Treasury bond yields, which may have made bullion more attractive. Investors may be monitoring the deteriorating Covid virus situation in China after authorities in Beijing expanded testing to a larger part of the city The U.S. dollar appears to have retreated today from a two-year high reached during the previous session, while the 10-year bond yield may have fallen from a three-year high, retreating to around 2.8 percent. Given the growing uncertainty about the outlook for global economic growth, the market may be gauging the Federal Reserve's willingness to tighten monetary policy quickly. Additionally, investors may be monitoring the deteriorating Covid virus situation in China after authorities in Beijing expanded testing to a larger part of the city, raising fears of a shutdown of the capital. In addition, Russia told the world not to underestimate the significant risk of nuclear war, which it says it wants to reduce, and warned that conventional Western weapons are a target in Ukraine. Gold can be seen as a store of value during economic and political crises. Read next: Conotoxia - Who's Gonna Stop Dollar (USD)!? EUR/USD Plunging Below 1.00? What A Surprise! Crude Oil Price Goes Down!| FXMAG.COM European buyers have refused to buy millions of barrels of Urals crude from Rosneft PJSC Meanwhile, in the oil market, WTI crude futures appear to have risen to around $99.5 a barrel on Tuesday, after a two-day decline that took prices below $100. However, the supply situation appears to remain tight. There is still a risk that the EU could join the U.S. and U.K. in banning Russian oil imports as the war in Ukraine continues. European buyers have refused to buy millions of barrels of Urals crude from Rosneft PJSC, while Asian refiners have given up on Russian oil because of sanctions imposed on the company that carries the cargoes. As a result, the world on the one hand may be reducing oil demand by the prospect of weaker economic growth and lower demand from China due to the epidemic. On the other hand, there are still chances of reduced oil supply in Europe due to war and sanctions, which may put upward pressure on production. Thus, the price of WTI crude oil, due to the opposing factors, may remain in a consolidation of $92-114. Read next: Conotoxia - (USD) Dollar Index - Fed Floors It! Hawkish Rhetoric And Interest Rate Hike? British Pound In Crisis? GBP/USD Affected By Weak Retail Sales Data!| FXMAG.COM   Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

The Swing Overview – Week 17 Major stock indices continued in their correction and tested strong support levels. In contrast, the US dollar strengthened strongly and is at its highest level since January 2017. The strengthening of the dollar had a negative impact on the value of the euro and commodities such as gold, which fell below the $1,900 per ounce. The Bank of Japan kept interest rates low and the yen broke the magic level 130 per dollar. The USD index strengthened again but the US GDP declined The US consumer confidence in the month of April came in at 107.3, a slight decline from the previous month when consumer confidence was 107.6.   The US GDP data was surprising. The US economy decreased by 1.4% in 1Q 2022 (in the previous quarter the economy grew by 6.4%). This sharp decline surprised even analysts who expected the economy to grow by 1.1%. This result is influenced by the Omicron, which caused the economy to shut down for a longer period than expected earlier this year.    The Fed meeting scheduled for the next week on May 4 will be hot. In fact, even the most dovish Fed officials are already leaning towards a 0.5% rate hike. At the end of the year, we can expect a rate around 2.5%.   The US 10-year bond yields continue to strengthen on the back of these expectations. The US dollar is also strengthening and is already at its highest level since January 2017, surpassing 103 level.  Figure 1: US 10-year bond yields and the USD index on the daily chart   Earnings season is underway in equities Earnings season is in full swing. Amazon's results were disappointing. While revenue was up 7% reaching $116.4 billion in the first quarter (revenue was $108.5 billion in the same period last year), the company posted an total loss of $8.1 billion, which translated to a loss of $7.56 per share. This loss, however, is not due to operating activities, but it is the result of the revaluation of the equity investment in Rivian Automotive.   Facebook, on the other hand, surprised in a positive way posting unexpectedly strong user growth, a sign that its Instagram app is capable of competing with Tik Tok. However, the revenue growth of 6.6% was the lowest in the company's history.    Apple was also a positive surprise, reporting earnings per share of $1.52 (analysts' forecast was $1.43) and revenue growth of $97.3 billion, up 8.6% from the same period last year. However, the company warned that the closed operations in Russia, the lockdown in China due to the coronavirus and supply disruptions will negatively impact earnings in the next quarter.   Figure 2: The SP 500 on H4 and D1 chart In terms of technical analysis, the US SP 500 index is in a downtrend and has reached a major support level on the daily chart last week, which is at 4,150. It has bounced upwards from this support to the resistance according to the 4 H chart which is 4,308 - 4,313. The next resistance according to the H4 chart is 4,360 - 4,365.  The strong resistance is at 4,500.   German DAX index German businessmen are optimistic about the development of the German economy in the next 6 months, as indicated by the Ifo Business Climate Index, which reached 91.8 for April (the expectation was 89.1). However, this did not have a significant effect on the movement of the index and it continued in its downward correction. Figure 3: German DAX index on H4 and daily chart The index is below the SMA 100 on both the daily chart and the H4 chart, confirming the bearish sentiment. The nearest support according to the H4 is 13,600 - 13,650. The resistance is 14,180 - 14,200. The next resistance is 14,592 - 14,632.   The euro has fallen below 1.05 The euro lost significantly last week. While the French election brought relief to the markets as Emmanuel Macron defended the presidency, geopolitical tensions in Ukraine continue to weigh heavily on the European currency. The strong dollar is also having an impact on the EUR/USD pair, pushing the pair down. The price has fallen below 1.05, the lowest level since January 2017.    Figure 4: EURUSD on H4 and daily chart The euro broke through the important support at 1.0650 - 1.071, which has now become the new resistance. The new support was formed in January 2017 and is around the level 1.0350 - 1.040.   Japan's central bank continues to support the fragile economy The Bank of Japan on Thursday reinforced its commitment to keep interest rates at very low levels by pledging to buy unlimited amounts of 10-year government bonds daily, sparking a fresh sell-off in the yen and reviving government bonds. With this commitment, the BOJ is trying to support a fragile economy, even as a surge in commodity prices is pushing the inflation up.   The decision puts Japan in the opposite position to other major economies, which are moving towards tighter monetary policy to combat soaring prices. Figure 5: The USD/JPY on the monthly and daily chart In fresh quarterly forecasts, the central bank has projected core consumer inflation to reach 1.9% in the current fiscal year and then ease to 1.1% in fiscal years 2023 and 2024, an indication that it views the current cost-push price increases as transitory.   In the wake of this decision, the Japanese yen has continued to weaken and has already surpassed the magical level 130 per dollar.   Strong dollar beats also gold Anticipation of aggressive Fed action against inflation, which is supporting the US dollar, is having a negative impact on gold. The rising US government bond yields are also a problem for the yellow metal. This has put gold under pressure, which peaked on Thursday when the price reached USD 1,872 per ounce of gold. But then the gold started to strengthen. Indeed, the decline in the US GDP may have been something of a warning to the Fed and prevent them from tightening the economy too quickly, which helped gold, in the short term, bounce off a strong support. Figure 6: The gold on H4 and daily chart Strong support for the gold is at $1,869 - $1,878 per ounce. There is a confluence of horizontal resistance and the SMA 100 moving average on the daily chart. The nearest resistance according to the H4 chart is 1 907 - 1 910 USD per ounce. The strong resistance according to the daily chart is then 1 977 - 2 000 USD per ounce of gold. Moving averages on the H4 chart can also be used as a resistance. The orange line is the EMA 50 and the blue line is the SMA 100.  

Today at 14:30 important macroeconomic data for the US economy will be published, which may also affect asset valuations outside the United States - we are talking about inflation data. In March 2022, inflation in the United States rose to 8.5 percent, which was the highest reading in 40 years. The rise in prices, in turn, may have affected several market measures. First, it forced the Fed to act, as the Federal Reserve is supposed to care about price stability and should raise interest rates if prices rise. This in turn could have influenced expectations of higher USD interest rates in the future and a strengthening of the dollar to levels last seen 20 years ago. Further expectations of rising rates could lead to an increase in bond yields, where for 10-year bonds they are in the region of 3%. The increase in bond yields, expectations of further tightening of monetary policy, and shrinking of the Fed's balance sheet, in turn, are information that could adversely affect the stock market, which in the case of the Nasdaq 100 index found itself in bear market territory. This spiral seen in many markets may continue until investors fully discount inflation, rising yields, and expectations of interest rate hikes. Interestingly, the latter had already begun to fall earlier in the week as recession fears increased. Currently, based on the federal funds rate contracts, the market is assuming a peak for hikes in mid-2023 at 3.00-3.25 percent. That's lower than the 3.5-.375 percent assumed as recently as the beginning of the month. The determinant, in turn, of whether there is a chance of full pricing for U.S. rate hikes may be where inflation will be. If this one peaks this six months and starts to fall, the market may stop assuming very aggressive Fed action. This, in turn, could bring relief to the bond market, the stock market, and also lead to the US dollar being close to its cyclical peak. Hence, today's and subsequent data on price growth in the U.S. economy could be so important. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Gold dipped to $1832 on Wednesday morning, pulling back to a critical support line in the form of the 200-day moving average, losing more than 11% from the peak levels reached in early March. Gold has been losing buyers amid a jump in US government bond yields Gold has been under systematic pressure for the past month and a half amid a rally in the dollar. In addition to this increase in the underlying price, gold has been losing buyers amid a jump in US government bond yields. However, it is too early to talk about a break in the uptrend in gold, but only a retreat into deep defences ahead of essential data. Most of the time, the correlation between inflation expectations and long-term bond yields governs the dynamics in gold. Weak real bond yields lead to a pull in the precious metal as investors look to protect the purchasing value of capital.  A significant event for the gold outlook is today’s US inflation release With high interest rates and inflation control, investors prefer to earn yields in bonds by selling off gold. A significant event for the gold outlook is today’s US inflation release. The market reaction to this event could be decisive for gold in the coming days or weeks. If gold manages to develop a pullback from current levels, we could see a sharp increase in buying over the next few days Consolidation below $1830 on the day would be an essential bearish signal that could rapidly decline towards $1800. Moreover, there would be an immediate question of double-top formation through 2020 and 2022 peaks as an early signal of a long-term downward trend with a potential of $1200. If gold manages to develop a pullback from current levels, we could see a sharp increase in buying over the next few days, as we did in early February and late November. But unlike those episodes, this time, the bears might not wait for a quick reversal, and a further rally would be an important signal that gold continues to claw its way out of the prolonged correction. In this case, the nearest stops might be the levels near $1900, and further, the market might quickly target a renewal of the historic highs above $2075 before the end of the year. 

The inflation concerns are easing ahead of today’s US CPI reading. We doubt central bankers will back down so soon, however. Markets are coming around to our view that a peak is near in yields, but we think it might still be a couple of months away In this article US 10yr edges back below 3% on remarkable easing in inflation expectations The inflation scare is easing but beware of circular reasonings Global growth gloom means holding psychologically important levels will be more difficult Today’s events and market views The peak in yields may be near US 10yr edges back below 3% on remarkable easing in inflation expectations The juxtaposition between rising real rates and falling inflation expectations remains, and over the past 24 hours the fall in inflation expectations has been dominant. And that’s why the US 10yr yield has dipped back below 3%. Right now, US 10yr inflation expectations are in the region of 2.65%. They were in excess of 3%, albeit briefly, a few weeks back, at which point talk of a 75bp hike in June were sounding like a solid call. Now that inflation expectations are well down, the 50bp promised looks fine. "10yr real rate in the area of 1% would not look out of whack" Meanwhile the 10yr real yield is now above 30bp. Add that to the inflation expectation and we get the sub-3% 10yr Treasury yield. The move higher in the real yield has been spectacular. Back in March it was deeper than -100bp. The move to 30bp is a sign that the economy has morphed away from the need for ultra-loose policy. And a continued move higher takes it towards a more normal footing. In fact a 10yr real rate in the area of 1% would not look out of whack. If we got there, inflation expectations would fall far more. The adjustment higher in real yields is a threat to risk asset valuations Source: Refinitiv, ING   Today’s US CPI number will be important, but not determinative. In other words it should not have a material impact on the 10yr inflation expectation. That said, if it’s an outsized / surprise number, it’s then more likely to have an impact out the curve. Our central view is in line with the market view, where we do see a fall in contemporaneous inflation, consistent with the recent tendency for inflation expectations to ease lower. We’ve been surprised by this though, and think it’s too early to call it a trend. The inflation scare is easing but beware of circular reasonings The ‘peak inflation’ narrative should receive a boost from slowing US annual headline and core inflation readings today but we would be cautious about chasing the move lower in rates. As always, forward-looking markets could apply a heavy discount to central bank rhetoric but an acceleration in monthly core CPI means Fed officials are unlikely to change tack just yet. One should also remember that the decline from the inflation peak will be very slow indeed, keeping pressure on the Fed to act. Swaps show inflation is no longer the market's only concern Source: Refinitiv, ING   US CPI and Eurozone HICP swaps have dropped significantly this month Further afield, inflation compensation offered by US CPI and Eurozone HICP swaps has dropped significantly this month. Should markets conclude that central banks can now afford to be less hawkish? Only up to a point. To some extent, the drop in inflation swaps is owing to a deteriorating global macro environment, but the post-FOMC timing of this drop also suggests that it has at least as much to do with expectations that central banks will deliver on expected tightening. We would be careful with such circular reasonings. Global growth gloom means holding psychologically important levels will be more difficult For an example of the doubt setting in investors’ mind about central banks’ ability to tighten policy, look no further than yesterday’s better-than-expected German (Zew) and US (National Federation of Independent Business) sentiment indicators. None of the readings was enough to alleviate global growth gloom but the NFIB details in particular could have brought inflation fears back to the fore. We suspect it is too early to call the end of the hawkish re-pricing, with central bankers still very much on their front-foot when it comes to delivering monetary tightening. Bonds risk failing a psychologically important test Source: Refinitiv, ING   We have sympathy with the growing view that there is a short time limit to this tightening cycle We think a better candidate for a peak in yields in this cycle is during the third quarter of this year, after the ECB’s expected first hike and after the couple of additional 50bp hikes the Fed has committed to. This being said, turning points are notoriously difficult to pick and we have sympathy with the growing view that there is a short time limit to this tightening cycle. Should 10Y bonds fail to hold on to their recent jump above the psychologically important levels of 3% for Treasuries and 1% for Bunds, it may take a lot of good news to test these levels again. Today’s events and market views Germany (10Y) and Portugal (8Y) make up today’s Euro sovereign supply slate. This will come on top of a dual tranche NGeu syndicated deal in the 3Y (new issue) and 30Y (tap) sectors. In the US session, the Treasury will auction 10Y notes. The main release of note in the afternoon will be the April CPI report. Consensus is for the annual readings to cool down from the previous month but a monthly acceleration in core could muddy the picture for rates. There is also an extensive list of ECB speakers on the schedule, culminating with interventions from Christine Lagarde and Isabel Schnabel. TagsRates Daily   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC). The latest COT data is updated through Tuesday May 10th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. Bonds market speculator bets mostly rose this week as seven out of the eight bond markets we cover saw higher positioning this week. Most of these markets are deeply bearish (speculator levels and price levels) as bond markets have been declining mightily in this higher interest rate environment this year. This week’s rise in bond speculator bets will likely be short-lived although there have been increasing calls that bond markets may have hit or are approaching a short term bottom. Overall, the markets with higher speculator bets this week were 2-Year Bond (2,342 contracts), Eurodollar (87,521 contracts), 10-Year Bond (61,565 contracts), Ultra 10-Year (15,302 contracts), Long US Bond (1,942 contracts), Fed Funds (104,415 contracts) and the Ultra US Bond (7,666 contracts). The only market with declining speculator bets this week was the 5-Year Bond (-6,738 contracts). Speculator strength standings for each Commodity where strength index is current net position compared to past three years, above 80 is bullish extreme, below 20 is bearish extreme OI Strength = Current Open Interest level compared to last 3 years range Spec Strength = Current Net Speculator level compared to last 3 years range Strength Move = Six week change of Spec Strength Data Snapshot of Bond Market Traders | Columns Legend May-10-2022OIOI-IndexSpec-NetSpec-IndexCom-NetCOM-IndexSmalls-NetSmalls-Index Eurodollar 10,439,124 33 -2,600,587 3 3,030,504 97 -429,917 10 FedFunds 1,750,404 55 49,162 46 -49,266 54 104 60 2-Year 2,264,774 21 -126,829 57 201,609 64 -74,780 17 Long T-Bond 1,207,560 50 15,453 90 -4,991 19 -10,462 44 10-Year 3,722,697 45 -85,972 59 268,376 54 -182,404 36 5-Year 3,813,677 38 -325,674 26 502,383 75 -176,709 32   3-Month Eurodollars Futures: The 3-Month Eurodollars large speculator standing this week reached a net position of -2,600,587 contracts in the data reported through Tuesday. This was a weekly boost of 87,521 contracts from the previous week which had a total of -2,688,108 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 3.3 percent. The commercials are Bullish-Extreme with a score of 96.6 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 9.8 percent. 3-Month Eurodollars Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 3.4 75.3 4.1 – Percent of Open Interest Shorts: 28.3 46.3 8.2 – Net Position: -2,600,587 3,030,504 -429,917 – Gross Longs: 356,101 7,861,403 422,820 – Gross Shorts: 2,956,688 4,830,899 852,737 – Long to Short Ratio: 0.1 to 1 1.6 to 1 0.5 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 3.3 96.6 9.8 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish-Extreme NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: -3.3 3.2 -0.4   30-Day Federal Funds Futures: The 30-Day Federal Funds large speculator standing this week reached a net position of 49,162 contracts in the data reported through Tuesday. This was a weekly gain of 104,415 contracts from the previous week which had a total of -55,253 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 45.7 percent. The commercials are Bullish with a score of 53.9 percent and the small traders (not shown in chart) are Bullish with a score of 60.0 percent. 30-Day Federal Funds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 5.9 75.2 2.3 – Percent of Open Interest Shorts: 3.1 78.0 2.3 – Net Position: 49,162 -49,266 104 – Gross Longs: 103,238 1,316,147 39,627 – Gross Shorts: 54,076 1,365,413 39,523 – Long to Short Ratio: 1.9 to 1 1.0 to 1 1.0 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 45.7 53.9 60.0 – Strength Index Reading (3 Year Range): Bearish Bullish Bullish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 7.8 -10.3 53.3   2-Year Treasury Note Futures: The 2-Year Treasury Note large speculator standing this week reached a net position of -126,829 contracts in the data reported through Tuesday. This was a weekly rise of 2,342 contracts from the previous week which had a total of -129,171 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 56.7 percent. The commercials are Bullish with a score of 63.9 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 17.4 percent. 2-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 12.1 77.3 6.2 – Percent of Open Interest Shorts: 17.7 68.4 9.5 – Net Position: -126,829 201,609 -74,780 – Gross Longs: 275,153 1,751,572 140,782 – Gross Shorts: 401,982 1,549,963 215,562 – Long to Short Ratio: 0.7 to 1 1.1 to 1 0.7 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 56.7 63.9 17.4 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish-Extreme NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: -13.7 8.7 11.6   5-Year Treasury Note Futures: The 5-Year Treasury Note large speculator standing this week reached a net position of -325,674 contracts in the data reported through Tuesday. This was a weekly decrease of -6,738 contracts from the previous week which had a total of -318,936 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 26.1 percent. The commercials are Bullish with a score of 74.5 percent and the small traders (not shown in chart) are Bearish with a score of 32.5 percent. 5-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 7.6 83.0 7.1 – Percent of Open Interest Shorts: 16.2 69.9 11.8 – Net Position: -325,674 502,383 -176,709 – Gross Longs: 291,527 3,167,247 271,640 – Gross Shorts: 617,201 2,664,864 448,349 – Long to Short Ratio: 0.5 to 1 1.2 to 1 0.6 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 26.1 74.5 32.5 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 6.3 -11.7 16.6   10-Year Treasury Note Futures: The 10-Year Treasury Note large speculator standing this week reached a net position of -85,972 contracts in the data reported through Tuesday. This was a weekly advance of 61,565 contracts from the previous week which had a total of -147,537 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 59.4 percent. The commercials are Bullish with a score of 53.8 percent and the small traders (not shown in chart) are Bearish with a score of 36.2 percent. 10-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 10.9 76.5 8.4 – Percent of Open Interest Shorts: 13.2 69.2 13.3 – Net Position: -85,972 268,376 -182,404 – Gross Longs: 406,123 2,846,309 313,590 – Gross Shorts: 492,095 2,577,933 495,994 – Long to Short Ratio: 0.8 to 1 1.1 to 1 0.6 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 59.4 53.8 36.2 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 59.4 -46.2 -0.3   Ultra 10-Year Notes Futures: The Ultra 10-Year Notes large speculator standing this week reached a net position of -95,416 contracts in the data reported through Tuesday. This was a weekly increase of 15,302 contracts from the previous week which had a total of -110,718 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 4.0 percent. The commercials are Bullish-Extreme with a score of 93.4 percent and the small traders (not shown in chart) are Bearish with a score of 48.6 percent. Ultra 10-Year Notes Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 4.5 82.9 11.3 – Percent of Open Interest Shorts: 12.2 66.3 20.3 – Net Position: -95,416 207,218 -111,802 – Gross Longs: 56,783 1,034,536 141,487 – Gross Shorts: 152,199 827,318 253,289 – Long to Short Ratio: 0.4 to 1 1.3 to 1 0.6 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 4.0 93.4 48.6 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: -5.7 0.4 12.4   US Treasury Bonds Futures: The US Treasury Bonds large speculator standing this week reached a net position of 15,453 contracts in the data reported through Tuesday. This was a weekly increase of 1,942 contracts from the previous week which had a total of 13,511 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 89.6 percent. The commercials are Bearish-Extreme with a score of 18.5 percent and the small traders (not shown in chart) are Bearish with a score of 44.3 percent. US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 10.9 72.1 13.0 – Percent of Open Interest Shorts: 9.6 72.5 13.8 – Net Position: 15,453 -4,991 -10,462 – Gross Longs: 131,916 870,932 156,698 – Gross Shorts: 116,463 875,923 167,160 – Long to Short Ratio: 1.1 to 1 1.0 to 1 0.9 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 89.6 18.5 44.3 – Strength Index Reading (3 Year Range): Bullish-Extreme Bearish-Extreme Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: -0.2 -0.6 1.9   Ultra US Treasury Bonds Futures: The Ultra US Treasury Bonds large speculator standing this week reached a net position of -311,513 contracts in the data reported through Tuesday. This was a weekly advance of 7,666 contracts from the previous week which had a total of -319,179 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 58.1 percent. The commercials are Bullish with a score of 57.2 percent and the small traders (not shown in chart) are Bearish with a score of 43.2 percent. Ultra US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 3.6 84.6 11.4 – Percent of Open Interest Shorts: 28.2 61.6 9.8 – Net Position: -311,513 290,655 20,858 – Gross Longs: 45,084 1,069,894 144,208 – Gross Shorts: 356,597 779,239 123,350 – Long to Short Ratio: 0.1 to 1 1.4 to 1 1.2 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 58.1 57.2 43.2 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 4.9 0.8 -9.9   Article By InvestMacro – Receive our weekly COT Reports by Email *COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

Fear of a recession may be one of the reasons pushing risky asset prices lower. Yesterday alone, the Dow Jones fell 3.57 percent and the S&P 500 fell 4.04 percent, its biggest one-day drop since June 2020. The Nasdaq Composite was off 4.73 percent. The U.S. economy is mainly spinning thanks to consumption and largely living on credit Another turnaround on Wall Street came after the release of the results of U.S. big-box retail chains such as Wal-Mart and Target. The share price of the former fell by almost 25 percent from its April peak, and the latter by about 40 percent. Why is this important? The U.S. economy is mainly spinning thanks to consumption and largely living on credit. Decrease in consumption by higher inflation, as shown by the results of companies and their comments to the results, can therefore be a wake-up call that the US economy will no longer grow so rapidly. As a result, there has been an even greater fear of recession, which in the current inflationary environment brings to mind the stagflation of the 70s-80s in the United States. Add to that rising lending rates through interest rate hikes, broken supply chains and an expensive U.S. dollar eroding export profits. According to some, this is the perfect set of factors that could push the market further into the embrace of a waking bear market. Investors also might be looking for the point at which they believe the dollar and U.S. bonds have priced in a full cycle of rate hikes before the Fed In a more optimistic scenario, however, they may predict that inflation will peak in the second or third quarter of this year and then begin to decline starting in the fourth quarter of 2022. At that point, consumers could breathe a sigh of relief as prices would still rise, but no longer as fast as before. The same could be true for the stock market, which statistically, in cycles of interest rate hikes, seemed to create corrections in the first reaction and then continued earlier trends. Investors also might be looking for the point at which they believe the dollar and U.S. bonds have priced in a full cycle of rate hikes before the Fed. At that point, they could switch from the dollar to bonds or stocks, which could also put the brakes on the declines currently seen. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM Since the beginning of the year alone, the Nasdaq index has fallen by 27 percent, the S&P 500 by more than 18 percent, and the Dow Jones by less than 15 percent. U.S. 10-year bonds have shrunk by 8 percent, and gold has fallen by 0.5 percent. Meanwhile, the U.S. dollar has gained about 8 percent. This could quite clearly show that the cash phase of the cycle may be underway. It may be followed, according to theory, by the bond phase of the cycle and only the equity phase of the cycle. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Summary:  Gold, in a downtrend since mid-April, has found a tentative bid amid continued turbulence across global stock markets. So far, however, the fresh bid has not been strong enough to rattle some of the recent established tactical short positions. For that to happen the metal needs a runaway upside day or a period of consolidation back above the 200-day moving average, currently at $1839/oz. From an absolute return perspective gold’s year-to-date performance in dollars can be viewed as a disappointing Gold, in a downtrend since mid-April, has found a tentative bid amid continued turbulence across global stock markets. So far, however, the fresh bid has not been strong enough to rattle some of the recent established tactical short positions. For that to happen the metal needs a runaway upside day or a period of consolidation back above the 200-day moving average, currently at $1839/oz. Read next: Altcoins: What Is PancakeSwap (CAKE)? A Deeper Look Into The PancakeSwap Platform| FXMAG.COM From an absolute return perspective gold’s year-to-date performance in dollars can be viewed as a disappointing, but when considering the impact of the stronger dollar and the steep losses in stocks and bonds, any diversified investor with gold is likely to be satisfied. The yield on US ten-year inflation adjusted bonds trades lower with the break below the 21-day moving average at +0.09% During the past month, gold has been suffering from the double blow of a stronger dollar and the FOMC (Federal Open Market Committee) signaling an aggressive pace of future rate hikes in order to combat inflation at the highest level in decades. Fine, if the economy does not suffer too much of a setback, thereby raising the risk of recession. What has changed during the past 48 hours has been dismal earnings news from large US retailers raising the risk of a deeper than expected economic slump. Most recently Target Corp which yesterday plunged the most since 1987’s Black Monday crash. In his comments the CEO sited persistent cost pressures and bloating inventories amid a change in consumer spending as reasons. These developments helped deepen the global stock market rout, and today the weakness has continued, thereby supporting short covering and fresh haven buying of US bonds while the dollar has softened. All developments that has supported the mentioned bid in gold. The yield on US ten-year inflation adjusted bonds trades lower with the break below the 21-day moving average at +0.09% signaling a loss of short-term bullish momentum.  Read next: Altcoins: What Is Litecoin (LTC)? A Deeper Look Into The Litecoin Platform| FXMAG.COM The loss of momentum in recent weeks have seen ETF (Exchange Traded Fund) investors reduce gold holdings in all but one of the last 18 days while money managers in the latest reporting week to May 10 cut their net long in COMEX gold futures to a three-month low. Interestingly the latest reduction was primarily driven by long liquidation with no signs of appetite for naked short selling.  We maintain a bullish outlook for gold given the need to diversify amid a troubled stock market and the increased risk of a policy FOMC policy mistakes driving yields and the dollar lower. From the chart below it is clear that gold has its work cut out, and a great deal of work is needed to mend the chart damage done during the past month. The first sign of improvement would be a break above the 200-day moving average at $1839 followed by $1868, the latter being the first level to signal loss of bearish momentum. Source: Saxo Group Source: Saxo Bank

Let’s just say things have been a lot more settled this week than last week’s bloodbath. The top 10 and 25 indexes remain positive on Friday. But it’s very little pulled back compared to the damage done over the last 6-weeks. A few headlines that caught our attention this week, Ripple partnered with a Lithuanian firm for cross-border payments. Attention remains on Ethereum as it prepares to merge and just hangs on to the 2000 USD level. Tether is said to be partially backed by non-US government bonds. Is this meant to give us confidence after the stable coins fiasco last week? Talk emerging around debt defaults by El Salvador. The country famously made Bitcoin legal tender and was reported to have bought large parcels on the coin. The pressure continued this week as BTC fell below 29K. Price has moved back above 30K, but pressure remains on the country after this move. Ranges are the topic of a lot of the top ten at this point in the week. We discussed this in detail in our Bitcoin report earlier today, and it’s not really a surprise based on last week’s trade. We want to point out the weekly demand areas and support areas we are seeing holding on several coins. Definitely take a look at some of the top 10 on their weekly charts to see the areas and levels we have brought up. Continuing on from this, we want to show an example of this. As you can see below, Bitcoin weekly has held for now from the 28,600 – 30,000 area. Last week’s plunge failed to break this level, and it remains key weekly support for now. While this level remains in play, we will look for buyers to continue to consolidate.   The post Crypto Focus: Market Steadies but No Sign of Recovery appeared first on Eightcap.

By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC). The latest COT data is updated through Tuesday May 17th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. Bonds market speculator bets were mostly lower this week as five out of the eight bond markets we cover had lower positioning this week. Most of these markets remain bearish (speculator levels and price levels) in the higher interest rate environment of 2022. The exceptions in the COT speculator positioning are the Fed Funds positions which recently turned positive in early April and have maintained a small bullish level in six out of the past seven weeks. The US Treasury Bond positions also turned positive in early March and have also had a small bullish position in nine out of the past eleven weeks. Overall, the bond markets with higher speculator bets for this week were Long US Bond (16,554 contracts), 5-Year Bond (65,450 contracts) and the Ultra US Bond (16,954 contracts). The markets with declining speculator bets this week were the 2-Year Bond (-7,808 contracts), Eurodollar (-273,864 contracts), 10-Year Bond (-74,119 contracts), Ultra 10-Year (-2,421 contracts) and the Fed Funds (-147 contracts). Speculator strength standings for each Commodity where strength index is current net position compared to past three years, above 80 is bullish extreme, below 20 is bearish extreme OI Strength = Current Open Interest level compared to last 3 years range Spec Strength = Current Net Speculator level compared to last 3 years range Strength Move = Six week change of Spec Strength Data Snapshot of Bond Market Traders | Columns Legend May-17-2022OIOI-IndexSpec-NetSpec-IndexCom-NetCOM-IndexSmalls-NetSmalls-Index Eurodollar 10,381,883 32 -2,874,451 0 3,300,959 100 -426,508 11 FedFunds 1,796,405 58 49,015 46 -45,484 54 -3,531 51 2-Year 2,376,024 26 -134,637 55 209,074 66 -74,437 18 Long T-Bond 1,244,823 57 32,007 95 -14,575 15 -17,432 39 10-Year 3,666,416 41 -160,091 48 318,592 60 -158,501 42 5-Year 3,791,540 37 -260,224 38 417,629 64 -157,405 38   3-Month Eurodollars Futures: The 3-Month Eurodollars large speculator standing this week reached a net position of -2,874,451 contracts in the data reported through Tuesday. This was a weekly decline of -273,864 contracts from the previous week which had a total of -2,600,587 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 10.6 percent. 3-Month Eurodollars Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 3.2 76.0 3.7 – Percent of Open Interest Shorts: 30.9 44.2 7.8 – Net Position: -2,874,451 3,300,959 -426,508 – Gross Longs: 336,958 7,889,274 386,384 – Gross Shorts: 3,211,409 4,588,315 812,892 – Long to Short Ratio: 0.1 to 1 1.7 to 1 0.5 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 0.0 100.0 10.6 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish-Extreme NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: -6.5 5.9 4.6   30-Day Federal Funds Futures: The 30-Day Federal Funds large speculator standing this week reached a net position of 49,015 contracts in the data reported through Tuesday. This was a weekly lowering of -147 contracts from the previous week which had a total of 49,162 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 45.7 percent. The commercials are Bullish with a score of 54.4 percent and the small traders (not shown in chart) are Bullish with a score of 50.7 percent. 30-Day Federal Funds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 5.6 75.5 2.1 – Percent of Open Interest Shorts: 2.8 78.0 2.3 – Net Position: 49,015 -45,484 -3,531 – Gross Longs: 100,043 1,355,889 37,674 – Gross Shorts: 51,028 1,401,373 41,205 – Long to Short Ratio: 2.0 to 1 1.0 to 1 0.9 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 45.7 54.4 50.7 – Strength Index Reading (3 Year Range): Bearish Bullish Bullish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 4.6 -5.3 16.5   2-Year Treasury Note Futures: The 2-Year Treasury Note large speculator standing this week reached a net position of -134,637 contracts in the data reported through Tuesday. This was a weekly lowering of -7,808 contracts from the previous week which had a total of -126,829 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 55.1 percent. The commercials are Bullish with a score of 65.6 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 17.6 percent. 2-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 13.0 76.6 5.8 – Percent of Open Interest Shorts: 18.6 67.8 8.9 – Net Position: -134,637 209,074 -74,437 – Gross Longs: 307,951 1,818,876 137,690 – Gross Shorts: 442,588 1,609,802 212,127 – Long to Short Ratio: 0.7 to 1 1.1 to 1 0.6 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 55.1 65.6 17.6 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish-Extreme NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: -12.6 8.0 10.7   5-Year Treasury Note Futures: The 5-Year Treasury Note large speculator standing this week reached a net position of -260,224 contracts in the data reported through Tuesday. This was a weekly boost of 65,450 contracts from the previous week which had a total of -325,674 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 37.5 percent. The commercials are Bullish with a score of 64.2 percent and the small traders (not shown in chart) are Bearish with a score of 37.8 percent. 5-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 7.9 81.1 7.5 – Percent of Open Interest Shorts: 14.7 70.1 11.7 – Net Position: -260,224 417,629 -157,405 – Gross Longs: 298,615 3,074,092 284,595 – Gross Shorts: 558,839 2,656,463 442,000 – Long to Short Ratio: 0.5 to 1 1.2 to 1 0.6 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 37.5 64.2 37.8 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 13.7 -16.5 15.8   10-Year Treasury Note Futures: The 10-Year Treasury Note large speculator standing this week reached a net position of -160,091 contracts in the data reported through Tuesday. This was a weekly decline of -74,119 contracts from the previous week which had a total of -85,972 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 48.1 percent. The commercials are Bullish with a score of 59.7 percent and the small traders (not shown in chart) are Bearish with a score of 42.1 percent. 10-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 8.6 76.9 8.9 – Percent of Open Interest Shorts: 12.9 68.2 13.2 – Net Position: -160,091 318,592 -158,501 – Gross Longs: 314,613 2,819,008 325,049 – Gross Shorts: 474,704 2,500,416 483,550 – Long to Short Ratio: 0.7 to 1 1.1 to 1 0.7 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 48.1 59.7 42.1 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 30.8 -29.7 11.0   Ultra 10-Year Notes Futures: The Ultra 10-Year Notes large speculator standing this week reached a net position of -97,837 contracts in the data reported through Tuesday. This was a weekly fall of -2,421 contracts from the previous week which had a total of -95,416 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 3.4 percent. The commercials are Bullish-Extreme with a score of 91.8 percent and the small traders (not shown in chart) are Bullish with a score of 53.8 percent. Ultra 10-Year Notes Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 4.6 81.6 12.2 – Percent of Open Interest Shorts: 12.6 65.2 20.7 – Net Position: -97,837 200,995 -103,158 – Gross Longs: 56,209 1,000,137 150,063 – Gross Shorts: 154,046 799,142 253,221 – Long to Short Ratio: 0.4 to 1 1.3 to 1 0.6 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 3.4 91.8 53.8 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bullish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: -0.6 -8.2 20.7   US Treasury Bonds Futures: The US Treasury Bonds large speculator standing this week reached a net position of 32,007 contracts in the data reported through Tuesday. This was a weekly increase of 16,554 contracts from the previous week which had a total of 15,453 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 95.0 percent. The commercials are Bearish-Extreme with a score of 15.5 percent and the small traders (not shown in chart) are Bearish with a score of 38.8 percent. US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 11.7 72.5 12.3 – Percent of Open Interest Shorts: 9.2 73.6 13.7 – Net Position: 32,007 -14,575 -17,432 – Gross Longs: 146,002 902,140 152,520 – Gross Shorts: 113,995 916,715 169,952 – Long to Short Ratio: 1.3 to 1 1.0 to 1 0.9 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 95.0 15.5 38.8 – Strength Index Reading (3 Year Range): Bullish-Extreme Bearish-Extreme Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 10.0 -7.4 -6.1   Ultra US Treasury Bonds Futures: The Ultra US Treasury Bonds large speculator standing this week reached a net position of -294,559 contracts in the data reported through Tuesday. This was a weekly gain of 16,954 contracts from the previous week which had a total of -311,513 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 65.1 percent. The commercials are Bearish with a score of 44.2 percent and the small traders (not shown in chart) are Bullish with a score of 50.1 percent. Ultra US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 3.7 81.8 11.6 – Percent of Open Interest Shorts: 26.3 61.5 9.3 – Net Position: -294,559 264,222 30,337 – Gross Longs: 48,033 1,065,877 151,667 – Gross Shorts: 342,592 801,655 121,330 – Long to Short Ratio: 0.1 to 1 1.3 to 1 1.3 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 65.1 44.2 50.1 – Strength Index Reading (3 Year Range): Bullish Bearish Bullish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 14.8 -21.4 5.2   Article By InvestMacro – Receive our weekly COT Reports by Email *COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

Photo Credit: mark m || Every now and then, a change in tactics is justified In 1994, there did come a limit where valuations of long debt undershot and started to come back. After more thought, the short-term yield effect of convexity hedging probably peaks out around 2.5-3.0% on 30-year mortgages. Unless the Fed becomes an aggressive seller of the their long bonds, and now-long MBS, I don’t see long rates going past their recent highs. As such, I am likely to begin buying a little bit of long Treasuries as a hedge against market weakness induced by the likely Fed overshoot. Recently the short-term correlation between stocks and 30-year Treasuries has seemed to go back to stocks down, bonds up, and vice-versa. That’s all for now.

By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC). The latest COT data is updated through Tuesday May 24th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. COT bonds market speculator bets were mostly lower this week as only three out of the eight bond markets we cover had higher positioning this week while five markets saw lower positions. Leading the gains for bonds was the 5-Year Bond (139,697 contracts) and the 2-Year Bond (99,344 contracts) with the Eurodollar (41,671 contracts) also showing a positive week. Meanwhile, leading the declines in speculator bets this week were the 10-Year Bond (-65,033 contracts) and the Ultra US Bond (-13,336 contracts) with the Ultra 10-Year (-1,088 contracts), Long US Bond (-3,505 contracts) and the Fed Funds (-6,524 contracts) also coming in with lower bets on the week. Speculator strength standings for each Bond Market where strength index is current net position compared to past three years, above 80 is bullish extreme, below 20 is bearish extreme OI Strength = Current Open Interest level compared to last 3 years range Spec Strength = Current Net Speculator level compared to last 3 years range Strength Move = Six week change of Spec Strength Data Snapshot of Bond Market Traders | Columns Legend May-24-2022 OI OI-Index Spec-Net Spec-Index Com-Net COM-Index Smalls-Net Smalls-Index Eurodollar 10,441,566 33 -2,832,780 1 3,227,860 99 -395,080 17 FedFunds 1,859,067 65 42,491 45 -38,493 55 -3,998 50 2-Year 2,526,000 32 -35,293 75 106,854 43 -71,561 19 Long T-Bond 1,267,244 60 28,502 94 -11,224 17 -17,278 39 10-Year 3,662,628 41 -225,124 38 376,665 67 -151,541 44 5-Year 4,011,412 52 -120,527 62 292,048 49 -171,521 34   3-Month Eurodollars Futures: The 3-Month Eurodollars large speculator standing this week resulted in a net position of -2,832,780 contracts in the data reported through Tuesday. This was a weekly increase of 41,671 contracts from the previous week which had a total of -2,874,451 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.8 percent. The commercials are Bullish-Extreme with a score of 98.7 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 17.5 percent. 3-Month Eurodollars Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 3.4 75.4 3.7 – Percent of Open Interest Shorts: 30.5 44.5 7.5 – Net Position: -2,832,780 3,227,860 -395,080 – Gross Longs: 351,909 7,877,754 384,474 – Gross Shorts: 3,184,689 4,649,894 779,554 – Long to Short Ratio: 0.1 to 1 1.7 to 1 0.5 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 0.8 98.7 17.5 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -3.5 3.1 3.7   30-Day Federal Funds Futures: The 30-Day Federal Funds large speculator standing this week resulted in a net position of 42,491 contracts in the data reported through Tuesday. This was a weekly fall of -6,524 contracts from the previous week which had a total of 49,015 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 44.9 percent. The commercials are Bullish with a score of 55.2 percent and the small traders (not shown in chart) are Bearish with a score of 49.5 percent. 30-Day Federal Funds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 6.4 75.5 2.1 – Percent of Open Interest Shorts: 4.1 77.5 2.3 – Net Position: 42,491 -38,493 -3,998 – Gross Longs: 119,202 1,403,144 39,289 – Gross Shorts: 76,711 1,441,637 43,287 – Long to Short Ratio: 1.6 to 1 1.0 to 1 0.9 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 44.9 55.2 49.5 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 1.0 -2.6 33.5   2-Year Treasury Note Futures: The 2-Year Treasury Note large speculator standing this week resulted in a net position of -35,293 contracts in the data reported through Tuesday. This was a weekly boost of 99,344 contracts from the previous week which had a total of -134,637 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 75.1 percent. The commercials are Bearish with a score of 43.2 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 18.8 percent. 2-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 14.3 73.0 5.8 – Percent of Open Interest Shorts: 15.7 68.8 8.7 – Net Position: -35,293 106,854 -71,561 – Gross Longs: 361,614 1,845,029 147,143 – Gross Shorts: 396,907 1,738,175 218,704 – Long to Short Ratio: 0.9 to 1 1.1 to 1 0.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 75.1 43.2 18.8 – Strength Index Reading (3 Year Range): Bullish Bearish Bearish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 11.2 -11.4 -1.5   5-Year Treasury Note Futures: The 5-Year Treasury Note large speculator standing this week resulted in a net position of -120,527 contracts in the data reported through Tuesday. This was a weekly rise of 139,697 contracts from the previous week which had a total of -260,224 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 62.1 percent. The commercials are Bearish with a score of 48.9 percent and the small traders (not shown in chart) are Bearish with a score of 33.9 percent. 5-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 10.1 77.1 9.7 – Percent of Open Interest Shorts: 13.1 69.8 14.0 – Net Position: -120,527 292,048 -171,521 – Gross Longs: 405,475 3,093,412 388,207 – Gross Shorts: 526,002 2,801,364 559,728 – Long to Short Ratio: 0.8 to 1 1.1 to 1 0.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 62.1 48.9 33.9 – Strength Index Reading (3 Year Range): Bullish Bearish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 37.6 -30.6 10.2   10-Year Treasury Note Futures: The 10-Year Treasury Note large speculator standing this week resulted in a net position of -225,124 contracts in the data reported through Tuesday. This was a weekly decrease of -65,033 contracts from the previous week which had a total of -160,091 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 38.2 percent. The commercials are Bullish with a score of 66.6 percent and the small traders (not shown in chart) are Bearish with a score of 43.8 percent. 10-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 7.5 77.4 9.7 – Percent of Open Interest Shorts: 13.6 67.1 13.8 – Net Position: -225,124 376,665 -151,541 – Gross Longs: 273,667 2,834,111 354,203 – Gross Shorts: 498,791 2,457,446 505,744 – Long to Short Ratio: 0.5 to 1 1.2 to 1 0.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 38.2 66.6 43.8 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 11.4 -14.4 11.0   Ultra 10-Year Notes Futures: The Ultra 10-Year Notes large speculator standing this week resulted in a net position of -98,925 contracts in the data reported through Tuesday. This was a weekly fall of -1,088 contracts from the previous week which had a total of -97,837 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 3.1 percent. The commercials are Bullish-Extreme with a score of 94.6 percent and the small traders (not shown in chart) are Bearish with a score of 47.9 percent. Ultra 10-Year Notes Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 5.3 80.9 11.9 – Percent of Open Interest Shorts: 13.0 64.5 20.7 – Net Position: -98,925 211,834 -112,909 – Gross Longs: 68,305 1,044,490 153,665 – Gross Shorts: 167,230 832,656 266,574 – Long to Short Ratio: 0.4 to 1 1.3 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 3.1 94.6 47.9 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -9.3 0.3 20.8   US Treasury Bonds Futures: The US Treasury Bonds large speculator standing this week resulted in a net position of 28,502 contracts in the data reported through Tuesday. This was a weekly fall of -3,505 contracts from the previous week which had a total of 32,007 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 93.9 percent. The commercials are Bearish-Extreme with a score of 16.6 percent and the small traders (not shown in chart) are Bearish with a score of 38.9 percent. US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 11.2 72.8 14.0 – Percent of Open Interest Shorts: 8.9 73.7 15.4 – Net Position: 28,502 -11,224 -17,278 – Gross Longs: 141,452 922,729 177,518 – Gross Shorts: 112,950 933,953 194,796 – Long to Short Ratio: 1.3 to 1 1.0 to 1 0.9 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 93.9 16.6 38.9 – Strength Index Reading (3 Year Range): Bullish-Extreme Bearish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 11.0 -7.5 -7.9   Ultra US Treasury Bonds Futures: The Ultra US Treasury Bonds large speculator standing this week resulted in a net position of -307,895 contracts in the data reported through Tuesday. This was a weekly fall of -13,336 contracts from the previous week which had a total of -294,559 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 59.6 percent. The commercials are Bullish with a score of 57.0 percent and the small traders (not shown in chart) are Bearish with a score of 40.9 percent. Ultra US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 3.6 81.8 11.6 – Percent of Open Interest Shorts: 25.8 60.9 10.3 – Net Position: -307,895 290,252 17,643 – Gross Longs: 50,153 1,136,228 161,147 – Gross Shorts: 358,048 845,976 143,504 – Long to Short Ratio: 0.1 to 1 1.3 to 1 1.1 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 59.6 57.0 40.9 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 10.2 -7.2 -7.3   Article By InvestMacro – Receive our weekly COT Reports by Email *COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

The Swing Overview – Week 20 The markets remain volatile and fragile, as shown by the VIX fear index, which has again surpassed the level 30 points. However, equity indices are at interesting supports and there could be some short-term recovery. The euro has bounced off its support in anticipation of tighter monetary policy and the gold is holding its price tag above $1,800 per troy ounce. Is the gold back in investors' favor again? Macroeconomic data The week started with a set of worse data from the Chinese economy, which showed that industrial production contracted by 2.9% year-on-year basis and the retail sales fell by 11.1%. The data shows the latest measures for the country's current COVID-19 outbreak are taking a toll on the economy. To support the slowing economy, China cut its benchmark interest rate by 0.15% on Friday morning, more than analysts expected. While this will not be enough to stave off current downside risks, markets may respond to expectation of more easing in the future. On a positive note, data from the US showed retail sales rose by 0.9% in April and industrial production rose by 1.1% in April. Inflation data in Europe was important. It showed that inflation in the euro area slowed down a little, reaching 7.4% in April compared to 7.5% in March. In Canada, on the other hand, the inflation continued to rise, reaching 6.8% (6.7% in March) and in the UK inflation was 9% in April (7% in the previous month). Several factors are contributing to the higher inflation figures: the ongoing war in Ukraine, problems in logistics chains and the effects of the lockdown in China. Concerns about the impact of higher inflation are showing up in the bond market. The benchmark 10-year US Treasury yield has come down from the 3.2% it reached on 9 May and is currently at 2.8%. This means that demand for bonds is rising and they are once again becoming an asset for times of uncertainty.  Figure 1: US 10-year bond yields and USD index on a daily chart   Equity indices on supports Global equities fell significantly in the past week, reaching significant price supports. Thus, there could be some form of short-term bounce. Although a cautious rally began on Thursday, which was then boosted by China's decision to cut interest rates in the early hours of Friday, there is still plenty of fear among investors and according to Louis Dudley of Federated Hermes, cash holdings have reached its highest level since September 2001, suggesting strong bearish sentiment. Supply chain problems have been highlighted by companies such as Cisco Systems, which has warned of persistent parts shortages. That knocked its shares down by 13.7%. The drop made it the latest big-stock company to post its biggest decline in more than a decade last week. The main risks that continue to cause volatility and great uncertainty are thus leading investors to buy "safe" assets such as the US bonds and the Swiss franc. Figure 2: The SP 500 on H4 and D1 chart From a technical analysis perspective, the US SP 500 index continues to move in a downtrend as the market has formed a lower low while being below both the SMA 100 and EMA 50 moving averages on the H4 and daily charts. The nearest resistance is 4,080 - 4,100. The next resistance is at 4,140 and especially 4,293 - 4,300. Support is at 3,860 - 3,900 level. German DAX index The index continues to move in a downtrend along with the major world indices. The price has reached the support which is at 13,680 – 13,700 and the moving average EMA 50 on the H4 chart is above the SMA 100. This could indicate a short-term signal for some upward correction. However, the main trend according to the daily chart is still downwards. The nearest resistance is at 14,260 - 14,330 level. Figure 3: German DAX index on H4 and daily chart The euro has bounced off its support The EUR/USD currency pair benefited last week from the US dollar moving away from its 20-year highs while on the euro, investors are expecting a tightening economy and a rise in interest rates, which the ECB has not risen yet as one of the few banks. Figure 4: The EURUSD on H4 and daily chart   Significant support is at the price around 1.0350 - 1.040. Current resistance is at 1.650 - 1.700.   The Gold in investors' attention again The gold has underperformed over the past month, falling by 10% since April when the price reached USD 2,000 per ounce. But there is now strong risk aversion in the markets, as indicated by the stock markets, which have fallen. The gold, on the other hand, has started to rise. Inflation fears are a possible reason, and investors have begun to accumulate the gold for protection against rising prices. The second reason is that the gold is inversely correlated with the US dollar. The dollar has come down from its 20-year highs, which has allowed the gold to bounce off its support.  Figure 5: The gold on H4 and daily chart The first resistance is at $1,860 per ounce. The support is at $1,830 - $1,840 per ounce. The next support is then at $1,805 - $1,807 and especially at $1,800 per ounce.

By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC). The latest COT data is updated through Tuesday May 31st and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. COT bonds market speculator bets were lower this week as all eight bond markets we cover had lower positioning this week. Leading the declines in speculator bets this week were the 5-Year Bond (-97,261 contracts) and the 2-Year Bond (-92,825 contracts) with the Eurodollar (-22,436 contracts), Fed Funds (-17,284 contracts), 10-Year Bond (-13,783 contracts), Long US Bond (-8,741 contracts), Ultra 10-Year (-6,442 contracts) and the Ultra US Bond (-1,383 contracts) also coming in with lower bets on the week.   Strength scores (3-Year range of Speculator positions, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) show that most of the bond markets are below their midpoints (50 percent) for the past 3 years.  The US Treasury Bond, 2-Year and the Ultra US Bond have all gone above the midpoint and the US Treasury Bond has now entered extreme bullish levels as compared to its range over the past 3 years. Strength score trends (or move index, that show 6-week changes in strength scores) shows a mixed picture with half the bond markets rising over the past six weeks and half not. Data Snapshot of Bond Market Traders | Columns Legend May-31-2022 OI OI-Index Spec-Net Spec-Index Com-Net COM-Index Smalls-Net Smalls-Index Eurodollar 10,374,105 31 -2,855,216 0 3,260,722 99 -405,506 15 FedFunds 1,907,235 69 25,207 43 -17,303 58 -7,904 40 2-Year 2,219,497 19 -128,118 56 193,103 62 -64,985 21 Long T-Bond 1,212,023 51 19,761 91 1,627 21 -21,388 36 10-Year 3,470,808 28 -238,907 36 411,183 71 -172,276 39 5-Year 3,804,715 40 -217,788 45 367,355 58 -149,567 40   3-Month Eurodollars Futures: The 3-Month Eurodollars large speculator standing this week was a net position of -2,855,216 contracts in the data reported through Tuesday. This was a weekly lowering of -22,436 contracts from the previous week which had a total of -2,832,780 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.4 percent. The commercials are Bullish-Extreme with a score of 99.3 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 15.2 percent. 3-Month Eurodollars Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 3.2 75.4 3.6 – Percent of Open Interest Shorts: 30.7 44.0 7.5 – Net Position: -2,855,216 3,260,722 -405,506 – Gross Longs: 332,811 7,825,376 371,699 – Gross Shorts: 3,188,027 4,564,654 777,205 – Long to Short Ratio: 0.1 to 1 1.7 to 1 0.5 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 0.4 99.3 15.2 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -5.5 4.8 6.9   30-Day Federal Funds Futures: The 30-Day Federal Funds large speculator standing this week was a net position of 25,207 contracts in the data reported through Tuesday. This was a weekly reduction of -17,284 contracts from the previous week which had a total of 42,491 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 42.7 percent. The commercials are Bullish with a score of 57.8 percent and the small traders (not shown in chart) are Bearish with a score of 39.6 percent. 30-Day Federal Funds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 6.2 75.9 1.9 – Percent of Open Interest Shorts: 4.8 76.8 2.4 – Net Position: 25,207 -17,303 -7,904 – Gross Longs: 117,407 1,448,066 37,077 – Gross Shorts: 92,200 1,465,369 44,981 – Long to Short Ratio: 1.3 to 1 1.0 to 1 0.8 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 42.7 57.8 39.6 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 0.8 -1.4 11.0   2-Year Treasury Note Futures: The 2-Year Treasury Note large speculator standing this week was a net position of -128,118 contracts in the data reported through Tuesday. This was a weekly reduction of -92,825 contracts from the previous week which had a total of -35,293 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 56.4 percent. The commercials are Bullish with a score of 62.1 percent and the small traders (not shown in chart) are Bearish with a score of 21.5 percent. 2-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 11.9 77.2 6.5 – Percent of Open Interest Shorts: 17.6 68.5 9.4 – Net Position: -128,118 193,103 -64,985 – Gross Longs: 263,530 1,714,483 143,470 – Gross Shorts: 391,648 1,521,380 208,455 – Long to Short Ratio: 0.7 to 1 1.1 to 1 0.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 56.4 62.1 21.5 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -1.2 -5.1 12.2   5-Year Treasury Note Futures: The 5-Year Treasury Note large speculator standing this week was a net position of -217,788 contracts in the data reported through Tuesday. This was a weekly decline of -97,261 contracts from the previous week which had a total of -120,527 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 45.0 percent. The commercials are Bullish with a score of 58.1 percent and the small traders (not shown in chart) are Bearish with a score of 39.9 percent. 5-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 9.1 81.4 7.5 – Percent of Open Interest Shorts: 14.9 71.7 11.4 – Net Position: -217,788 367,355 -149,567 – Gross Longs: 348,119 3,096,723 285,676 – Gross Shorts: 565,907 2,729,368 435,243 – Long to Short Ratio: 0.6 to 1 1.1 to 1 0.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 45.0 58.1 39.9 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 12.5 -15.9 16.3   10-Year Treasury Note Futures: The 10-Year Treasury Note large speculator standing this week was a net position of -238,907 contracts in the data reported through Tuesday. This was a weekly decrease of -13,783 contracts from the previous week which had a total of -225,124 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 36.1 percent. The commercials are Bullish with a score of 70.7 percent and the small traders (not shown in chart) are Bearish with a score of 38.9 percent. 10-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 7.1 79.6 9.0 – Percent of Open Interest Shorts: 14.0 67.8 14.0 – Net Position: -238,907 411,183 -172,276 – Gross Longs: 245,557 2,764,399 313,090 – Gross Shorts: 484,464 2,353,216 485,366 – Long to Short Ratio: 0.5 to 1 1.2 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 36.1 70.7 38.9 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 14.2 -13.1 3.9   Ultra 10-Year Notes Futures: The Ultra 10-Year Notes large speculator standing this week was a net position of -105,367 contracts in the data reported through Tuesday. This was a weekly fall of -6,442 contracts from the previous week which had a total of -98,925 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 1.4 percent. The commercials are Bullish-Extreme with a score of 94.3 percent and the small traders (not shown in chart) are Bullish with a score of 52.6 percent. Ultra 10-Year Notes Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 4.8 81.8 11.9 – Percent of Open Interest Shorts: 13.4 64.7 20.4 – Net Position: -105,367 210,588 -105,221 – Gross Longs: 59,643 1,010,524 147,144 – Gross Shorts: 165,010 799,936 252,365 – Long to Short Ratio: 0.4 to 1 1.3 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 1.4 94.3 52.6 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -7.3 5.0 5.2   US Treasury Bonds Futures: The US Treasury Bonds large speculator standing this week was a net position of 19,761 contracts in the data reported through Tuesday. This was a weekly reduction of -8,741 contracts from the previous week which had a total of 28,502 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 91.0 percent. The commercials are Bearish with a score of 20.6 percent and the small traders (not shown in chart) are Bearish with a score of 35.6 percent. US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 9.9 75.9 13.0 – Percent of Open Interest Shorts: 8.3 75.8 14.7 – Net Position: 19,761 1,627 -21,388 – Gross Longs: 120,014 920,309 157,340 – Gross Shorts: 100,253 918,682 178,728 – Long to Short Ratio: 1.2 to 1 1.0 to 1 0.9 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 91.0 20.6 35.6 – Strength Index Reading (3 Year Range): Bullish-Extreme Bearish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 10.1 -6.3 -8.8   Ultra US Treasury Bonds Futures: The Ultra US Treasury Bonds large speculator standing this week was a net position of -309,278 contracts in the data reported through Tuesday. This was a weekly fall of -1,383 contracts from the previous week which had a total of -307,895 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 59.0 percent. The commercials are Bullish with a score of 55.7 percent and the small traders (not shown in chart) are Bearish with a score of 43.8 percent. Ultra US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 3.2 83.4 11.5 – Percent of Open Interest Shorts: 27.2 61.1 9.9 – Net Position: -309,278 287,591 21,687 – Gross Longs: 41,190 1,074,846 148,794 – Gross Shorts: 350,468 787,255 127,107 – Long to Short Ratio: 0.1 to 1 1.4 to 1 1.2 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 59.0 55.7 43.8 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 11.5 -11.4 -3.5   Article By InvestMacro – Receive our weekly COT Reports by Email *COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC). The latest COT data is updated through Tuesday June 7th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. Bond market speculator bets were mostly on the lower side this week as only three out of the eight bond markets we cover had higher positioning this week while five markets had lower contracts. Leading the gains for the COT bonds markets was the Eurodollar (208,714 contracts) and the Fed Funds (29,026 contracts) with the Ultra 10-Year Bond (29,533 contracts) also showing a positive week. Meanwhile, leading the declines in speculator bets this week were the 2-Year Bond (-42,371 contracts) and the 10-Year Bond (-27,280 contracts) with the Long US Bond (-14,798 contracts), Ultra US Bond (-5,695 contracts) and the 5-Year Bond (-4,759 contracts) also registering lower bets on the week. Strength scores (3-Year range of Speculator positions, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) show that the Ultra US Treasury Bond and the US Treasury Bond are above their midpoint levels for the past 3 years while all the other markets are below the 50 percent level. The US Treasury Bond is actually in an extreme-bullish level currently while the Eurodollar and the Ultra 10-Year Note are both in extreme-bearish levels at the moment. Strength score trends (or move index, that calculate the 6-week changes in strength scores) shows that the 5-Year Bond and the Ultra US Treasury Bond have had the highest rising scores over the past six weeks. On the downside, the 10-Year Bond and the 2-Year Bond have shown the largest downward trends. Data Snapshot of Bond Market Traders | Columns Legend Jun-07-2022 OI OI-Index Spec-Net Spec-Index Com-Net COM-Index Smalls-Net Smalls-Index Eurodollar 10,409,834 32 -2,646,502 4 3,023,490 95 -376,988 21 FedFunds 1,568,823 44 54,233 46 -47,932 54 -6,301 44 2-Year 2,002,134 10 -170,489 48 225,040 69 -54,551 26 Long T-Bond 1,193,131 48 4,963 86 -5,633 18 670 53 10-Year 3,469,948 28 -266,187 32 426,524 73 -160,337 42 5-Year 3,784,732 39 -222,547 44 409,463 63 -186,916 30   3-Month Eurodollars Futures: The 3-Month Eurodollars large speculator standing this week reached a net position of -2,646,502 contracts in the data reported through Tuesday. This was a weekly gain of 208,714 contracts from the previous week which had a total of -2,855,216 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 4.2 percent. The commercials are Bullish-Extreme with a score of 95.1 percent and the small traders (not shown in chart) are Bearish with a score of 21.5 percent. 3-Month Eurodollars Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 3.5 74.1 3.7 – Percent of Open Interest Shorts: 29.0 45.0 7.4 – Net Position: -2,646,502 3,023,490 -376,988 – Gross Longs: 367,476 7,712,618 389,949 – Gross Shorts: 3,013,978 4,689,128 766,937 – Long to Short Ratio: 0.1 to 1 1.6 to 1 0.5 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 4.2 95.1 21.5 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 2.3 -3.5 14.9   30-Day Federal Funds Futures: The 30-Day Federal Funds large speculator standing this week reached a net position of 54,233 contracts in the data reported through Tuesday. This was a weekly boost of 29,026 contracts from the previous week which had a total of 25,207 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 46.3 percent. The commercials are Bullish with a score of 54.1 percent and the small traders (not shown in chart) are Bearish with a score of 43.7 percent. 30-Day Federal Funds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 9.6 74.5 2.6 – Percent of Open Interest Shorts: 6.1 77.5 3.0 – Net Position: 54,233 -47,932 -6,301 – Gross Longs: 149,853 1,168,089 40,470 – Gross Shorts: 95,620 1,216,021 46,771 – Long to Short Ratio: 1.6 to 1 1.0 to 1 0.9 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 46.3 54.1 43.7 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 1.9 -2.8 19.2   2-Year Treasury Note Futures: The 2-Year Treasury Note large speculator standing this week reached a net position of -170,489 contracts in the data reported through Tuesday. This was a weekly decrease of -42,371 contracts from the previous week which had a total of -128,118 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 47.8 percent. The commercials are Bullish with a score of 69.1 percent and the small traders (not shown in chart) are Bearish with a score of 25.8 percent. 2-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 10.0 79.8 7.2 – Percent of Open Interest Shorts: 18.5 68.6 9.9 – Net Position: -170,489 225,040 -54,551 – Gross Longs: 200,307 1,598,627 143,536 – Gross Shorts: 370,796 1,373,587 198,087 – Long to Short Ratio: 0.5 to 1 1.2 to 1 0.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 47.8 69.1 25.8 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -16.4 9.0 16.5   5-Year Treasury Note Futures: The 5-Year Treasury Note large speculator standing this week reached a net position of -222,547 contracts in the data reported through Tuesday. This was a weekly decrease of -4,759 contracts from the previous week which had a total of -217,788 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 44.2 percent. The commercials are Bullish with a score of 63.2 percent and the small traders (not shown in chart) are Bearish with a score of 29.7 percent. 5-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 9.5 80.9 7.5 – Percent of Open Interest Shorts: 15.4 70.1 12.4 – Net Position: -222,547 409,463 -186,916 – Gross Longs: 359,715 3,061,190 283,380 – Gross Shorts: 582,262 2,651,727 470,296 – Long to Short Ratio: 0.6 to 1 1.2 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 44.2 63.2 29.7 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 9.1 -8.7 5.5   10-Year Treasury Note Futures: The 10-Year Treasury Note large speculator standing this week reached a net position of -266,187 contracts in the data reported through Tuesday. This was a weekly lowering of -27,280 contracts from the previous week which had a total of -238,907 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 32.0 percent. The commercials are Bullish with a score of 72.6 percent and the small traders (not shown in chart) are Bearish with a score of 41.7 percent. 10-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 5.6 81.0 8.9 – Percent of Open Interest Shorts: 13.3 68.7 13.5 – Net Position: -266,187 426,524 -160,337 – Gross Longs: 195,120 2,810,360 307,456 – Gross Shorts: 461,307 2,383,836 467,793 – Long to Short Ratio: 0.4 to 1 1.2 to 1 0.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 32.0 72.6 41.7 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -22.6 16.1 3.1   Ultra 10-Year Notes Futures: The Ultra 10-Year Notes large speculator standing this week reached a net position of -75,834 contracts in the data reported through Tuesday. This was a weekly advance of 29,533 contracts from the previous week which had a total of -105,367 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 9.1 percent. The commercials are Bullish-Extreme with a score of 88.3 percent and the small traders (not shown in chart) are Bearish with a score of 48.9 percent. Ultra 10-Year Notes Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 5.5 81.8 11.1 – Percent of Open Interest Shorts: 11.6 66.7 20.0 – Net Position: -75,834 187,134 -111,300 – Gross Longs: 67,884 1,015,640 137,608 – Gross Shorts: 143,718 828,506 248,908 – Long to Short Ratio: 0.5 to 1 1.2 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 9.1 88.3 48.9 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -1.5 -3.6 12.2   US Treasury Bonds Futures: The US Treasury Bonds large speculator standing this week reached a net position of 4,963 contracts in the data reported through Tuesday. This was a weekly lowering of -14,798 contracts from the previous week which had a total of 19,761 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 86.2 percent. The commercials are Bearish-Extreme with a score of 18.3 percent and the small traders (not shown in chart) are Bullish with a score of 53.1 percent. US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 9.5 74.8 14.1 – Percent of Open Interest Shorts: 9.0 75.2 14.0 – Net Position: 4,963 -5,633 670 – Gross Longs: 112,838 892,073 168,164 – Gross Shorts: 107,875 897,706 167,494 – Long to Short Ratio: 1.0 to 1 1.0 to 1 1.0 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 86.2 18.3 53.1 – Strength Index Reading (3 Year Range): Bullish-Extreme Bearish-Extreme Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -4.9 -1.2 15.1   Ultra US Treasury Bonds Futures: The Ultra US Treasury Bonds large speculator standing this week reached a net position of -314,973 contracts in the data reported through Tuesday. This was a weekly decrease of -5,695 contracts from the previous week which had a total of -309,278 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 56.7 percent. The commercials are Bullish with a score of 57.2 percent and the small traders (not shown in chart) are Bearish with a score of 45.6 percent. Ultra US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 3.4 83.5 11.7 – Percent of Open Interest Shorts: 28.0 60.7 9.8 – Net Position: -314,973 290,771 24,202 – Gross Longs: 42,957 1,067,607 149,154 – Gross Shorts: 357,930 776,836 124,952 – Long to Short Ratio: 0.1 to 1 1.4 to 1 1.2 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 56.7 57.2 45.6 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 11.9 -8.7 -8.2   Article By InvestMacro – Receive our weekly COT Reports by Email *COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

Image credit: All images belong to Aleph Blog Well, finally the bear market… at 3/31/2002 the S&P 500 was priced to return a trice less than zero in nominal terms. After the pasting the market received today, that figure is 3.57%/year nominal (not adjusted for inflation). You would likely be better off in an ETF of 10-year single-A rated bonds yielding 4.7% — both for safety and return. I will admit that my recent experiment buying TLT has been a flop. I added to the position today. My view is that the long end of the curve is getting resistant to the belly of the curve, and thus the curve is turning into the “cap” formation, where the middle of the curve is higher than the short and long ends. This is a rare situation. Usually, the long end rallies in situations like this. The only situation more rare than this is the “cup” formation where the middle of the curve is lower than the short and long ends. I will have to update my my old post of “Goes Down Double-Speed.” We’ve been through three cycles since then — bear, bull, and now bear again. People get surprised by the ferocity of bear markets, but they shouldn’t be. People get shocked at losing money on paper, and thus the selloffs happen more rapidly. Bull markets face skepticism, and so they are slow. What are the possibilities given where the market is now? When the market is expecting 3.57% nominal, give or take one percent, what tends to happen? Most of the time, growth at these levels for the S&P 500 is pretty poor. That said, market expectations of inflation over the next ten years are well below the 4.7% you can earn on an average 10-year single-A rated corporate bond. Those expectations may be wrong — they usually are, but you can’t tell which way they will be wrong. I am still a believer in deflation, so I think current estimates of inflation are too high. There is too much debt and so monetary policy will have more punch than previously. The FOMC will panic, tighten too much, and crater some area in the financial economy that they care about, and then they will give up again, regardless of how high inflation is. They care more about avoiding a depression than inflation. They will even resume QE with inflation running hot if they are worried about the financial sector. The Fed cares about things in this order: Preserve their own necksPreserve the banks, and things like themFight inflationFund the US GovernmentPromote nominal GDP growth, though they will call it reducing labor unemployment. The Fed really doesn’t care about labor unemployment, or inequality. They are a bourgeois institution that cares about themselves and their patrons — those who are rich. I know this post is “all over the map.” My apologies. That said, we in a very unusual situation featuring high debt, high current inflation (that won’t last), war, plague, and supply-chain issues. How this exactly works out is a mystery, especially to me — but I am giving you my best guess here, for whatever it is worth. It’s worth than double what you paid for it! Full disclosure: long TLT for clients and me

The Swing Overview - Week 23 Major global stock indices broke through their support levels after several days of range movement in response to the tightening economy, the ongoing war in Ukraine, slowing economic growth and high inflation. The Reserve Bank of Australia raised its interest rate by 0.50%. The ECB decided to start raising interest rates by 0.25% from July 2022. The winner of last week is the US dollar, which continues to strengthen. Macroeconomic data Data from the US labour market was highly anticipated. The job creation indicator, the so-called NFP, surprised the markets positively. Analysts expected that 325,000 new jobs had been created in May. In fact, 390 thousand jobs were created in the US. Unemployment is at 3.6%. The information on the growth of hourly wages, which is a leading indicator of inflation, was important. Average hourly earnings rose 0.3% in May, less than analysts who expected 0.4%.   Unemployment claims reached 229,000 this week. This is the highest levels since 3/3/2022. However, this is not an extreme increase. The number of claims is still in the pre-pandemic average area. Nevertheless, it can be seen that since 7/4/2022, when the number of applications reached 166 thousand, the number of applications is slowly increasing and this indicator will be closely monitored.  The ISM index of purchasing managers in the US service sector reached 55.9 in May. This is lower than the previous month's reading of 57.1. A value above 50 still points to expansion in the sector although the decline in the reading indicates  economy.   The yield on the US 10-year bond is close to its peak and is currently around 3%. The rise in yields has been followed by a rise in the US dollar. The dollar index has surpassed 103. The reason for the strengthening of the dollar is the aggressive tightening of the economy by the US Fed, which began reducing the central bank's balance sheet on June 1, 2022. In practice, this means that the Fed will let expire the government bonds it previously bought as part of QE and will not reinvest them further. The first tranche of bonds will expire on June 15, so the effect of this operation remains to be seen. Figure 1: The US 10-year bond yields and USD index on the daily chart   The SP 500 Index The SP 500 index has been moving in a narrow range for the past few days between 4,200, where resistance is and 4,080, where support has been tested several times. This support was broken and has become the new resistance as we can see on the H4 chart.   Figure 2: The SP 500 on H4 and D1 chart   The catalyst for this strong initiation move is the strong US dollar and rising bond yields. Therefore, the current resistance is in the 4,075 - 4,085 range.  The nearest support is 3,965 - 3,970 according to the H4 chart. The next support is 3,879 - 3,907.   German DAX index Macroeconomic data that affected the DAX was manufacturing orders for April, which fell 2.7% month-on-month, while analysts were expecting a 0.3% rise. Industrial production in Germany rose by 0.7% in April (expectations were for 1.0%). The war in Ukraine has a strong impact on the weaker figures. The catalyst for breaking support was the ECB's decision to raise interest rates, which the bank will start implementing from July 2022. Figure 3: German DAX index on H4 and daily chart The DAX is below the SMA 100 moving average according to the daily and H4 chart. This shows a bearish sentiment. The nearest resistance is 14,300 - 14,335. Support is at 13,870 - 13,900 according to the H4 chart.   The ECB left the interest rate unchanged  The ECB left interest rates unchanged on June 9, 2022, so the key rate is still at 0.0%. However, the bank said that it will proceed with a rate hike from July, when the rate is expected to rise by 0.25%. The next hike will then be in September, probably again by 0.25%. The bank pointed to the high inflation rate, which is expected to reach 6.8% for 2022. Inflation is expected to fall to 3.4% in 2023 and 2.1% in 2024.  Figure 4: The EUR/USD on H4 and daily chart According to the bank, a significant risk is Russia's unjustified aggression against Ukraine, which is causing problems in supply chains and pushing energy and some commodity prices up. The result is a slowdown in the growth of the European economy. The bank also announced that it will end its asset purchase program as of July 1, 2022. This is the soft end of this program, as the money that will flow from matured assets will continue to be reinvested by the bank. In practice, this means that the ECB's balance sheet will not be further inflated, but for now, unlike the Fed’s balance sheet, the bank has no plans to reduce its balance sheet. This, coupled with the more moderate rate hike plans and the existence of the above risks, has supported the dollar and the euro has begun to weaken sharply in response to the ECB announcement. The resistance is 1.0760-1.0770. Current support at 1.063-1.064 is broken and it will become new resistance if the break is confirmed. The next support according to the H4 chart is 1.0530 - 1.0550.   Australian central bank surprises with aggressive approach In Australia, the central bank raised its policy rate by 0.50%. Analysts had expected the bank to raise the rate by 0.25%. Thus, the current rate on the Australian dollar is 0.80%. However, this aggressive increase did not strengthen the Australian dollar, which surprisingly weakened. The reason for this is the strong US dollar and also the risk off sentiment that is taking place in the equity indices.  Also impacting the Aussie is the situation in China, where there is zero tolerance of COVID-19. This will impact the country's economic growth, which is very likely to fall short of the 5.5% that was originally projected.  Figure 5: The AUD/USD on H4 and daily chart According to the H4 chart, the AUD/USD currency pair has broken below the SMA 100 moving average, which is a bearish signal. The nearest resistance is 0.7140 - 0.7150. The support is in the zone 0.7030 - 0.7040. 

By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC). The latest COT data is updated through Tuesday June 14th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. COT bond market speculator bets were mixed as five out of the eight bond markets we cover had higher positioning this week while three markets had falling speculator contracts for the week. Leading the gains for the bond markets was the Eurodollar (791,810 contracts) and the 10-Year Bond (60,658 contracts) with Fed Funds (56,698 contracts), 5-Year Bond (31,476 contracts) and the 2-Year Bond (10,067 contracts) also showing positive weeks. Meanwhile, leading the declines in speculator bets this week were the Long US Bond (-34,363 contracts) and the Ultra US Bond (-26,628 contracts) with the Ultra 10-Year (-5,373 contracts) also seeing lower bets on the week. Strength scores (3-Year range of Speculator positions, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) show that the US Treasury Bond (75 percent) is at the highest level of the bonds markets currently. On the lower end, the Ultra 10-Year Bonds (7.7 percent) and 3-Month Eurodollars (15.4 percent) are in bearish-extreme levels and have the weakest speculator strength scores at the moment. Strength score trends (or move index, that calculate 6-week changes in strength scores) shows that the 5-Year Bond (22.5 percent) and Fed Funds (20.5 percent) are leading the rising trend scores over the past six weeks. The US Treasury Bond leads the trends on the downside with a -9.2 percent trend change followed by the 10-Year Bonds and Ultra 10-Year Bonds. Data Snapshot of Bond Market Traders | Columns Legend Jun-14-2022 OI OI-Index Spec-Net Spec-Index Com-Net COM-Index Smalls-Net Smalls-Index Eurodollar 9,327,824 9 -1,854,692 19 2,223,303 81 -368,611 23 FedFunds 1,680,512 52 110,931 53 -115,511 46 4,580 71 2-Year 2,012,004 10 -160,422 50 228,211 70 -67,789 20 Long T-Bond 1,188,806 47 -29,400 75 43,870 32 -14,470 41 10-Year 3,509,639 30 -205,529 41 374,018 66 -168,489 40 5-Year 3,889,422 45 -191,071 50 372,681 59 -181,610 31   3-Month Eurodollars Futures: The 3-Month Eurodollars large speculator standing this week recorded a net position of -1,854,692 contracts in the data reported through Tuesday. This was a weekly lift of 791,810 contracts from the previous week which had a total of -2,646,502 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 18.8 percent. The commercials are Bullish-Extreme with a score of 80.8 percent and the small traders (not shown in chart) are Bearish with a score of 23.3 percent. 3-Month Eurodollars Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 7.0 68.9 4.4 – Percent of Open Interest Shorts: 26.9 45.1 8.4 – Net Position: -1,854,692 2,223,303 -368,611 – Gross Longs: 651,750 6,428,169 412,783 – Gross Shorts: 2,506,442 4,204,866 781,394 – Long to Short Ratio: 0.3 to 1 1.5 to 1 0.5 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 18.8 80.8 23.3 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 15.4 -15.7 11.1   30-Day Federal Funds Futures: The 30-Day Federal Funds large speculator standing this week recorded a net position of 110,931 contracts in the data reported through Tuesday. This was a weekly advance of 56,698 contracts from the previous week which had a total of 54,233 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 53.3 percent. The commercials are Bearish with a score of 45.9 percent and the small traders (not shown in chart) are Bullish with a score of 71.3 percent. 30-Day Federal Funds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 13.2 70.8 2.8 – Percent of Open Interest Shorts: 6.6 77.6 2.5 – Net Position: 110,931 -115,511 4,580 – Gross Longs: 221,596 1,189,101 46,737 – Gross Shorts: 110,665 1,304,612 42,157 – Long to Short Ratio: 2.0 to 1 0.9 to 1 1.1 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 53.3 45.9 71.3 – Strength Index Reading (3 Year Range): Bullish Bearish Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 20.5 -21.4 25.1   2-Year Treasury Note Futures: The 2-Year Treasury Note large speculator standing this week recorded a net position of -160,422 contracts in the data reported through Tuesday. This was a weekly gain of 10,067 contracts from the previous week which had a total of -170,489 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 49.9 percent. The commercials are Bullish with a score of 69.7 percent and the small traders (not shown in chart) are Bearish with a score of 20.3 percent. 2-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 11.7 77.3 7.1 – Percent of Open Interest Shorts: 19.7 65.9 10.5 – Net Position: -160,422 228,211 -67,789 – Gross Longs: 236,115 1,554,892 143,727 – Gross Shorts: 396,537 1,326,681 211,516 – Long to Short Ratio: 0.6 to 1 1.2 to 1 0.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 49.9 69.7 20.3 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -6.3 -3.8 20.3   5-Year Treasury Note Futures: The 5-Year Treasury Note large speculator standing this week recorded a net position of -191,071 contracts in the data reported through Tuesday. This was a weekly advance of 31,476 contracts from the previous week which had a total of -222,547 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 49.7 percent. The commercials are Bullish with a score of 58.8 percent and the small traders (not shown in chart) are Bearish with a score of 31.1 percent. 5-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 9.6 80.8 7.8 – Percent of Open Interest Shorts: 14.5 71.2 12.5 – Net Position: -191,071 372,681 -181,610 – Gross Longs: 374,601 3,141,449 302,708 – Gross Shorts: 565,672 2,768,768 484,318 – Long to Short Ratio: 0.7 to 1 1.1 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 49.7 58.8 31.1 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 22.5 -16.7 2.5   10-Year Treasury Note Futures: The 10-Year Treasury Note large speculator standing this week recorded a net position of -205,529 contracts in the data reported through Tuesday. This was a weekly lift of 60,658 contracts from the previous week which had a total of -266,187 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 41.2 percent. The commercials are Bullish with a score of 66.3 percent and the small traders (not shown in chart) are Bearish with a score of 39.8 percent. 10-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 7.2 80.3 8.7 – Percent of Open Interest Shorts: 13.1 69.7 13.5 – Net Position: -205,529 374,018 -168,489 – Gross Longs: 253,485 2,819,950 305,184 – Gross Shorts: 459,014 2,445,932 473,673 – Long to Short Ratio: 0.6 to 1 1.2 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 41.2 66.3 39.8 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -8.8 7.2 -0.6   Ultra 10-Year Notes Futures: The Ultra 10-Year Notes large speculator standing this week recorded a net position of -81,207 contracts in the data reported through Tuesday. This was a weekly fall of -5,373 contracts from the previous week which had a total of -75,834 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 7.7 percent. The commercials are Bullish-Extreme with a score of 95.2 percent and the small traders (not shown in chart) are Bearish with a score of 36.7 percent. Ultra 10-Year Notes Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 4.5 83.7 11.0 – Percent of Open Interest Shorts: 11.1 66.2 21.8 – Net Position: -81,207 213,971 -132,764 – Gross Longs: 55,047 1,027,514 134,825 – Gross Shorts: 136,254 813,543 267,589 – Long to Short Ratio: 0.4 to 1 1.3 to 1 0.5 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 7.7 95.2 36.7 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 7.7 -2.9 -11.3   US Treasury Bonds Futures: The US Treasury Bonds large speculator standing this week recorded a net position of -29,400 contracts in the data reported through Tuesday. This was a weekly lowering of -34,363 contracts from the previous week which had a total of 4,963 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 75.0 percent. The commercials are Bearish with a score of 32.3 percent and the small traders (not shown in chart) are Bearish with a score of 41.1 percent. US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 8.7 76.8 13.1 – Percent of Open Interest Shorts: 11.1 73.1 14.3 – Net Position: -29,400 43,870 -14,470 – Gross Longs: 102,957 912,867 155,248 – Gross Shorts: 132,357 868,997 169,718 – Long to Short Ratio: 0.8 to 1 1.1 to 1 0.9 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 75.0 32.3 41.1 – Strength Index Reading (3 Year Range): Bullish Bearish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -14.0 12.7 3.3   Ultra US Treasury Bonds Futures: The Ultra US Treasury Bonds large speculator standing this week recorded a net position of -341,601 contracts in the data reported through Tuesday. This was a weekly decrease of -26,628 contracts from the previous week which had a total of -314,973 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 45.9 percent. The commercials are Bullish with a score of 67.4 percent and the small traders (not shown in chart) are Bearish with a score of 50.0 percent. Ultra US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 3.2 84.1 11.4 – Percent of Open Interest Shorts: 29.5 60.1 9.1 – Net Position: -341,601 311,386 30,215 – Gross Longs: 41,147 1,091,594 147,658 – Gross Shorts: 382,748 780,208 117,443 – Long to Short Ratio: 0.1 to 1 1.4 to 1 1.3 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 45.9 67.4 50.0 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -9.2 6.2 7.1   Article By InvestMacro – Receive our weekly COT Reports by Email *COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC). The latest COT data is updated through Tuesday June 21st and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. COT bond market speculator bets were overall higher this week as five out of the eight bond markets we cover had higher positioning this week while three markets had lower contracts. Leading the gains for the bond markets was the 5-Year Bond (86,980 contracts) and the 2-Year Bond (41,139 contracts) with the Ultra 10-Year Bond (17,501 contracts), Fed Funds (13,490 contracts) and the Long US Bond (10,078 contracts) also showing higher speculator bets for the week. Meanwhile, leading the declines in speculator bets this week were the Eurodollar (-143,197 contracts) and the 10-Year Bond (-22,655 contracts) with the Ultra US Bond (-3,455 contracts) also seeing lower speculator bets on the week. Strength scores (3-Year range of Speculator positions, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) show that the US Treasury Bond (78.3 percent) is at the highest level of the bonds markets currently with the 5-Year Bond (65 percent), 2-Year Bond (58.2 percent), and Fed Funds (55 percent) following. The Ultra 10-Year Bonds (12.2 percent) and 3-Month Eurodollars (16.2 percent) continue to remain in bearish-extreme levels and have the weakest speculator strength scores at the moment. Strength score trends (or move index, that calculate 6-week changes in strength scores) shows that the 5-Year Bond (38.9 percent) continues to lead the strength trends. Next up is Eurodollars (11.1 percent) and then Fed Funds with a 9.3 percent strength change over the past six weeks. The 10-Year Bonds (-21.6 percent) leads the falling speculator trends over the past six weeks followed by the Ultra US Treasury Bonds (-13.7 percent) and then the US Treasury Bond (-11.3 percent). Data Snapshot of Bond Market Traders | Columns Legend Jun-21-2022 OI OI-Index Spec-Net Spec-Index Com-Net COM-Index Smalls-Net Smalls-Index Eurodollar 9,411,173 11 -1,997,889 16 2,355,143 83 -357,254 26 FedFunds 1,646,303 50 124,421 55 -125,477 45 1,056 62 2-Year 2,086,917 13 -119,283 58 205,599 65 -86,316 13 Long T-Bond 1,177,791 45 -19,322 78 37,921 26 -18,599 38 10-Year 3,440,085 25 -228,184 38 404,754 70 -176,570 38 5-Year 3,854,228 43 -104,091 65 289,493 49 -185,402 30   3-Month Eurodollars Futures: The 3-Month Eurodollars large speculator standing this week was a net position of -1,997,889 contracts in the data reported through Tuesday. This was a weekly reduction of -143,197 contracts from the previous week which had a total of -1,854,692 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 16.2 percent. The commercials are Bullish-Extreme with a score of 83.2 percent and the small traders (not shown in chart) are Bearish with a score of 25.8 percent. 3-Month Eurodollars Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 6.5 69.6 4.3 – Percent of Open Interest Shorts: 27.8 44.6 8.1 – Net Position: -1,997,889 2,355,143 -357,254 – Gross Longs: 614,934 6,554,406 400,504 – Gross Shorts: 2,612,823 4,199,263 757,758 – Long to Short Ratio: 0.2 to 1 1.6 to 1 0.5 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 16.2 83.2 25.8 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 11.1 -12.0 16.0   30-Day Federal Funds Futures: The 30-Day Federal Funds large speculator standing this week was a net position of 124,421 contracts in the data reported through Tuesday. This was a weekly advance of 13,490 contracts from the previous week which had a total of 110,931 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 55.0 percent. The commercials are Bearish with a score of 44.7 percent and the small traders (not shown in chart) are Bullish with a score of 62.4 percent. 30-Day Federal Funds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 14.1 70.0 2.6 – Percent of Open Interest Shorts: 6.5 77.6 2.6 – Net Position: 124,421 -125,477 1,056 – Gross Longs: 231,344 1,151,997 43,549 – Gross Shorts: 106,923 1,277,474 42,493 – Long to Short Ratio: 2.2 to 1 0.9 to 1 1.0 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 55.0 44.7 62.4 – Strength Index Reading (3 Year Range): Bullish Bearish Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 9.3 -9.3 2.4   2-Year Treasury Note Futures: The 2-Year Treasury Note large speculator standing this week was a net position of -119,283 contracts in the data reported through Tuesday. This was a weekly gain of 41,139 contracts from the previous week which had a total of -160,422 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 58.2 percent. The commercials are Bullish with a score of 64.8 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 12.6 percent. 2-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 12.3 76.8 6.4 – Percent of Open Interest Shorts: 18.0 67.0 10.6 – Net Position: -119,283 205,599 -86,316 – Gross Longs: 257,375 1,603,236 134,031 – Gross Shorts: 376,658 1,397,637 220,347 – Long to Short Ratio: 0.7 to 1 1.1 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 58.2 64.8 12.6 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 1.5 0.9 -4.8   5-Year Treasury Note Futures: The 5-Year Treasury Note large speculator standing this week was a net position of -104,091 contracts in the data reported through Tuesday. This was a weekly lift of 86,980 contracts from the previous week which had a total of -191,071 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 65.0 percent. The commercials are Bearish with a score of 48.6 percent and the small traders (not shown in chart) are Bearish with a score of 30.1 percent. 5-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 9.7 80.9 7.6 – Percent of Open Interest Shorts: 12.4 73.4 12.4 – Net Position: -104,091 289,493 -185,402 – Gross Longs: 373,807 3,119,594 292,913 – Gross Shorts: 477,898 2,830,101 478,315 – Long to Short Ratio: 0.8 to 1 1.1 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 65.0 48.6 30.1 – Strength Index Reading (3 Year Range): Bullish Bearish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 38.9 -25.9 -2.4   10-Year Treasury Note Futures: The 10-Year Treasury Note large speculator standing this week was a net position of -228,184 contracts in the data reported through Tuesday. This was a weekly fall of -22,655 contracts from the previous week which had a total of -205,529 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 37.8 percent. The commercials are Bullish with a score of 70.0 percent and the small traders (not shown in chart) are Bearish with a score of 37.9 percent. 10-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 7.8 80.3 8.4 – Percent of Open Interest Shorts: 14.5 68.5 13.5 – Net Position: -228,184 404,754 -176,570 – Gross Longs: 269,685 2,760,756 287,654 – Gross Shorts: 497,869 2,356,002 464,224 – Long to Short Ratio: 0.5 to 1 1.2 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 37.8 70.0 37.9 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -21.6 16.2 1.4   Ultra 10-Year Notes Futures: The Ultra 10-Year Notes large speculator standing this week was a net position of -63,706 contracts in the data reported through Tuesday. This was a weekly boost of 17,501 contracts from the previous week which had a total of -81,207 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 12.2 percent. The commercials are Bullish-Extreme with a score of 94.9 percent and the small traders (not shown in chart) are Bearish with a score of 26.5 percent. Ultra 10-Year Notes Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 4.6 85.6 8.9 – Percent of Open Interest Shorts: 9.8 68.0 21.2 – Net Position: -63,706 212,999 -149,293 – Gross Longs: 55,061 1,035,003 107,499 – Gross Shorts: 118,767 822,004 256,792 – Long to Short Ratio: 0.5 to 1 1.3 to 1 0.4 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 12.2 94.9 26.5 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 8.3 1.5 -23.2   US Treasury Bonds Futures: The US Treasury Bonds large speculator standing this week was a net position of -19,322 contracts in the data reported through Tuesday. This was a weekly rise of 10,078 contracts from the previous week which had a total of -29,400 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 78.3 percent. The commercials are Bearish with a score of 26.5 percent and the small traders (not shown in chart) are Bearish with a score of 37.8 percent. US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 8.4 77.1 13.2 – Percent of Open Interest Shorts: 10.1 73.9 14.7 – Net Position: -19,322 37,921 -18,599 – Gross Longs: 99,282 907,963 154,938 – Gross Shorts: 118,604 870,042 173,537 – Long to Short Ratio: 0.8 to 1 1.0 to 1 0.9 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 78.3 26.5 37.8 – Strength Index Reading (3 Year Range): Bullish Bearish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -11.3 14.8 -6.5   Ultra US Treasury Bonds Futures: The Ultra US Treasury Bonds large speculator standing this week was a net position of -345,056 contracts in the data reported through Tuesday. This was a weekly reduction of -3,455 contracts from the previous week which had a total of -341,601 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 44.4 percent. The commercials are Bullish with a score of 70.0 percent and the small traders (not shown in chart) are Bearish with a score of 48.5 percent. Ultra US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 3.3 85.1 11.4 – Percent of Open Interest Shorts: 30.3 60.3 9.2 – Net Position: -345,056 316,836 28,220 – Gross Longs: 42,428 1,089,411 145,784 – Gross Shorts: 387,484 772,575 117,564 – Long to Short Ratio: 0.1 to 1 1.4 to 1 1.2 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 44.4 70.0 48.5 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -13.7 12.8 5.3   Article By InvestMacro – Receive our weekly COT Reports by Email *COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

Image credit: Diverse Stock Photos || Would that those shiny coins were the real thing. Metal coins are real. Code, not so. As I have said before, look at the underlying economics of an investment rather than its external form. It doesn’t matter whether it is public or private. The form of an investment does not affect its returns, for the most part. I grew up in investing as a risk manager within life insurance and fixed income. We faced three main risks: credit, liquidity, and duration. We had lesser risks as well, like FX, sovereigns, convexity, etc. My main goal was to see the firm survive under all reasonable circumstances. My secondary goal was to improve profitability over those same circumstances. In doing that, we could make some small “side bets.” Buy an underpriced Canadian dollar bond. Buy a broken convertible bond of a beaten down company. Buy underpriced MBS where the models are overstating refinancing risk. Things like that. We could not make those side bets too large, but we could put a few on to try to make some money for the firm. We would match assets against our likely liability cashflows. We knew that 99%+ of the time, we would be fine. I can’t imagine what the so-called crypto banks are thinking. Much as they deride banking generally, they don’t have the vaguest idea of what they are doing. They should hire an investment actuary to limit what they do. Imagine a world where banks don’t care about currency risk, and some fail because the temptation to reach for yield causes them to buy asset in currencies that are weak… leading them to lose capital on net. This is the nature of crypto lending and borrowing. As Aristotle might have said, “Crypto is sterile.” It doesn’t produce anything. So don’t lend out crypto for a return… you may lose you principal in the process. There is no good reason why you should earn a return exceeding Treasuries plus 1% in lending crypto. But no one in crypto considers risk control. In one sense, I’m not sure how it could be done, unless you limit yourself to one major cryptocurrency — Bitcoin or Ethereum. The grand questions should be: Can I be sure of making payments over the next three months?Is my leverage low enough that the mélange of assets that I own will be able to cover my liabilities? Is there anything I can do to promote long-term survival? With cryptocurrency banks and stablecoins these concerns are ignored. They take risks that no bank or insurance company would take and with far less capital than would be reasonable. I encourage you to sell your crypto and buy gold, stocks, bonds, and other dollar-denominated assets.

The Swing Overview - Week 26 2022 After ashort-term upward correction, the indices resumed their bearish trend and closed the week in the red. Along with this risk-off sentiment, commodity currencies weakened, as did the British pound and the euro. Gold is losing ground as a means of inflation protection and has fallen back below the USD 1,800 per ounce. The US dollar, on the other hand, is still the strongest currency amid the looming recession. Macroeconomic data The number of new home sales in the US for May reached 696,000, beating expectations of 588,000. This is positive news.   On the other hand, the negative news is the drop in consumer confidence, which reached 98.7 for May (103.2 the previous month). The drop in consumer confidence is expected to affect consumer spendings. It is evident that American consumers are reluctant to spend in times of rising prices and are accumulating savings for the future. This is of course contributing to the economic slowdown and the risk of a recession in the US is thus becoming stronger. This was confirmed by the GDP data, which fell for the third month in a row.   The fall in GDP last month was 1.6%. GDP was therefore negative in 1Q 2022. If it is also negative in 2Q2022, it will be an official confirmation of the recession defined by two negative quarters in a row. Jerome Powell suggested this week that the risk of the economy being damaged by higher rates is less important than restoring price stability. This heightens fears that a slowdown in the US economy will take the whole world down with it. So in times when central banks are tackling inflation, this risk will set the tone for some time.    This situation is positive for the US dollar, which is seen by investors as a safe haven asset in times of uncertainty. The dollar therefore remains close to this year's highs.  Although the yield on 10-year US Treasuries has fallen below 3%, the overall trend in bond yields is still upwards. Figure 1: US 10-year bond yields and USD index on the daily chart   The SP 500 Index The strengthening on the SP 500 Index that we have seen in the week of June 20 was really just a short-term correction to the overall downtrend, as we have previously suggested. Last week saw another sell-off and so the overall downtrend on the index continues.   Figure 2: The SP 500 on H4 and D1 chart   The nearest resistance according to the H4 chart is in the range of 3,810 - 3,820. The next resistance is 3,930 - 3,950. A support is 3 640 - 3 670.    German DAX index  The German Ifo Business Climate Index which measures the expectations of manufacturers, builders and sellers for the next 6 months continued to show a value of 92.3, which is worse than the previous month when the index value was 93.0. The fall in the reading suggests some pessimism, accentuated by current market uncertainties, which include the impact of the war in Ukraine and high inflation, which in Germany for the month of June was 7.6% year-on-year. However, inflation fell by 0.1% month-on-month.   The labour market has also indicated problems. The number of unemployed in Germany rose by 133 000, while the market had expected a fall of 6 000. This was very negative news, which triggered a strong sell-off on the Dax on Thursday. On the other hand, retail sales were positive, rising by 0.6% in May, while a 5.4% decline was recorded in April. Figure 3: German DAX index on H4 and daily chart The DAX has broken support according to the H4 chart at 12,850, which has now become the new resistance, which is in the 12,820 - 12,850 range. The next resistance according to the H4 chart is then at 13,280 - 13,375. The strong support according to the daily chart is 12,443 - 12,620, which price is currently approaching.    Eurozone inflation at a new record Eurozone consumer inflation reached another record high in June, rising by 8.6% year-on-year. This is higher than analysts' expectations, who predicted a rise of 8.4%. Inflation is therefore continuing to rise, so the expectation that the ECB could raise rates by more than 0.25% in July is on target and this could support the euro's growth. On the other hand, there is a strong dollar which could continue to slow down bulls on the euro.   Figure 4: EUR/USD on H4 and daily chart The nearest resistance according to the H4 chart is at 1.048 - 1.0500. The next resistance is at 1.0600 - 1.0610. Support is at 1.0360 - 1.0380.   Gold broke the $1,800 price tag The development in gold has once again confirmed that investors prefer US bonds instead of gold, which, in addition to being considered a "safe haven" along with the US dollar, also brings a small but still certain return. The strong dollar is not good news for gold, which has fallen below the key support of USD 1,800 per ounce.  Figure 5: Gold on H4 and daily chart The nearest resistance according to the H4 chart is therefore in the zone of USD 1,800 - 1,807 per ounce. Below this resistance we have several supports. The closest one is 1 780 - 1 787 USD per ounce.  

The Swing Overview - Week 26 2022 After ashort-term upward correction, the indices resumed their bearish trend and closed the week in the red. Along with this risk-off sentiment, commodity currencies weakened, as did the British pound and the euro. Gold is losing ground as a means of inflation protection and has fallen back below the USD 1,800 per ounce. The US dollar, on the other hand, is still the strongest currency amid the looming recession. Macroeconomic data The number of new home sales in the US for May reached 696,000, beating expectations of 588,000. This is positive news.   On the other hand, the negative news is the drop in consumer confidence, which reached 98.7 for May (103.2 the previous month). The drop in consumer confidence is expected to affect consumer spendings. It is evident that American consumers are reluctant to spend in times of rising prices and are accumulating savings for the future. This is of course contributing to the economic slowdown and the risk of a recession in the US is thus becoming stronger. This was confirmed by the GDP data, which fell for the third month in a row.   The fall in GDP last month was 1.6%. GDP was therefore negative in 1Q 2022. If it is also negative in 2Q2022, it will be an official confirmation of the recession defined by two negative quarters in a row. Jerome Powell suggested this week that the risk of the economy being damaged by higher rates is less important than restoring price stability. This heightens fears that a slowdown in the US economy will take the whole world down with it. So in times when central banks are tackling inflation, this risk will set the tone for some time.    This situation is positive for the US dollar, which is seen by investors as a safe haven asset in times of uncertainty. The dollar therefore remains close to this year's highs.  Although the yield on 10-year US Treasuries has fallen below 3%, the overall trend in bond yields is still upwards. Figure 1: US 10-year bond yields and USD index on the daily chart   The SP 500 Index The strengthening on the SP 500 Index that we have seen in the week of June 20 was really just a short-term correction to the overall downtrend, as we have previously suggested. Last week saw another sell-off and so the overall downtrend on the index continues.   Figure 2: The SP 500 on H4 and D1 chart   The nearest resistance according to the H4 chart is in the range of 3,810 - 3,820. The next resistance is 3,930 - 3,950. A support is 3 640 - 3 670.    German DAX index  The German Ifo Business Climate Index which measures the expectations of manufacturers, builders and sellers for the next 6 months continued to show a value of 92.3, which is worse than the previous month when the index value was 93.0. The fall in the reading suggests some pessimism, accentuated by current market uncertainties, which include the impact of the war in Ukraine and high inflation, which in Germany for the month of June was 7.6% year-on-year. However, inflation fell by 0.1% month-on-month.   The labour market has also indicated problems. The number of unemployed in Germany rose by 133 000, while the market had expected a fall of 6 000. This was very negative news, which triggered a strong sell-off on the Dax on Thursday. On the other hand, retail sales were positive, rising by 0.6% in May, while a 5.4% decline was recorded in April. Figure 3: German DAX index on H4 and daily chart The DAX has broken support according to the H4 chart at 12,850, which has now become the new resistance, which is in the 12,820 - 12,850 range. The next resistance according to the H4 chart is then at 13,280 - 13,375. The strong support according to the daily chart is 12,443 - 12,620, which price is currently approaching.    Eurozone inflation at a new record Eurozone consumer inflation reached another record high in June, rising by 8.6% year-on-year. This is higher than analysts' expectations, who predicted a rise of 8.4%. Inflation is therefore continuing to rise, so the expectation that the ECB could raise rates by more than 0.25% in July is on target and this could support the euro's growth. On the other hand, there is a strong dollar which could continue to slow down bulls on the euro.   Figure 4: EUR/USD on H4 and daily chart The nearest resistance according to the H4 chart is at 1.048 - 1.0500. The next resistance is at 1.0600 - 1.0610. Support is at 1.0360 - 1.0380.   Gold broke the $1,800 price tag The development in gold has once again confirmed that investors prefer US bonds instead of gold, which, in addition to being considered a "safe haven" along with the US dollar, also brings a small but still certain return. The strong dollar is not good news for gold, which has fallen below the key support of USD 1,800 per ounce.  Figure 5: Gold on H4 and daily chart The nearest resistance according to the H4 chart is therefore in the zone of USD 1,800 - 1,807 per ounce. Below this resistance we have several supports. The closest one is 1 780 - 1 787 USD per ounce.  

By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC). The latest COT data is updated through Tuesday July 5th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. COT bonds market speculator bets were mostly higher this week as five out of the eight bond markets we cover had higher positioning this week while three markets had lower contracts. Leading the gains for the bond markets was the Ultra US Bond (19,328 contracts) and the 2-Year Bond (15,076 contracts) with the 10-Year Bond (11,180 contracts), the Long US Bond (10,580 contracts) and the Ultra 10-Year (3,338 contracts) also having positive weeks. Meanwhile, leading the declines in speculator bets this week were the Eurodollar (-192,721 contracts) and the 5-Year Bond (-51,789 contracts) with the Fed Funds (-24,396 contracts) also registering lower bets on the week. Strength scores (measuring the 3-Year range of Speculator positions, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) show that the US Treasury Bond (75.6 percent) is at the highest level of the bonds markets again this week followed by the 2-Year Bond (64.7 percent) and the Ultra US Treasury Bond (55.2 percent). On the lower end, the 3-Month Eurodollars (9.7 percent) is the weakest bond market among the speculators and is in a bearish-extreme level again this week. The Ultra 10-Year Bonds (22.9 percent) comes in as the next weakest speculator strength score at the moment but has been on the rise (see chart below) and has come out of the bearish extreme level of the past few weeks. Strength score trends (or move index, that calculate 6-week changes in strength scores) shows that the Ultra 10-Year Bonds (19.8 percent), the 3-Month Eurodollars (8.9 percent) and the 10-Year Bonds (8.3 percent) are leading the rising trend scores over the past six weeks. The 5-Year Bonds (-23.5 percent) and the US Treasury Bond (-18.3 percent) leads the trends on the downside while the 2-Year Bonds (-10.5 percent) and the Ultra US Treasury Bond (-4.4 percent) also show negative six-week trends. Data Snapshot of Bond Market Traders | Columns Legend Jul-05-2022OIOI-IndexSpec-NetSpec-IndexCom-NetCOM-IndexSmalls-NetSmalls-Index Eurodollar 9,569,471 14 -2,349,151 10 2,628,720 88 -279,569 43 FedFunds 1,599,372 47 96,186 51 -88,543 49 -7,643 40 2-Year 2,103,356 14 -87,042 65 171,591 57 -84,549 13 Long T-Bond 1,192,980 47 -27,673 76 22,028 18 5,645 57 10-Year 3,469,680 28 -170,500 47 303,820 58 -133,320 48 5-Year 4,013,995 52 -254,453 39 404,953 63 -150,500 40   3-Month Eurodollars Futures: The 3-Month Eurodollars large speculator standing this week was a net position of -2,349,151 contracts in the data reported through Tuesday. This was a weekly fall of -192,721 contracts from the previous week which had a total of -2,156,430 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 9.7 percent. The commercials are Bullish-Extreme with a score of 88.0 percent and the small traders (not shown in chart) are Bearish with a score of 42.9 percent. 3-Month Eurodollars Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 5.8 71.0 4.4 – Percent of Open Interest Shorts: 30.4 43.6 7.4 – Net Position: -2,349,151 2,628,720 -279,569 – Gross Longs: 557,177 6,798,600 424,934 – Gross Shorts: 2,906,328 4,169,880 704,503 – Long to Short Ratio: 0.2 to 1 1.6 to 1 0.6 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 9.7 88.0 42.9 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 8.9 -10.7 25.4   30-Day Federal Funds Futures: The 30-Day Federal Funds large speculator standing this week was a net position of 96,186 contracts in the data reported through Tuesday. This was a weekly fall of -24,396 contracts from the previous week which had a total of 120,582 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 51.5 percent. The commercials are Bearish with a score of 49.1 percent and the small traders (not shown in chart) are Bearish with a score of 40.3 percent. 30-Day Federal Funds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 12.6 72.4 2.6 – Percent of Open Interest Shorts: 6.6 77.9 3.0 – Net Position: 96,186 -88,543 -7,643 – Gross Longs: 201,100 1,157,169 40,944 – Gross Shorts: 104,914 1,245,712 48,587 – Long to Short Ratio: 1.9 to 1 0.9 to 1 0.8 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 51.5 49.1 40.3 – Strength Index Reading (3 Year Range): Bullish Bearish Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 6.6 -6.1 -9.3   2-Year Treasury Note Futures: The 2-Year Treasury Note large speculator standing this week was a net position of -87,042 contracts in the data reported through Tuesday. This was a weekly rise of 15,076 contracts from the previous week which had a total of -102,118 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 64.7 percent. The commercials are Bullish with a score of 57.4 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 13.3 percent. 2-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 13.0 78.2 6.9 – Percent of Open Interest Shorts: 17.1 70.0 10.9 – Net Position: -87,042 171,591 -84,549 – Gross Longs: 273,378 1,643,875 144,139 – Gross Shorts: 360,420 1,472,284 228,688 – Long to Short Ratio: 0.8 to 1 1.1 to 1 0.6 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 64.7 57.4 13.3 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish-Extreme NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: -10.5 14.2 -5.4   5-Year Treasury Note Futures: The 5-Year Treasury Note large speculator standing this week was a net position of -254,453 contracts in the data reported through Tuesday. This was a weekly reduction of -51,789 contracts from the previous week which had a total of -202,664 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 38.6 percent. The commercials are Bullish with a score of 62.7 percent and the small traders (not shown in chart) are Bearish with a score of 39.7 percent. 5-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 7.0 83.9 7.6 – Percent of Open Interest Shorts: 13.3 73.8 11.3 – Net Position: -254,453 404,953 -150,500 – Gross Longs: 280,011 3,368,874 303,153 – Gross Shorts: 534,464 2,963,921 453,653 – Long to Short Ratio: 0.5 to 1 1.1 to 1 0.7 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 38.6 62.7 39.7 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: -23.5 13.7 5.8   10-Year Treasury Note Futures: The 10-Year Treasury Note large speculator standing this week was a net position of -170,500 contracts in the data reported through Tuesday. This was a weekly increase of 11,180 contracts from the previous week which had a total of -181,680 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 46.5 percent. The commercials are Bullish with a score of 58.0 percent and the small traders (not shown in chart) are Bearish with a score of 48.0 percent. 10-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 8.6 79.8 9.0 – Percent of Open Interest Shorts: 13.5 71.0 12.8 – Net Position: -170,500 303,820 -133,320 – Gross Longs: 297,724 2,767,198 310,990 – Gross Shorts: 468,224 2,463,378 444,310 – Long to Short Ratio: 0.6 to 1 1.1 to 1 0.7 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 46.5 58.0 48.0 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 8.3 -8.7 4.3   Ultra 10-Year Notes Futures: The Ultra 10-Year Notes large speculator standing this week was a net position of -22,742 contracts in the data reported through Tuesday. This was a weekly gain of 3,338 contracts from the previous week which had a total of -26,080 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 22.9 percent. The commercials are Bullish with a score of 77.8 percent and the small traders (not shown in chart) are Bearish with a score of 42.4 percent. Ultra 10-Year Notes Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 5.2 82.5 11.7 – Percent of Open Interest Shorts: 7.2 69.9 22.4 – Net Position: -22,742 146,293 -123,551 – Gross Longs: 60,503 959,975 136,617 – Gross Shorts: 83,245 813,682 260,168 – Long to Short Ratio: 0.7 to 1 1.2 to 1 0.5 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 22.9 77.8 42.4 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: 19.8 -16.8 -6.6   US Treasury Bonds Futures: The US Treasury Bonds large speculator standing this week was a net position of -27,673 contracts in the data reported through Tuesday. This was a weekly advance of 10,580 contracts from the previous week which had a total of -38,253 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 75.6 percent. The commercials are Bearish-Extreme with a score of 18.5 percent and the small traders (not shown in chart) are Bullish with a score of 57.1 percent. US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 8.1 77.5 13.9 – Percent of Open Interest Shorts: 10.4 75.7 13.5 – Net Position: -27,673 22,028 5,645 – Gross Longs: 96,356 924,975 166,387 – Gross Shorts: 124,029 902,947 160,742 – Long to Short Ratio: 0.8 to 1 1.0 to 1 1.0 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 75.6 18.5 57.1 – Strength Index Reading (3 Year Range): Bullish Bearish-Extreme Bullish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: -18.3 11.9 18.2   Ultra US Treasury Bonds Futures: The Ultra US Treasury Bonds large speculator standing this week was a net position of -318,655 contracts in the data reported through Tuesday. This was a weekly increase of 19,328 contracts from the previous week which had a total of -337,983 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 55.2 percent. The commercials are Bullish with a score of 54.9 percent and the small traders (not shown in chart) are Bullish with a score of 51.8 percent. Ultra US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 4.2 84.1 11.5 – Percent of Open Interest Shorts: 29.1 61.8 8.9 – Net Position: -318,655 285,953 32,702 – Gross Longs: 53,639 1,077,401 147,290 – Gross Shorts: 372,294 791,448 114,588 – Long to Short Ratio: 0.1 to 1 1.4 to 1 1.3 to 1 NET POSITION TREND:       – Strength Index Score (3 Year Range Pct): 55.2 54.9 51.8 – Strength Index Reading (3 Year Range): Bullish Bullish Bullish NET POSITION MOVEMENT INDEX:       – 6-Week Change in Strength Index: -4.4 -2.1 10.8   Article By InvestMacro – Receive our weekly COT Reports by Email *COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC). The latest COT data is updated through Tuesday July 12th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. Weekly Speculator Changes COT bond market speculator bets were overall lower this week as just three out of the eight bond markets we cover had higher positioning this week while the other five markets had lower net speculator contracts. Leading the gains for the bond markets was the 10-Year Bond with a gain of 62,129 contracts while the 2-Year Bond (22,473 contracts) and the Long US Treasury Bond (4,455 contracts) also had higher net speculator positions for the week. The Bond markets leading the declines in speculator bets this week were the Eurodollar (-375,415 contracts) and the 5-Year Bond (-36,670 contracts) with the Fed Funds (-15,131 contracts), the Ultra US Bond (-9,640 contracts) and the Ultra 10-Year (-4,597 contracts) also having lower bets on the week. The Eurodollar represents the largest futures market with open interest (contracts open in the market currently) near 10 million contracts each week and the weekly changes dwarf most other markets. Overall, the bonds category represents around sixty percent of the contracts outstanding in the futures markets we cover and currently five bond markets reside in the top six of open interest.   Data Snapshot of Bond Market Traders | Columns Legend Jul-12-2022 OI OI-Index Spec-Net Spec-Index Com-Net COM-Index Smalls-Net Smalls-Index Eurodollar 9,649,037 16 -2,724,566 3 3,025,607 95 -301,041 38 FedFunds 1,627,114 49 81,055 50 -72,132 51 -8,923 37 2-Year 2,064,383 12 -64,569 69 166,752 56 -102,183 6 Long T-Bond 1,174,643 43 -23,218 77 8,304 14 14,914 64 10-Year 3,459,761 27 -108,371 56 221,849 48 -113,478 53 5-Year 3,968,034 50 -291,123 32 418,734 64 -127,611 46   Strength Scores Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) show that the US Treasury Bond (77.0 percent) and the 2-Year Bond (69.2 percent) lead the bonds markets currently and have both risen since last week. The 10-Year Bond (56.0 percent) comes in as the next highest bonds market in strength scores and has risen almost 10 percent for the week. On the downside, the Eurodollar (2.8 percent) comes in at the lowest strength level currently and is the only extreme score this week (bearish). The Ultra 10-Year Bond (21.7 percent) and the 5-Year Bond (32.1 percent) follow as the next weakest strength scores. Strength Statistics: Fed Funds (49.6 percent) vs Fed Funds previous week (51.5 percent) 2-Year Bond (69.2 percent) vs 2-Year Bond previous week (64.7 percent) 5-Year Bond (32.1 percent) vs 5-Year Bond previous week (38.6 percent) 10-Year Bond (56.0 percent) vs 10-Year Bond previous week (46.5 percent) Ultra 10-Year Bond (21.7 percent) vs Ultra 10-Year Bond previous week (22.9 percent) US Treasury Bond (77.0 percent) vs US Treasury Bond previous week (75.6 percent) Ultra US Treasury Bond (51.3 percent) vs Ultra US Treasury Bond previous week (55.2 percent) Eurodollar (2.8 percent) vs Eurodollar previous week (9.7 percent) Strength Trends Strength Score Trends (or move index, calculates the 6-week changes in strength scores) show that the Ultra 10-Year Bond leads the past six weeks trends for bonds this week with a 20.3 percent gain. The 10-Year Bond (19.8 percent) and the 2-Year Bond (12.8 percent) round out the next top movers in the latest trends data. The US Treasury Bond (-14.0 percent) leads the downside trend scores currently while the next markets with lower trend scores were the 5-Year Bond (-12.9 percent) followed by the Ultra US Treasury Bond (-7.8 percent). Strength Trend Statistics: Fed Funds (6.9 percent) vs Fed Funds previous week (6.6 percent) 2-Year Bond (12.8 percent) vs 2-Year Bond previous week (-10.5 percent) 5-Year Bond (-12.9 percent) vs 5-Year Bond previous week (-23.5 percent) 10-Year Bond (19.8 percent) vs 10-Year Bond previous week (8.3 percent) Ultra 10-Year Bond (20.3 percent) vs Ultra 10-Year Bond previous week (19.8 percent) US Treasury Bond (-14.0 percent) vs US Treasury Bond previous week (-18.3 percent) Ultra US Treasury Bond (-7.8 percent) vs Ultra US Treasury Bond previous week (-4.4 percent) Eurodollar (2.4 percent) vs Eurodollar (8.9 percent) Individual Markets: 3-Month Eurodollars Futures: The 3-Month Eurodollars large speculator standing this week totaled a net position of -2,724,566 contracts in the data reported through Tuesday. This was a weekly decrease of -375,415 contracts from the previous week which had a total of -2,349,151 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 2.8 percent. The commercials are Bullish-Extreme with a score of 95.1 percent and the small traders (not shown in chart) are Bearish with a score of 38.2 percent. 3-Month Eurodollars Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 4.7 72.4 4.3 – Percent of Open Interest Shorts: 33.0 41.1 7.4 – Net Position: -2,724,566 3,025,607 -301,041 – Gross Longs: 456,666 6,989,571 415,361 – Gross Shorts: 3,181,232 3,963,964 716,402 – Long to Short Ratio: 0.1 to 1 1.8 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 2.8 95.1 38.2 – Strength Index Reading (3 Year Range): Bearish-Extreme Bullish-Extreme Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 2.4 -4.2 23.0   30-Day Federal Funds Futures: The 30-Day Federal Funds large speculator standing this week totaled a net position of 81,055 contracts in the data reported through Tuesday. This was a weekly fall of -15,131 contracts from the previous week which had a total of 96,186 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 49.6 percent. The commercials are Bullish with a score of 51.1 percent and the small traders (not shown in chart) are Bearish with a score of 37.0 percent. 30-Day Federal Funds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 11.7 72.9 2.3 – Percent of Open Interest Shorts: 6.7 77.3 2.8 – Net Position: 81,055 -72,132 -8,923 – Gross Longs: 189,815 1,186,007 37,102 – Gross Shorts: 108,760 1,258,139 46,025 – Long to Short Ratio: 1.7 to 1 0.9 to 1 0.8 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 49.6 51.1 37.0 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 6.9 -6.7 -2.6   2-Year Treasury Note Futures: The 2-Year Treasury Note large speculator standing this week totaled a net position of -64,569 contracts in the data reported through Tuesday. This was a weekly boost of 22,473 contracts from the previous week which had a total of -87,042 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 69.2 percent. The commercials are Bullish with a score of 56.3 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 6.0 percent. 2-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 13.5 78.0 6.5 – Percent of Open Interest Shorts: 16.6 69.9 11.4 – Net Position: -64,569 166,752 -102,183 – Gross Longs: 278,448 1,610,060 133,635 – Gross Shorts: 343,017 1,443,308 235,818 – Long to Short Ratio: 0.8 to 1 1.1 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 69.2 56.3 6.0 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 12.8 -5.8 -15.5   5-Year Treasury Note Futures: The 5-Year Treasury Note large speculator standing this week totaled a net position of -291,123 contracts in the data reported through Tuesday. This was a weekly reduction of -36,670 contracts from the previous week which had a total of -254,453 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 32.1 percent. The commercials are Bullish with a score of 64.4 percent and the small traders (not shown in chart) are Bearish with a score of 45.9 percent. 5-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 6.9 84.2 7.6 – Percent of Open Interest Shorts: 14.3 73.6 10.8 – Net Position: -291,123 418,734 -127,611 – Gross Longs: 274,551 3,340,256 301,482 – Gross Shorts: 565,674 2,921,522 429,093 – Long to Short Ratio: 0.5 to 1 1.1 to 1 0.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 32.1 64.4 45.9 – Strength Index Reading (3 Year Range): Bearish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -12.9 6.3 6.0   10-Year Treasury Note Futures: The 10-Year Treasury Note large speculator standing this week totaled a net position of -108,371 contracts in the data reported through Tuesday. This was a weekly increase of 62,129 contracts from the previous week which had a total of -170,500 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 56.0 percent. The commercials are Bearish with a score of 48.2 percent and the small traders (not shown in chart) are Bullish with a score of 52.7 percent. 10-Year Treasury Note Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 10.4 77.6 9.3 – Percent of Open Interest Shorts: 13.5 71.2 12.5 – Net Position: -108,371 221,849 -113,478 – Gross Longs: 360,163 2,686,457 320,087 – Gross Shorts: 468,534 2,464,608 433,565 – Long to Short Ratio: 0.8 to 1 1.1 to 1 0.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 56.0 48.2 52.7 – Strength Index Reading (3 Year Range): Bullish Bearish Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 19.8 -22.5 13.8   Ultra 10-Year Notes Futures: The Ultra 10-Year Notes large speculator standing this week totaled a net position of -27,339 contracts in the data reported through Tuesday. This was a weekly decrease of -4,597 contracts from the previous week which had a total of -22,742 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 21.7 percent. The commercials are Bullish with a score of 74.1 percent and the small traders (not shown in chart) are Bullish with a score of 57.2 percent. Ultra 10-Year Notes Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 5.1 82.2 12.0 – Percent of Open Interest Shorts: 7.4 71.1 20.8 – Net Position: -27,339 131,498 -104,159 – Gross Longs: 60,265 973,110 141,625 – Gross Shorts: 87,604 841,612 245,784 – Long to Short Ratio: 0.7 to 1 1.2 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 21.7 74.1 57.2 – Strength Index Reading (3 Year Range): Bearish Bullish Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 20.3 -20.2 0.7   US Treasury Bonds Futures: The US Treasury Bonds large speculator standing this week totaled a net position of -23,218 contracts in the data reported through Tuesday. This was a weekly lift of 4,455 contracts from the previous week which had a total of -27,673 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 77.0 percent. The commercials are Bearish-Extreme with a score of 13.6 percent and the small traders (not shown in chart) are Bullish with a score of 64.4 percent. US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 8.3 77.2 14.0 – Percent of Open Interest Shorts: 10.3 76.5 12.7 – Net Position: -23,218 8,304 14,914 – Gross Longs: 97,335 907,260 163,928 – Gross Shorts: 120,553 898,956 149,014 – Long to Short Ratio: 0.8 to 1 1.0 to 1 1.1 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 77.0 13.6 64.4 – Strength Index Reading (3 Year Range): Bullish Bearish-Extreme Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -14.0 2.4 28.8   Ultra US Treasury Bonds Futures: The Ultra US Treasury Bonds large speculator standing this week totaled a net position of -328,295 contracts in the data reported through Tuesday. This was a weekly fall of -9,640 contracts from the previous week which had a total of -318,655 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 51.3 percent. The commercials are Bullish with a score of 61.0 percent and the small traders (not shown in chart) are Bearish with a score of 49.7 percent. Ultra US Treasury Bonds Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 4.1 84.3 11.4 – Percent of Open Interest Shorts: 29.5 61.2 9.1 – Net Position: -328,295 298,402 29,893 – Gross Longs: 52,766 1,087,219 146,988 – Gross Shorts: 381,061 788,817 117,095 – Long to Short Ratio: 0.1 to 1 1.4 to 1 1.3 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 51.3 61.0 49.7 – Strength Index Reading (3 Year Range): Bullish Bullish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -7.8 5.3 5.9   Article By InvestMacro – Receive our weekly COT Reports by Email *COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.

The Swing Overview – Week 28 2022 This week's new record inflation readings sent a clear message to central bankers. Further interest rate hikes must be faster than before. The first of the big banks to take this challenge seriously was the Bank of Canada, which literally shocked the markets with an unprecedented rate hike of a full 1%. This is obviously not good for stocks, which weakened again in the past week. The euro also stumbled and has already fallen below parity with the usd. Uncertainty, on the other hand, favours the US dollar, which has reached new record highs.   Macroeconomic data The data from the US labour market, the so-called NFP, beat expectations, as the US economy created 372 thousand new jobs in June (the expectation was 268 thousand) and the unemployment rate remained at 3.6%. But on the other hand, unemployment claims continued to rise, reaching 244k last week, the 7th week in a row of increase.   But the crucial news was the inflation data for June. It exceeded expectations and reached a new record of 9.1% on year-on-year basis, the highest value since 1981. Inflation rose by 1.3% on month-on-month basis. Energy prices, which rose by 41.6%, had a major impact on inflation. Declines in commodity prices, such as oil, have not yet influenced June inflation, which may be some positive news. Core inflation excluding food and energy prices rose by 5.9%, down from 6% in May.   The value of inflation was a shock to the markets and the dollar strengthened sharply. We can see this in the dollar index, which has already surpassed 109. We will see how the Fed, which will be deciding on interest rates in less than two weeks, will react to this development. A rate hike of 0.75% is very likely and the question is whether even such an increase will be enough for the markets. Meanwhile, there has been an inversion on the yield curve on US bonds. This means that yields on 2-year bonds are higher than those on 10-year bonds. This is one of the signals of a recession. Figure 1: The US Treasury yield curve on the monthly chart and the USD index on the daily chart   The SP 500 Index Apart from macroeconomic indicators, the ongoing earnings season will also influence the performance of the indices this month. Among the major banks, JP Morgan and Morgan Stanley reported results this week. Both banks reported earnings, but they were below investor expectations. The impact of more expensive funding sources that banks need to finance their activities is probably starting to show.   We must also be interested in the data in China, which, due to the size of the Chinese economy, has an impact on the movement of global indices. 2Q GDP in China was 0.4% on year-on-year basis, a significant drop from the previous quarter (4.8%). Strict lockdowns against new COVID-19 outbreaks had an impact on economic situation in the country. Figure 2: SP 500 on H4 and D1 chart The threat of a recession is seeping into the SP 500 index with another decline, which stalled last week at the support level, which according to the H4 is in the 3,740-3,750 range. The next support is 3,640 - 3,670.  The nearest resistance is 3,930 - 3,950. German DAX index The German ZEW sentiment, which shows expectations for the next 6 months, reached - 53.8. This is the lowest reading since 2011. Inflation in Germany reached 7.6% in June. This is lower than the previous month when inflation was 7.9%. Concerns about the global recession continue to affect the DAX index, which has tested significant supports. Figure 3: German DAX index on H4 and daily chart Strong support according to the daily chart is 12,443 - 12,500, which was tested again last week. We can take the moving averages EMA 50 and SMA 100 as a resistance. The nearest horizontal resistance is 12,950 - 13,000.   The euro broke parity with the dollar The euro fell below 1.00 on the pair with the dollar for the first time in 20 years, reaching a low of 0.9950 last week. Although the euro eventually closed above parity, so from a technical perspective it is not a valid break yet, the euro's weakening points to the headwinds the eurozone is facing: high inflation, weak growth, the threat in energy commodity supplies, the war in Ukraine. Figure 4: EUR/USD on H4 and daily chart Next week the ECB will be deciding on interest rates and it is obvious that there will be some rate hike. A modest increase of 0.25% has been announced. Taking into account the issues mentioned above, the motivation for the ECB to raise rates by a more significant step will not be very strong. The euro therefore remains under pressure and it is not impossible that a fall below parity will occur again in the near future.   The nearest resistance according to the H4 chart is at 1.008 - 1.012. A support is the last low, which is at 0.9950 - 0.9960.   Bank of Canada has pulled out the anti-inflation bazooka Analysts had expected the Bank of Canada to raise rates by 0.75%. Instead, the central bank shocked markets with an unprecedented increase by a full 1%, the highest rate hike in 24 years. The central bank did so in response to inflation, which is the highest in Canada in 40 years. With this jump in rates, the bank is trying to prevent uncontrolled price increases.   The reaction of the Canadian dollar has been interesting. It strengthened significantly immediately after the announcement. However, then it began to weaken sharply. This may be because investors now expect the US Fed to resort to a similarly sharp rate hike. Figure 5: USD/CAD on H4 and daily chart Another reason may be the decline in oil prices, which the Canadian dollar is correlated with, as Canada is a major oil producer. The oil is weakening due to fears of a drop in demand that would accompany an economic recession. Figure 6: Oil on the H4 and daily charts Oil is currently in a downtrend. However, it has reached a support value, which is in the area near $94 per barrel. The support has already been broken, but on the daily chart oil closed above this value. Therefore, it is not a valid break yet.  

The equity rally in the US didn’t pick up momentum after the Federal Reserve (Fed) released its latest meeting minutes, which sounded more hawkish-than-expected, or more hawkish-than-what-was-needed-to-give-another-boost to the US stock markets. The biggest take was that the Fed will continue tightening its policy until it sees that inflation is ‘firmly on path back to 2%’. The S&P500 fell 0.72% as Nasdaq gave back 1.20%, although the jump in the US 2-year yield was relatively soft, and the Fed funds futures scaled back the expectation of a 75 bp hike in the next meeting. Crude price completed an ABCD pattern, and it is more likely than not we see the price rebound to the $100 level in the medium run. In China, Tencent announced its first ever revenue drop as government crackdown continued taking a toll on its sales, and the pound couldn’t gain even after the above 10% inflation data boosted the Bank of England (BoE) hawks and the call fall steeper rate hikes to tame inflation in the UK. Watch the full episode to find out more! 0:00 Intro 0:28 As expected, Fed minutes were more hawkish-than-expected 3:39 Crude oil has more chance to rebound than to fall 6:02 Tencent posts first-ever revenue drop 7:14 Apple extends gains, but technicals warn of correction 8:38 Pound unable to extend gains despite rising Fed hawks’ voices Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #FOMC #minutes #USD #GBP #inflation #Tencent #Alibaba #earnings #crude #oil #natural #gas #coal #futures #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH

Eurozone government deposits at the central bank are subject to a 0% rate cap. This means hundreds of billions of euros could be shifted around. In some cases, this will reduce repo lending or boost demand for safe bonds, all exacerbating the existing collateral shortage Source: Shutterstock The return to positive policy rates will change the incentives for public sector actors in markets Germany’s and Austria’s debt agencies no longer want to lend securities against cash Exiting negative and eventually zero interest rate policies does not simply mean higher rates, but it also means some of the incentives that have dictated the basic market structure and functioning we have become accustomed to over the years of extraordinary policies will change as well. One such change has been highlighted by reports that Germany’s and Austria’s debt agencies are planning to change their repo rules. They no longer want to lend out their securities against cash, but only against other collateral. Why now? And what are the amounts involved? Government cash deposits held at central banks are remunerated at the ECB's deposit facility rate, but importantly that remuneration is capped at zero. Given the vast amounts of excess liquidity in the banking system, short term market rates have traded noticeably below the deposit facility rate. With the deposit facility rate below or at zero the incentive for governments to park cash outside of the central bank were low. But the ECB is now expected to hike the deposit facility rate at a fast pace to well above zero, possibly by 75bp already this week – and the gap to the remuneration capped at 0% will widen quickly. For the abovementioned repos that means that the economics of  government debt agency lending out a security against cash and redepositing at the ECB will change dramatically. Ballooning government central bank deposits are a problem as their remuneration is capped at 0% Source: Refinitiv, ING Germany’s government deposits at the Bundesbank amount to currently €176bn, €120bn of which from the central government Eurozone government deposits at their respective central banks amount to around €600bn currently, fluctuating between €600 to 700bn over the past year. Pre-pandemic they were in the region of €200 to 300bn, already up from around €50 to 150bn before negative interest rates (and then QE) were introduced. But it was the pandemic that has led governments to build up vast cash buffers. Remuneration at the negative depo rate did not matter, it was actually better than market rates. Germany’s government deposits at the Bundesbank amount to currently €176bn, €120bn of which from the central government. Those of Austria at the Oesterreichische Nationalbank amount to €17bn. Certainly not all of that cash originates from the debt agencies' repo operations for which the rules are now tweaked. The operations affected are those that the agencies conduct to support market functioning and market liquidity. Collateral scarcity is set to worsen It all boils down to the one burning issue, the scarcity of high quality collateral. The incentives for the German debt agency to reduce its cash holdings at the central bank are clear. The options are to either seek alternative short term investments, or –  in this special case the simpler solution – to tweak the rules to avoid generating the cash in the first place. Crucially, allowing market participants to effectively only swap securities does not add to the overall availability of government bonds as lending against cash does. While it may still ease price distortions for individual securities, the overall high price for already scarce collateral is unaddressed. As an aside, the ECB's own securities lending against cash (capped at 150bn) has gained importance since late last year, tripling in volume to now account for half of the ECB's overall securities lending. Worsening collateral scarcity is already visible in widening 2Y German swap spreads Source: Refinitiv, ING   There should be an incentive to reduce the cash holdings at the central bank Looking beyond the case where just repo rules are tweaked, there should be an incentive to reduce the cash holdings at the central bank, thus limiting those holdings to the need for safety liquidity buffers. Some countries already have institutional arrangements in place to transfer the cash back to the banking system, via daily repos or the collection of non-collateralised deposits. Those arrangements were more likely meant to smoothen the volatility of the accounts to facilitate the ECB’s liquidity management rather than to structurally reduce the vast amounts that have now accumulated. Cash could of course also be invested in high quality liquid assets - think government bills or similar assets. Alternatively, debt agencies could run down cash buffers, simply by issuing less government paper. All of this to the same effect that the market's collateral availability for is further reduced. This is already visible in the stretched bond valuations (2Y German Schatz in the chart above) relative to swaps. Read this article on THINK

Today the market will be calmer as I do not have very important data that could be confusing. Mainly, the eyes of traders will be focused on the results of the ZEW Economic Sentiment in Germany and in Euroland as well as the statements of bank criminals in these regions. From the American economy, we are only waiting for the report on Industrial Production. The Reserve Bank of Australia (RBA) events As the day started, events from Australia arrived. The first event took place at 2:05 CET, and it was a speech. The speaker was Michele Bullock, who is an Assistant Governor of the Reserve Bank of Australia. Her public engagements are often used to drop subtle clues regarding future monetary policy. The RBA minutes provide a detailed record of the discussions held between the RBA’s board members on monetary policy and economic conditions that influenced their decision on adjusting interest rates and/or bond buys, significantly impacting the Australian Dollar (AUD). ZEW Economic Sentiment German ZEW Economic Sentiment According to the report on the six-month economic outlook, the mood is currently pessimistic. Another decline is projected from -61.9 to -65.7. Since March, the indicator has been below 0, which means negative results. In June it looked like the situation could improve, but the next results quickly showed that it was a temporary change and that the downward trend has been consistently maintained since then. Source: investing.com Eurozone ZEW Economic Sentiment In the euro zone, the outlook is also negative. It is expected to drop from -60.7 to -61.2. Contrary to Germany, the situation in the euro zone deteriorated only in May. The downward trend has continued since then. The higher results than the German index are due to the fact that 19 Member States have an influence on the European one. Source: investing.com Speeches Also today, representatives of the central banks of Europe and Germany will take the floor. The speeches will be held in the evening. The first one at 18:00 CET and the speaker will be a member of the Executive Board of the European Central Bank, Isabel Schnabel. One hour later at 19:00 CET, Joachim Nagel, who is Deutsche Bundesbank President and voting member of the ECB Governing Council, will speak. Canada Housing Starts The annualized number of new residential buildings that began construction during the reported month will published today. It is expected to drop to 263K from 267.4K. At the beginning of the year, the trend was exemplary, with the highest level recorded in May (287.3K). After this reading, the trend changed to a downward trend. The positive fact is that since the April reading the result was higher than expected. Source: investing.com Canada Foreign Securities Purchases The overall value of domestic stocks, bonds, and money-market assets purchased by foreign investors in Canada is expected to increase compared to the previous month. Canada Foreign Securities Purchases is expected to reach 17.32B. Purchase by foreign investors will provide new money to the Canadian economy and will also demonstrate its attractiveness. During the year, the appearance of the indicator varied considerably. At the beginning of the year it was in a downward trend, then the readings for January and February were downward. After these negative results, the highest reading was recorded at 46.94B. This very positive result was followed by a shift to a downward trend. A rebound after a negative reading in June could mean an improvement. US Industrial Production There are no forecasts for the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities. Observing the last result, the trend is downward, and the last reading was 0.13% lower than the previous reading (3.81%). We can only expect it to decline slightly. Summary 2:05 CET RBA Assist Gov Bullock Speaks 2:30 CET RBA Meeting Minutes 11:00 CET German ZEW Economic Sentiment (Oct) 11:00 CET ZEW Economic Sentiment (Oct) 14:15 CET Housing Starts (Sep) 14:30 CET Foreign Securities Purchases (Aug) 15:15 CET US Industrial Production 18:00 CET ECB's Schnabel Speaks 19:00 CET German Buba President Nagel Speaks Source: https://www.investing.com/economic-calendar/

Treasury bonds, while they may be considered a relatively safe investment instrument, it seems that they cannot boast the above status this year. The dynamics of changes in interest rates seem to be unprecedented, which may force big changes in the bond market. Bond yields Yields on U.S. 10-year bonds surpassed the 4.25 percent level this week for the first time in 14 years. Further price declines and yield increases may have followed statements by Federal Reserve officials, who continue to reaffirm a commitment to long-term restrictive monetary policy, which may keep negative pressure on U.S. government bonds, which appear less attractive to investors in a high interest rate environment. They may also wait for further debt issuances already with higher interest rates and, in favor of them, dispose of current paper that had lower interest rates. Statements relevant to interest rates and bonds Federal Reserve Bank of Philadelphia President and CEO Patrick Harker said Thursday that the federal funds rate will be "well above" 4 percent by the end of 2022 due to a "frankly disappointing lack of progress in curbing inflation," BBN reported. The Fed will stop raising interest rates next year, Harker added. The restrictive stance the central bank will take at this point should remain in place "for some time to allow monetary policy to do its job." He went on to estimate that GDP growth will be "flat" this year, and will soon rise by 1.5 percent and around 2 percent in 2023 and 2024, respectively. The unemployment rate will peak at 4.5 percent in 2023 and should fall to 4 percent in 2024, "suggesting that even as we tighten monetary policy, the labor market will remain quite healthy." - Harker stressed in his statement, quoted by BBN. What does the scale of the bond sell-off look like? Source: Conotoxia MT5, AGG, Weekly Looking at the trading chart of the ETF with the symbol AGG, someone could see that the price of a unit of this fund has fallen by more than 20 percent since its peak in August 2020. What is the AGG fund? The iShares Core U.S. Aggregate Bond ETF seeks to track the investment performance of an index composed of the entire U.S. investment grade bond market. According to the issuer, AGG can provide broad exposure to U.S. investment-grade bonds, which also includes Treasury bonds. Nevertheless, for the moment, until a peak in US interest rate hikes is reached, the market may continue to be under pressure. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

After both Boris Johnson and Penny Mordaunt pulled out of the British PM race, Rushi Sunak cried victory on Monday afternoon, and markets cried ‘Ready for Rishi’. The new UK Prime Minister The British sovereign bonds posted one of the biggest gains on record, the 10-year gilt yield tanked 8.50%, the 30-year yield dived 8.40%, sterling gained. Investors loved seeing Sunak become the new UK Prime Minister, they, however, hated seeing Xi Jinping confirm a third term. NASDAQ Nasdaq’s Golden Dragon China index lost more than 20% yesterday and closed the session more than 14% down. Direxion’s FTSE China Bear times 3 ETF jumped almost 30% in the session. Macro data On macro, the PMI data revealed yesterday did little good to the mood in Europe. The composite PMI fell to 47.1, which is the lowest level since April 2013. In the US, the services sector saw a sharp, and an unexpected decline to 46.6, from 49.3 printed a month earlier, and 49.6 expected by analysts. Japanese core CPI advanced to 2% versus 1.9% expected by analysts. The dollar-yen trades touch below the 149 mark after the Bank of Japan (BoJ) intervened to slowdown the depreciation in yen. US tech giants In the corporate space, two big US tech giants are due to announce earnings: Alphabet and Microsoft. Their revenues are expected to have slowed in the latest quarter, but how much of the slowdown is already priced in? Walking into the results, it’s important to remember that soft results don’t necessarily mean negative market reaction. If the soft results still beat the market estimates, we could see Google, and Microsoft shares rally. Watch the full episode to find out more! 0:00 Intro 0:39 Markets are ready for Rishi! 2:52 …but not for Xi. 4:32 PMI data disappoint 6:00 Japanese inflation advance 7:25 Google earnings preview 9:07 Microsoft earnings preview 10:20 Option traders bet for Tesla below $200! Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Google #Microsoft #earnings #UK #PM #Rishi #Sunak #GBP #USD #JPY #BoJ #ECB #China #XiJinping #selloff #Tesla #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5  ___  Let's stay connected: LinkedIn: https://swq.ch/cH

Among the various financial instruments in which you can invest, two of extremely different nature stand out - shares and bonds. They are in the form of a document or a record in the IT system. Thanks to them, investors have a chance to multiply their funds. Many of us learn very early what stocks and bonds are. Some people then catch the bug and dream about quickly accumulating capital that they will be able to invest in one of the financial instruments. Of course, most novice investors dream of doing fast and spectacular things, making risky decisions and earning huge amounts of money. The beginnings can be difficult, so it is worth learning to understand them better. Stocks A stock is a form of security that indicates the holder has proportionate ownership in the issuing corporation and is sold predominantly on stock exchanges. Corporations issue shares to raise funds to run the business, and the shareholder, shareholder, may have a claim on a portion of the company's assets and profits. A shareholder is considered to be the owner of the issuing company, which is determined by the number of shares owned by the investor in relation to the number of shares issued. Owning shares gives you the right to vote at shareholders' meetings, receive dividends if and when they are paid, and the right to sell your shares to someone else. If you own the majority of shares, your voting power increases so you can indirectly control the direction of the company. Most often, stocks are bought and sold on exchanges such as the Nasdaq or the New York Stock Exchange (NYSE). After a company is listed on an IPO, its shares become available to investors who can buy and sell on the stock exchange. Typically, investors use a brokerage account. Stock price is influenced, among other things, by supply and demand factors in the market. Bonds Bonds are units of corporate debt issued by companies and securitized as transferable assets. A bond is referred to as a fixed income instrument because the bonds have traditionally paid debtors a fixed interest rate (coupon). Companies sell bonds to finance ongoing operations, new projects or acquisitions. Governments sell bonds for funding purposes, and also to supplement revenue from taxes. There is the different types of bonds: Corporate bonds are issued by public and private companies to fund day-to-day operations, expand production, fund research or to finance acquisitions. Government bonds is a debt security issued by a government to support government spending and obligations. Government bonds can pay periodic interest payments called coupon payments. Municipal bonds - issued by local governments, Bonds of legal entities, e.g. corporate bonds. Bond valuation: The market prices bonds based on their specific characteristics. The price of a bond fluctuates daily as with any other publicly traded security. The price of a bond is inversely proportional to interest rates. The price of a bond fluctuates in response to changes in interest rates in the economy. This is because, for a fixed rate bond, the issuer has promised to pay the coupon based on the face value of the bond. While there are a few specialized bond brokers out there, most online and discount brokers these days offer access to the bond markets and you can buy them more or less like you would with stocks. Bonds are typically less volatile than stocks and are generally recommended to be at least part of a diversified portfolio. For this reason, bonds are often good for investors who are looking for an income and want to keep their capital. In general, experts advise that older people or those approaching retirement should shift their portfolio weight more to bonds. The Differences Bonds differ from stocks in several ways. Bondholders are creditors of the corporation and are entitled to interest and repayment of invested capital. Creditors have legal priority over other stakeholders in the event of bankruptcy Source: The Psychology of Investing

Summary:  After chasing the runaway inflation train from behind for eight months and signs of economic slowdown emerging, the Fed is ready to adjust its pace to a lower gear in 2023 and move into a risk management mode and become data-dependent. As a downturn in the economy and the impacts of past rate hikes continue to haunt equities and high-year credits, U.S. treasury notes and investment-grade bonds are increasingly valuable to an investment portfolio in providing it with yields and potential risk reduction. Bonds did not work in the past 12 months but things are starting to change For the best part of 2022, the prices of equities and bonds fell together, and the 60-40 portfolios performed poorly. Bonds have not been able to perform the function of mitigating the risks of stock market selloffs. The primary reason for this phenomenon was that the decline in equities resulted from higher interest rates, which also drove bond prices down. When inflation was the problem, both equities and bonds tend to fall together (Figure 1). When inflation starts to plateau and the number one concern of the markets is shifting from inflation to deceleration in growth, which was the result of the aftermath of past aggressive rate hikes to fight inflation, equities and bonds tend to behave differently, with bond prices rising as equities declining. This potential shift in the equity-bond dynamic makes bonds a valuable asset class to be included in an investment portfolio in the coming months. Figure 1: S&P 500 and 10-year Treasury Note Yield; Source: Saxo, Bloomberg. The Fed‘s modus operandi has shifted from chasing a runaway inflation train from behind to data-dependent risk management The US inflation train left the station in March 2021 (Figure 2) but the Fed waited for a full year before they raised the policy interest rate for the first time in March 2022. The inaction of the Fed from March 2021 to February 2022 (red zone in Figure 2) and its now infamous notion of the transitoriness of inflation put the Fed in an awkward position of chasing the inflation train from behind (the blue zone in Figure 2). The Fed started small in March 2022 and then quickly abandoned its initial gradualism and rushed to the new normal of 75bps rate hikes four times in a row since June 2022. During this phase of chasing from behind, the rate of change in inflation have decelerated and the inflation rates seem to have plateaued at elevated levels. The distances between inflation rates and the Fed Fund target rate are converging. This development provides the Fed with some breathing room to consider slowing from the turbo-charged pace of monetary tightening to a lower gear. Figure 2: Consumer Price Indices & Fed Fund Target (upper bound); Source: Saxo, Bloomberg. The Fedspeak over the past two weeks and the minutes of the FOMC’s November meeting provide investors with a gap in the curtain to gauge the new phase of risk management in which the Fed’s pace of tightening and the terminal rate are becoming more data-dependent. According to the minutes, participants of the FOMC’s November remarked that: purposefully moving to a more restrictive policy stance was consistent with risk-management considerations…There was wide agreement that heightened uncertainty regarding the outlooks for both inflation and real activity underscored the importance of taking into account the cumulative tightening of monetary policy, the lags with which monetary policy affected economic activity and inflation, and economic developments.                                                                         Minutes of the FOMC Nov. 1-2, 2022, p.10 Inflation, especially services inflation, is still sticky but after raising its policy overnight Fed Fund rate target from 0.00-0.25% range to 3.75-4.00% in eight months, the Fed is finally signaling its intention to reduce the size of future rate hikes starting probably from December and adopting a data-dependent risk management approach going forward. It is important to reiterate here that the change in the Fed’s thinking and approach does not mean that the Fed is pivoting in the sense of having decided to end the current tightening cycle. The Fed needs time to allow the impact of the rate hikes over the past eight months to come about as monetary policy working with lags. In addition, the Fed needs time to assess the impact of the quantitative tightening as it winds down its balance sheet.  Figure 3: The Federal Reserve’s Balance Sheet Assets; Source: Saxo, Bloomberg. The market is already signaling to the Fed that the latter might have overdone the monetary tightening and could trigger a recession next year. The long end of the curve has been well bid with the 10-year yield falling to 3.69%, 65bps below its cycle high of 4.34%, and the 30-year yield declined to 3.73%, 69bps off its high of 4.42%, despite that the Fed raised its policy rate by 75bps since then. Short-term interest rates were driven by the Fed’s actions to raise the overnight Fed Fund rates while longer-dated bond yields fell on the prospect of slower growth or even a recession together with anchored long-term inflation. The market is signaling recession risks The yield spread between the 3-month treasury bill versus the 10-year treasury note tumbled to minus-63 (Figure 4), a level only seen in less than 12 months preceding the prior three recessions. According to the New York Fed’s study, the 3-month vs 10-year yield curve is the preferred indicator to the more popular 2-year vs 10-year yield curve to foretell a recession. We at Saxo are not calling for a U.S. recession as our base case for 2023 but we are expecting growth to decelerate and the risk of the U.S. economy dipping into recession is not negligible. Figure 4: 3-Month Treasury Bill vs 10-Year Treasury Note Yield Spread; Source: Saxo, Bloomberg. While none of the members of the FOMC mentioned the “R” word as per the November minutes, the Fed’s staff economists in their assessment of the economy presented to the FOMC suggested that “the possibility that the economy would enter a recession sometime over the next year as almost as likely as the baseline” projections. The inflection point may be near for bonds to contribute positively to the portfolio while equities slide lower as the economy and corporate earnings growth slow The past 375 bps increase in the policy rate have been working through the financial markets and the economy. Although not yet fallen into a recession, the U.S. economy has shown signs of slowing and companies are reporting weaker outlooks for their businesses. Analysts are revising down Q4 and 2023 earnings forecasts for companies other than those in the energy sector. In short, the equity market is facing multiple headwinds. After six rounds of increases and 375bps in total, the financial condition in the U.S. arguably has not yet entered into the restrictive territory. For example, the Chicago National Financial Conditions Index is still below zero, the threshold between tight (above zero) and loose (below zero) financial conditions (Figure 5). The Chicago National Financial Conditions Index is compiled from 105 financial indicators including stock prices. As equities may retreat on recession fear, margin compression, and earning downgrades, the proverbial Fed put for the equity market is nowhere in sight to bail out equity investors in case of a selloff. The carry or coupon income of bonds and potentials of capital appreciation (bond prices rise when yields fall) will be something very valuable to have in a portfolio to generate positive returns and reduce volatility as the Fed has likely moved past the chasing inflation from behind phase.  Figure 5: Chicago Fed National Financial Conditions Index; Source: Saxo, Bloomberg. The 3 to 7-year segment of the U.S. dollar yield curve tends to offer relatively better risks and rewards through Q1 2023 From the closing of Nov 1, 2022, the day before the FOMC decisions on Nov 2, to the present, yields for the short-dated bills through 1-year bills rose and yields for 2-year notes little-changed and those for 3-year notes through 30-year treasury bonds declined significantly (Figure 6).  Figure 6. Changes in yields since the last FOMC; Source: Saxo, Bloomberg. As the Fed is not done yet with rate hikes but only adjusting its pace, the short end of the curve through 2-year notes is likely to continue to rise or little-changed at best to reflect the Fed’s rate hikes. On the other hand, yields from 3 years onward may be poised to fall to reflect the outlook for an anchored long-term inflation rate (Figure 7) and deteriorating growth and recession risks.  Figure 7: Market implied long-term inflation; Source: Saxo, Bloomberg. On the balance of yields, potential capital gains, and duration risks, the 3-year to 7-year segment of the curve looks relatively attractive. It is important to note that while the yield curve tends to become increasingly inverted months ahead of a recession, it will steepen and turns positively sloped again shortly before the onset of a recession and through the recession and the subsequent recovery (Figure 8). For traders who are taking a punt in the market, the long ends may still be the place to be in. However, for investors who are looking for yields, long-term capital appreciation, and reducing risks for their portfolios for 2023, the 3-year to 7-year treasury notes may be the better place to be in. Moreover, after the recent sharp decline in yields, it may pay off for investors to be patient and wait for yields to bounce before gradually adding bonds to their portfolios through the first quarter of 2023, as opposed to taking a large position in bonds in one go at the current yield levels.   Sticking to investment grades until deep into an economic downturn or the onset of a recession In addition to selecting the tenor of bonds to invest in, investors have many alternatives in terms of credit quality. As a rule of thumb, bonds with better credit quality tend to yield less, and bonds with lesser credit quality tend to offer investors higher yields. One of the key factors for investors to consider is if the additional yields are compensating more than sufficient for the higher credit risks embedded in a bond. Credit risks are more than just default risks. Only considering whether a certain issuer will default or not is insufficient. For example, a deterioration in an issuer’s cashflows to cover interest payments may cause a downgrade in credit rating which in turn adversely affects the price of all the bonds issued by that company. Another factor to consider is the likely direction of change in credit spreads in general. For example, when the economy is entering into a recession, corporates in general tend to suffer from deterioration in cashflows and therefore lower creditworthiness for the issuers and wider credit spreads for their bonds. Credit spreads, in a sense, is a put option on the issuing company. Investors pick up an option premium (credit spread) on top of a risk-free rate (treasury yield) when investing in a corporate bond. In an economic downturn that causes equity volatilities to surge, credit spreads widen. As the U.S. economy is likely to slow down sharply or even enter into a recession, investors shall demand an above-average credit spread from high-yield bonds to compensate for the risks. Currently, U.S. high-yield corporate bonds on average are yielding 305 bps more than investment-grade bonds which are much lower than what they were during past recessions (Figure 9). In other words, high-yield bonds are not offering sufficiently attractive yields relative to investment-grade bonds given the stage of the business cycle we are in. Figure 9: U.S. High-yields vs Investment-grade Spread; Source: Saxo, Bloomberg. Regarding credit trends, it is noteworthy that among all the rating actions by Moody’s in October, credit upgrades accounted for just 42%. It was the first time in two years that Moody’s downgraded more issuers than upgraded. Likewise, U.S. banks were tightening lending standards. Increased difficulties in getting bank financing will take its toll on the corporate bond markets. Therefore, it is advisable to stick to investing in investment-grade bonds.  Figure 10: Net Percent of U.S. banks tightening Lending Standards for Commercial and Industrial Loans; Source: Federal Reserve Oct 2022 Senior Loan Officer Opinion Survey on Bank Lending Practices. Taking profits in the short position in the September 2023 3-month SOFR futures (SR3U3) As the Fed has moved into a risk management mode and the pace and path of monetary policy have become data dependent, investors who have taken a short position at around 97.20 in the 3-month SOFR futures September 2023 contract (SR3U3) that we noted on August 1, 2023, when the market underestimated the magnitude of incoming rate hikes from the Fed and prematurely priced in rate cuts in 2023, may consider taking profits. Although we still think inflation will be sticky and stay at elevated levels and the Fed is not cutting rates in 2023, the current level of SR3U3 at 95.185, which represents a 3-month (from Sep 20 to Dec 20, 2023) compound rate of the secured overnight financing rate at 4.815%, offers diminished upside on risks and rewards. On September 22, after the Sept FOMC meeting, we lowered our target of the trade to 95.25 (or 4.75%). The target is now reached and taking profits deems appropriate.  Figure 11. SOFR 3-month Futures Sep 2023 ; Source: Saxo, Bloomberg. Key Takeaways: The Fed has shifted to a risk management mode The pace and path of the Fed’s rate hikes in 2023 will be data dependent Equities are facing headwinds as the economy slipping into a sharp downturn or even recession Bonds are becoming attractive in providing yields and potentially reducing volatilities in an investment portfolio in 2023 Focussing on 3-7 year U.S. treasury notes or investment-grade corporate bonds Avoiding high-yield (non-investment-grade) bonds until deep into the economic downturn or onset of recession at credit spreads much wider than the current level in the second half of 2023 Taking profits in the short SOFR futures Source: https://www.home.saxo/content/articles/bonds/fixed-income-update-25112022

„The future’s so bright, I gotta wear shades”, or about shares and ETFs „The future’s so bright, I gotta wear shades” is the title that, unfortunately, we cannot use to forecast 2023. Although, the new year will have to really work hard to surprise anyone who has lived through the past couple of years. It appears that all investors’ eyes are on China and its success in resuming economic activity. A rebounding China will boost imports of oil, commodities and raw materials while fueling demand for airline tickets, hotel rooms and foreign real estate. „Surely it will push up global inflation if China reopens fully,” says Iris Pang, chief economist for Greater China at ING Group NV. There is a risk that China will act more inflationary in 2023, but this risk seems limited due to the very real likelihood that supply will also improve in many sectors of the economy. Inflation and bond yields are the major risks for 2023 stock indices performance. While a mild recession in 2023 is almost certain, the Fed possibly will slow its rate hikes in case inflation starts to show signs of easing. With slowing growth, wage increases would slow, which, among others, would help stabilize corporate margins. „It’s astonishing,” said Harvard University professor Jeremy Stein, „If you told any one of us a year ago, ‚we’re going to have a bunch of 75 basis-point hikes,’ you’d have said, ‚Are you nuts? You’re going to blow up the financial system.’” Guess what? 75 basis-point hikes are done, and the financial system has not broken – and it is not even near that happening. Stock indices are open to another downward phase (we didn’t have a capitulation yet), but by the end of 2023, they could be back on the upward trend even if the world is in a „mild” recession. Investors should watch the market and remain cautious until the new trend is proven. However, someone may say it might be a good to have some exposure and adjust when your asset allocation gets out of whack. Essential factors to watch for 2023 and stock indices are the short-term bond yields, put/call ratio and bank liquidity. Finally, one should remember that stocks are hostages to the tyranny of round numbers, so it might be good for the support and resistance lines to be always near them. As we move further, let us look at what the companies expect the year 2023 to bring. We have studied the earnings forecasts of all 30 companies that are part of the Dow Jones Industrials index (US30). Read next: Santander Bank Polska Shareholders Can Expect A Solid Dividend, The ETH Liquid Staking Narrative Is Already Going Strong| FXMAG.COM It’s going to be tough at first, and then it’s downhill for the Dow Jones Collecting the data of Q1 2023 earnings per share forecasts, we can see that 12 of the 30 companies in this index (40%) are expected to improve their quarterly earnings, resulting in an 11.7% growth in EPS from Q4 2022 to Q1 2023. The average price-to-future earnings ratio within the index is expected to be 16.8, an improvement compared to the current average P/E ratio within the index of 18.5. The most considerable improvement for the upcoming quarter is forecasted by the aircraft and missile manufacturer Boeing Co., which was the only company within the index to record a loss in Q3 2022. In fact, if we exclude Boeing Co. data from the calculations, the estimated EPS growth in the following quarter diminishes to a meagre 2.00%. The second most substantial growth is forecasted by Goldman Sachs Group Inc., which is also expected to report the highest quarterly EPS (9.99) within the index. The investment bank would be able to boost its earnings by taking advantage of the increasing interest rate environment. Two companies expecting their EPS to decrease in the upcoming quarter are Chevron Corp. and McDonald’s Corp. The cumulative annual earnings figures are similarly presented. Cumulative EPS is calculated by summing annual EPS for all companies within the index, allowing us to evaluate the EPS changes between two periods. However, to compare the full annual periods, we have taken the expected results for the last quarter of 2022. The data show that the anticipated annual EPS increase in 2023 within the index would be 10.37% (6.19% if we exclude Boeing Co. as an outlier). Furthermore, 26 of the 30 companies in the index are likely to report year-on-year earnings growth. These results show that analysts are currently predicting a slowdown at a large proportion of companies in the medium term and a slow improvement by the end of next year. The companies’ employee retention activities and job postings share the same relatively gloomy sentiment for the upcoming year. Good morning, but unfortunately you are fired Last year, all major tech companies announced job cuts – some significant, some smaller. The motivation for companies to reduce the employee count comes from various factors, such as changing business models and a slowing economy. However, the biggest reason for the extensive tech firing in 2022 is the growth opportunities in cloud computing services and online shopping upon Covid-19 pandemic that drove people to organize their lives remotely. For example, due to this change in consumer behavior, Amazon doubled its workforce and had its most profitable period in the two years since the pandemic’s beginning. As the pandemic slowed in most of the world, such companies as Amazon were left with the high costs of rapid expansions, slower sales, and high inflation. Amazon’s growth stalled to the lowest rate in 20 years in mid-2022. During the period between April and September, Amazon laid off around 80,000 people around the world. In November, it announced another 10,000-employee layoff (the number was increased to 20,000 in December) and froze hiring. In total, Amazon’s downsizing amount to approximately 6.6% of its total workforce. While this has been the biggest job layoff in the history of Amazon in absolute terms, Amazon is experienced in managing its workforce amid recessions – it cut 1,500 jobs during the dot-com crash (which at that time was 15% of the staff). Besides large tech companies such as Amazon, Meta and Twitter, also startups – especially those emerging in response to the needs of a pandemic-hit world - and cryptocurrency companies are also feeling the pressure of inflation, the difficulty of raising new funding and, in the case of the latter, falling Bitcoin prices and investor sentiment. According to the Crunchbase database of public and private companies in the United States laying off employees, nearly 400 companies have announced layoffs, from which 21 reported a complete shutdown and 15 more fired 40% to 60% of their workforce. The major layoffs took place in Fintech, Crypto, E-commerce and Social media industries If anyone is wondering whether redundancies continue into 2023, they will (at least at Amazon). It has been confirmed by the company’s CEO Andy Jassy. Although, it is relatively safe to say that the layoffs would continue in 2023 for other tech companies and may spread out to other sectors as well. While the US labour market still shows meager unemployment data, if taking a closer look, it is visible that a considerable part of the hiring takes place in those industries trampled by the pandemic. And the downsizing among Tech companies also seems to become a problem for other sector workers. Among other (potentially more logical) factors is that corporate leaders are just people with a sense of herd unity. Therefore, if their competitors announce layoffs to prepare for the coming recession, they would probably consider doing the same. While it is harder to look for the silver lining in getting fired, it may be an absolute necessity for the company to undergo downsizing as part of a strategic restructuring. Downsizing allows companies to save cash, improve efficiency and, if necessary, survive economic slowdown. Nevertheless, it is crucial to do the due diligence and see what other activities the company is performing in order to optimize its operations – no company has earned billions by simply laying off employees. While cutting jobs is not necessarily bad for the company, the overall market typically perceives it as a negative sign, which is clearly reflected in its stock price. Studies involving 141 companies announcing layoffs between 1979 and 1997 and 1,445 companies announcing layoffs between 1990 and 1998 clearly show that downsizing negatively affects the companies’ stock prices following the news and in the longer period after the announcement. Interestingly, even though the key objective for downsizing typically is cost-cutting and optimization, not all companies achieve reliable results in this field. On the contrary, as a result, companies face the risk of losing valuable employees, may need to rehire some of them at a later stage and is likely to deal with a fall in customer service quality, productivity, and innovation due to demoralized workforce. The bottom line is that companies don’t fire employees if they are expecting a high growth period ahead. It is true whether we speak about one particular company or the market in general. Investors should pay attention to employee retention activities, reasons for necessary downsizing, and how the company expects to handle any negative consequences. Based on current market trends, it is safe to say that further downsizing will continue as we officially enter a recession in 2023. Good to watch ETFs Read the full Yearly Outlook 2023 by Conotoxia here!

The Internet and social media are a good place to promote your business. In China, one of the TikTok applications wants to enter the food delivery industry. In this article: The food delivery industry in China Russia's MTS bank has UAE licence More than in any other year The bond market The food delivery industry in China The food delivery market is constantly evolving. Apps such as Uber Eats or Glovo are very popular. China has its own counterpart, but other companies also want to enter this market. Douyin is the Chinese version of TikTok which is owned by ByteDance. ByteDance's douyin is testing a type of food delivery service in China. Restaurant owners often broadcast live on Douyin to promote their business. By doing so, they can offer discounts. The user can then redeem this offer and choose the time the food will arrive. The food delivery industry in China is dominated by Meituan and Ele.me. However, ByteDance's initial steps in the market suggest that the company wants a piece of the market, and their business model is different from the current market. ByteDance is testing food delivery service via its Chinese version of TikTok https://t.co/36zS7pddDl — CNBC (@CNBC) February 8, 2023 Read next: The Decline In Tech Valuations Continues To Hit SoftBank| FXMAG.COM Russia's MTS bank has UAE licence The tougher Western sanctions against Russia have not yet directly targeted telecommunications infrastructure. The fintech unit of the largest Russian mobile operator Mobile TeleSystems -MTS - has received licenses from the Central Bank of the United Arab Emirates. The UAE, like Saudi Arabia, maintains good relations with Moscow despite pressure from the West to help isolate Russia from the invasion of Ukraine, which Moscow calls a "special military operation." Russia's MTS bank has UAE licence -central bank website https://t.co/nPrzeEAFgy pic.twitter.com/ksib85fIpZ — Reuters Business (@ReutersBiz) February 8, 2023 More than in any other year The cryptocurrency market is vulnerable to hacker attacks. Reports show that hackers are hitting this market particularly hard. A confidential United Nations report shows that in 2022 North Korean hackers stole more crypto assets than in any other year. So the main task as always will be to implement the maximum protection of funds in any project. Or it may seem that the problem is North Korean #hackers, but that depends on how you look at the situation. #cryptonews: A confidential United Nations report has revealed North Korean hackers stole more #crypto assets in 2022 than in any other year 🫢Stay #SAFU! — CoinMarketCap (@CoinMarketCap) February 8, 2023 The bond market Many people want to try their hand at investing. They often choose stocks or bonds. These are two key reasons to own quality bond investments. Most bonds make semi-annual interest payments that are known in advance based on a percentage of the face value. Bonds also have fixed face values and maturity dates, so in the event of default, investors know in advance what they will receive and when. However, given how large and complex the bond market is, there can be some confusion about how to actually invest. Therefore, before making a decision on such an investment, you should increase your knowledge in this area, for example by using the materials of financial institutions. Five key points about bond investing, ranging from "how" to invest to "why now?"https://t.co/pTt30eiGJg — Charles Schwab Corp (@CharlesSchwab) February 7, 2023

Online shopping is becoming more and more popular. Sellers, in order to meet the expectations of consumers, look for the best possible solutions. It turns out that online sales require more storage space than brick-and-mortar sales, which is why the demand for warehouse space increases with the growth of online trade. In this article: US CPI and what does it mean for investors? Magazine dominance The largest ever bond issue by India's Housing Development Finance Corp US CPI and what does it mean for investors? After months of good news in the fight against inflation, the January report on the Consumer Price Index showed that progress in bringing down inflation is slower. Although it seems that the trend towards lower inflation is still on track For investors, more sticky inflation means interest rates can stay higher for longer. Increasingly, they expect the Fed to hold off on interest rate hikes until the end of the year, the latest inflation report, coupled with the Good Jobs Report released earlier this month, shows that hopes may be waning. The latest data changed expectations that the Fed will raise interest rates and hold them longer. January's CPI report is potentially difficult news for both bond and equity markets, which have increasingly bet that the Fed will soon stop raising interest rates and start cutting them well before the end of 2023. The January CPI report showed that progress in bringing inflation down is moving more slowly than many in the markets thought.For investors, stickier inflation means interest rates potentially staying higher for longer. Here's what to know. https://t.co/oMMcguky0C — Morningstar, Inc. (@MorningstarInc) February 14, 2023 Read next: Airbnb Posted A Profit Of $1.9. Billion, Air India And Largest Commercial Aircraft Deal In Aviation History| FXMAG.COM Magazine dominance According to CBRE, another nearly 190 million square feet of warehouse space was under construction in North America in 2020, with more than 43% of the buildings pre-leased. This demand is being driven by retailers who are expanding their e-commerce business during the online shopping boom and investing in faster delivery thanks to consumer expectations. Retailers are also securing more US warehouse space to cushion the impact of future supply chain shocks, such as those caused by the coronavirus pandemic. JLL estimates that by 2025, the US may need an additional 1 billion square feet of new industrial space to keep up with demand. This forces industrial developers to get creative and find more unconventional places. The U.S. is facing a warehouse shortage. What does this mean for American consumers and business people from Wall Street to Main Street? Watch the full video here: https://t.co/0frYl0vhY7 pic.twitter.com/lnTxxJroki — CNBC (@CNBC) February 15, 2023 The largest ever bond issue by India's Housing Development Finance Corp India's Housing Development Finance Corp (HDFC) aims to raise at least 50 billion rupees ($603.4 million) through the sale of 10-year bonds on Thursday. If the company raises the full amount, it will also be the largest-ever private debt issuance by an Indian company. Indian lender HDFC's biggest-ever bond issue to see strong demand - bankers https://t.co/3IH1i2XeZR pic.twitter.com/cgZ2ziNKzh — Reuters Business (@ReutersBiz) February 15, 2023

The US 10Y Treasury yield is now facing strong resistance near 3.83. We could see a temporary break followed by a setback close to the 3.50 - 3.60 area. The next move will be a strong rally higher towards the 4.86 target and maybe even closer to the 5.81 target to complete wave 5 and the entire five-wave rally from 0.33. However, for now, let's see the reaction after resistance at 3.83 is tested.   This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/313140

The real estate market has suffered from the pandemic and high inflation, especially in China. Sales have fallen but costs have not disappeared, which is why real estate developers are doing their best to cover debts. In this article: The car market Real estate sector in China The demand for bonds What to invest in? The car market The car market is constantly changing from a slow transition from combustion cars to electric cars, and the type of trade is changing from traditional to online. There are challenges ahead for sellers and products, and the sooner they seize the opportunity, the better. Consumers are increasingly frustrated with high prices. New car prices have hit an all-time high due to parts shortages and high demand for cars, especially for Americans who have moved to suburban areas during the Covid-19 pandemic and need their personal vehicles as their primary mode of transportation. Is the car dealership on its way out? Watch the video to learn how these companies are taking over the auto dealership industry. https://t.co/OHiXPfWUPW pic.twitter.com/Nv3JPoV2aq — CNBC (@CNBC) March 1, 2023 Read next: Some McDonald's Locations Don't Promote Hip-Hop Stars' New Meal| FXMAG.COM Real estate sector in China The real estate sector in China has been facing a serious liquidity crisis since mid-2021, with many developers defaulting or delaying debt repayments. Developer companies are trying to solve this problem. China Vanke Co Ltd is seeking to raise approximately USD 500 million through a new equity offering in Hong Kong. The state-backed developer Vanke is selling 300 million shares, the company plans to allocate 60% of the proceeds to debt repayment and the rest to supplement working capital. Property developer China Vanke to raise $500 mln via share placement - term sheet https://t.co/gtwqIChl45 pic.twitter.com/oaA5jczVP7 — Reuters Business (@ReutersBiz) March 1, 2023 The demand for bonds After a decade of near-zero interest rates around the world, interest rates have risen as central banks scramble to contain inflation, hitting markets as a result. However, amid signs that inflation is coming down and interest rate hikes may be slowing, the bond market could be the main beneficiary. In light of the slowdown in economic growth, markets are betting that central banks will back off from raising interest rates as the risk of a recession mounts. This direction strengthens the demand for bonds, which are perceived as safe assets. Overall, the prospect of a slowdown in interest rate hikes could mean good news for the Developed Markets bond markets, which are expected to see further positive returns in 2023. Global bonds surged 4.1% to start the year, their best performance in over two decades. But the tightening cycle is not over yet, so will the bond market rebound last? https://t.co/TY5CqLlDn9 pic.twitter.com/tqofW9EymP — J.P. Morgan (@jpmorgan) February 28, 2023 What to invest in? Brutal market performance in 2022 has reignited the narrative that active funds can handle market turmoil better than passive peers. But a year is not enough to draw conclusions. Investors have a hard nut to crack when it comes to what to invest in. Should investors turn to active funds?Despite an uptick in success by U.S. stock-pickers, the latest evidence debunks the claim that active funds better navigate market turmoil than their passive peers.Here's our latest Active/Passive Barometer report: https://t.co/XNMFQLNqhl — Morningstar, Inc. (@MorningstarInc) February 28, 2023

Pre-funding before CSPP & CBPP3 tapering Decent supply in February as pre-funding comes before CSPP tapering • Corporate supply amounted to €27bn in February, up on last year’s €14bn but in line with February 2021. Supply on a year-to-date basis is still decent, following the heavy supply in January, currently pencilled in at €68bn. This is running ahead of last year’s €52bn and is more in line with, or slightly ahead of, previous years. The funding environment has been more conducive for issuance, as spreads are stuck around these arguably tight levels. The ECB was still purchasing under its reinvestments, which we expected would push some issuers to pre-fund in the past two months - the central bank will begin tapering its reinvestments now in March, resulting in much less CSPP purchasing. Furthermore, the ECB will put focus on the secondary market, only purchasing green bonds and high ESG-scoring corporates in the primary market. Therefore, we could see supply slow slightly in the coming months. We forecast a small increase on last year’s €258bn, up to closer to €275bn this year. This is still a historically low yearly supply level. • Reverse Yankee supply totalled another €5.5bn in February, now €11bn for the year thus far. The cross-currency basis swap has tightened since October - by about 15bp in the 5yr and 8bp in the 10yr. The cross-currency basis swap is also not historically that wide. At the same time, the USD EUR spread differential has widened, particularly on the 5yr, albeit marginally tighter on the past week. As a result, the 10yr area has opened up an even larger cost-saving advantage for US issuers to issue in Euro and swap back to USD. This is now the case for 5yr too. This creates an attractive cost-saving advantage for Reverse Yankee supply Record-breaking covered bond supply • Covered bond supply remains on record-breaking track with €27bn covered bonds printed in February, resulting in YTD supply reaching a substantial €65bn thus far. Unsurprisingly, this month’s supply is heavily dominated by eurozone banks taking the opportunity to come to the market before the ECB ends its reinvestments of redemptions through the primary market, starting in March. This probably also explains why supply this month is focusing mostly on covered bonds and not so much on unsecured deals, with only €18bn issued in senior unsecured and just €4bn in bank capital. Read the article on ING Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

Substantial corporate supply in February Record-breaking supply YTD thus far at US$171bn • Substantial corporate supply in February, totalling a significant US$126bn. This is the highest monthly supply since March 2021, jumping just slightly higher than March 2022. After US$45bn supplied in January, YTD supply thus far this year sums up to US$171bn. This is significantly larger than previous years, with 2021’s US$140bn the next largest YTD figure. Redemptions were just US$47bn in February, meaning net supply amounted to US$79bn. As a result, net supply YTD is now at US$85bn. • The Healthcare sector saw the most supply last month with US$34bn, followed by US$28bn in TMT. The Utility sector and the Consumer sector also saw notable amounts with US$20bn and US$18bn respectively. Furthermore, a large portion of last month’s supply was longer out on the curve, with US$42bn in the 9-12yr maturity bucket and US$34bn in the 17yr+ maturity bucket. • Reverse Yankee supply totalled another €5.5bn in February, now €11bn for the year thus far. The cross-currency basis swap has tightened since October by about 15bp in the 5yr and 8bp in the 10yr. In addition, the cross-currency basis swap is also not that wide historically. At the same time, the USD EUR spread differential has widened, particularly on the 5yr, albeit marginally tighter on the past week. As a result, the 10yr area has opened up an even larger cost saving advantage for US issuers to issue in euro and swap back to USD. And this is now the case for the 5yr too. This creates an attractive cost saving advantage for Reverse Yankee supply. Financial supply was somewhat low in February, as Bank capital is most favoured • Financial supply was somewhat low at just US$20bn in February. This is marginally lower than previous years, which normally came closer to US$25-30bn. Furthermore, redemptions amounted to US$28bn in February, meaning last month’s net supply was negative at -US$8bn. Financial supply is now sitting at US$87bn on a YTD basis. This is lower than the US$104bn and US$136bn seen in 2021 and 2022 respectively but is closer to the US$91bn seen in 2020. • Interestingly, issuers focussed on Bank capital supply, as US$8bn AT1 and T2 supply came to the market, compared to just US$4bn in Bank senior. Although the reverse can be said about January, therefore on a YTD basis Bank senior supply totals US$59bn, while Bank capital amounts to US$12bn. Read the article on ING Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

While 2023 has started on shaky ground for the municipal bond market, there are reasons to be optimistic for more stability ahead, according to Jennifer Johnston, Franklin Templeton Fixed Income’s Director of Municipal Bond Research. While 2023 has started on shaky ground for the municipal bond market, there are reasons to be optimistic for more stability ahead, according to Jennifer Johnston, Franklin Templeton Fixed Income’s Director of Municipal Bond Research. She explains why California’s issues don’t reflect all states and offers reasons for optimism. Check out the video below featuring Jennifer and Jack Mcgee, senior product manager, Franklin Templeton Fixed Income, to hear more thoughts on muni bonds, including sectors to watch. As we reflect on the disappointing performance of municipal bonds in 2022 and even so far in 2023, the fundamentals really have not been a driving force. In fact, in many cases we have actually seen a peak in terms of muni bond credit quality, and many municipalities are actually stronger today than they were prior to COVID-19. Hopefully, state and local governments have prepared themselves for the next rainy day. Coming into 2023, municipal bond fundamentals were strong as most state and local issuers utilized COVID-19 relief funds to address pandemic costs and economic challenges so the shore up rainy day funds and position themselves for a potential economic slowdown. States in particular entered the year with very strong balance sheets that surpassed levels seen before the pandemic. California an outlier, not an example Following a huge surplus in the prior fiscal year, California now projects a large projected deficit in California for fiscal 2024. California’s budget deficit has gotten a lot of media attention given the state’s sheer size. But the deficit was not a surprise to us as we have been monitoring the state monthly and we think it’s an outlier for a few reasons. However, we feel this volatility is not a trend we see nationwide. California is highly reliant on income taxes as a main revenue source. California’s income tax structure is very progressive and as a result it has a high reliance on capital gains taxes, which were muted during last year’s overall market downturn. We still feel California can utilize its reserve funds (which are the highest in its history) and other budget measures to preserve its fiscal strength over this coming year. We think California can weather this year’s challenges. In contrast, most other states are reporting higher-than-expected income and sales tax receipts. Illinois, for example, is a stronger credit than before the pandemic. The state is projecting an additional US$1.2 billion in revenue since the last projection in November. The state has utilized its surpluses smartly and has prepaid pension expenses and debt. It really has seen a turnaround. The impact of inflation   Inflation not only hits consumers, it hits governments too. Wage inflation has created challenges, but it also increases income taxes, so that can actually have a positive impact for states. Sales taxes also increase as the price of goods increase, and we’ve seen good performance in sales taxes. To combat inflation, interest rates are rising, however, so the cost of borrowing for governments is going up. The good news is that rainy day funds are near all-time highs as states used federal support funds to pay down debt and reduce expenses. So in sum, higher inflation, wage increases, and additional borrowing costs are having a negative impact on budgets, but these are being partially offset with higher tax revenue from additional economic activity. Last year saw many rating upgrades across several states, reflecting their strong financial positions. We continue to evaluate issuers individually, but as a whole, we feel municipal bond fundamentals will remain supportive of the sector throughout 2023. We anticipate that states have the tools to manage the challenging environment. As investors, we think there is always opportunity—and that is still the case today. WHAT ARE THE RISKS? All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Because municipal bonds are sensitive to interest rate movements, a municipal bond portfolio’s yield and value will fluctuate with market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in an investment portfolio adjust to a rise in interest rates, the portfolio’s value may decline. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value.

Markets are understandably skittish about the health of the financial sector, which allows bonds to act as a safe haven. We would be wary of acting on large market moves ahead of a week heavy in event risks – but investors being sidelined might be just what causes such moves A lot of reasons for bonds to rally, but no coherent narrative The reasons for this week’s bond rally are manifold, but they don’t really add up to a coherent change in the macro narrative. Spanish PPI turning negative on both a monthly and annual basis caught markets off guard, just as Schnabel signalled a 50bp hike is on the table the evening before. A couple of more moderate views from Philip Lane and Francois Villeroy helped temper hawkish momentum, but we also think a return of banking worries put investors on alert for a repeat of the bond rally that took place after the Silicon Valley Bank (SVB) failure. A return of banking worries put investors on alert for a repeat of the bond rally that took place after the SVB failure Despite a further sell-off in First Republic Bank shares after its results were published, it is European financials that dragged their domestic equity indices down and provoked a further move to safe havens. This negative correlation between bonds and stock prices – long the norm, though all but vanished in 2022 – probably warrants an explanation. A slowing economy and inflation probably helped on that front. Still, we think it is the growing concern over trouble in the financial sector spilling into the real economy that is allowing investors to give bonds some of their safety value back. For now, however, systemic stress indicators remain at manageable levels. Estr basis and financial CDS indices have ticked up but remain well below stressed levels. Systemic risk indicators have ticked up this week, but remain below stressed levels Source: Refinitiv, ING Sidelined investors, and a sizeable short base As always, market context matters. We’ve flagged recently that yields were approaching the top of their post-SVB range, which may well have provided a signal for dip-buyers to emerge. It should be said at this point that with a lot of event risks on the horizon, including inflation measures, central bank meetings, and banking sector surveys, many investors are probably sidelined. It is likely a reluctance to fade moves, and a willingness to keep their powder dry, that magnifies this sort of move. The large short base in treasury futures is another fact that is reminiscent of early March Although the data come with many caveats – the main one being that not all bond future shorts are directional bets – the large short base in treasury futures is another fact that is reminiscent of early March, before 2Y rallied over 125bp in the space of two weeks. We would expect that post-SVB, appetite for directional rates has ebbed, but data contradicts this view. For what it’s worth, we agree with the direction of the move over the medium term as it is consistent with our view that inflation rates will converge with central bank targets – and there is some way to go before bond yields touch the bottom of their recent range. The March rally in 2Y bonds should have dampened appetite for short positions but data suggests otherwise Source: Refinitiv, ING Today's events and market view Today the Riksbank concludes one of its five annual policy meetings, caught between high core inflation and a falling currency and housing market. We expect a 50bp hike and the door to remain open to more tightening. Germany comes back to primary markets just one day after selling 2Y and 10Y debt. Today, the focus will be on the 15Y area, with two bonds on offer in the sector. US economic releases consist of trade balance, inventories, and durable goods orders. Read next: FX Daily: Hawkish Riksbank can lift the krona today| FXMAG.COM US durable goods orders stand the best chance of moving rates markets today but we suspect short term direction will be dictated by sentiment towards the financial sector (see above). It is not our base case but recent history has shown that these can spill over quickly into broader markets. Absent further contagion, the default mode for government bonds should be to reverse of some of yesterday's gains, reflattening yield curves as a result. Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

Are you worried about the current state of the economy? Do you find yourself constantly checking financial news for updates on market fluctuations? In times of economic uncertainty, it's natural to want to protect your investments. One way to do so is by investing in safe-haven assets that can withstand turbulent markets and provide stability during uncertain times. And when it comes to safe-haven investments, gold reigns supreme! In this blog post, we'll explore why gold is a go-to investment for those seeking security amidst global economic instability.   Image Source: https://unsplash.com/photos/iYsrkq5qq0Q   What is economic uncertainty? Economic uncertainty refers to a situation where the future state of the economy is uncertain or unpredictable. It often arises due to various factors such as political instability, market volatility, trade wars, natural disasters, and pandemics. When investors are unsure about how these external factors might impact the economy in the short or long term, there can be a significant decline in confidence which leads to volatile markets. During times of economic uncertainty, people tend to become more cautious with their investments and financial decisions. They may hold onto cash rather than invest it in riskier assets like stocks or property that could be impacted by an economic downturn. For example, buying gold bullion or bonds can be a safer option during such periods. Plus, investors may also be more hesitant to take on debt or increase spending as a result of the uncertainty surrounding the future of the economy.     What are safe haven investments? One key characteristic of safe haven investments is their ability to hold their value or appreciate in times of crisis. Examples include gold, silver, government bonds, and cash. These assets have historically been seen as reliable stores of wealth because they are not tied to the performance of other markets such as stocks or real estate. Another feature that makes these assets attractive is their low correlation with other traditional investment options. This means that even if the stock market experiences a sharp decline, safe havens like gold can continue to rise in price.     Why is gold a safe haven investment? Gold has been considered a safe haven investment for centuries. This precious metal is known to retain its value, even during times of economic uncertainty. Gold's scarcity and durability make it an attractive option for investors who want to protect their wealth. Gold also has the advantage of being a universal currency. It is accepted around the world as a form of payment and retains its purchasing power across borders. As such, gold investments can offer protection against inflation or depreciation in other currencies. Another reason why gold is considered a safe haven investment is because it has a low correlation with other asset classes like stocks and bonds. This means that when other assets suffer losses due to market volatility, gold may remain stable or even appreciate in value.   Image Source: https://unsplash.com/photos/yoWkkoUbG4E     Economic uncertainty can be daunting for investors who are worried about the safety of their investments. Safe haven investments provide a sense of security during times of economic instability and gold has been proven to be one of the most reliable safe havens throughout history. Not only does gold have intrinsic value, but it is also immune to geopolitical tensions and currency fluctuations. Its ability to retain its value over long periods despite market volatility makes it an essential asset in any diversified portfolio.

Rates Spark: Sterling rates most likely to fall, dollar rates more likely to rise US labour market data could trigger another leg higher in dollar rates but we doubt their euro peers will follow, barring a much stronger inflation print today. Hawkish BoE pricing is vulnerable to a pushback.   US labour market indicators take centre stage The start of the week is proving a constructive one for bonds. It seems the feel-good factor felt by markets, after the White House and House leader McCarthy reached a deal to raise the debt ceiling over the weekend, was short-lived. The deal is due to be voted on today by the lower chamber and later this week by the Senate. We think expectations are for the bill to pass, which also means the market-moving potential of a successful vote is limited. The same cannot be said of any delay on procedural grounds, although more would be needed to shake the market’s optimism.   Instead, the focus should now focus on more fundamental matters for interest rates valuations, namely this week’s two labour market releases. Today sees the publication of the ‘JOLTS’ job openings report, followed on Friday by the non-farm payroll report (which also includes wages). Rate cut expectations last month received a shot in the arm when job openings unexpectedly dropped but payroll data continues to go from strength to strength and we expect investors will be wary of chasing bond yields lower into the report as a result.   We expect investors will be wary of chasing bond yields lower into Friday's job report  

Market stability has remained in place in all major submarkets (FX, bonds & swaps). Although the forint has been weakening in recent days, the exchange rate against the euro has not hit a critical level that could prompt the central bank to back down. Nor do we see any grey clouds hovering over global financial markets that could darken the future. This is certainly a significant help, as it continues to mean a constructive investment environment overall. In addition, the major central banks (Federal Reserve, European Central Bank) have not surprised markets in any meaningful way, which would be drastically countered by the easing of the Hungarian central bank.   Hungarian yield curve   We don't expect any substantive change in the tone of the press release and the expected press conference. The National Bank of Hungary will continue to define the series of interest rate cuts as a function of market stability and remain committed to the principles of gradualism and prudence. Obviously, the central bank will underscore the acceleration of disinflation as a significant factor, but we think that the Monetary Council will still not want to make any substantive comment on a possible cut in the base rate soon. In other words, the sound distinction between market stability and price stability will remain. The forward guidance is, therefore, unlikely to change in light of this.   ING's inflation and base rate forecasts for Hungary   Looking further down the road If the supportive environment remains and market stability is maintained, the NBH is going to continue its series of gradual interest rate cuts of 100bps. Accordingly, the base rate and the effective rate should merge at 13% at the September rate decision, in our base case. As to whether the rate cuts will resume immediately from here or whether there will be a pause, we will only be able to say with a high degree of certainty once we have seen market conditions and the inflation situation in the autumn. At the moment, we would give a higher probability to a pause of one or two months after September. When we see that inflation has fallen to single-digit levels (which could happen as early as November, so the NBH can make a decision in December with this in mind), then the base rate cut will start.

In the dynamic world of financial markets, the interplay between macroeconomic data and central bank decisions can significantly impact various asset classes. We had the opportunity to speak with an FXPrimus expert to gain valuable insights into the current market situation and the influence of these factors on currency quotes, particularly the Turkish lira (TRY) and the British pound (GBP), as well as the broader effects on the US and European stock markets. FXMAG.COM: How will Thursday's (22.06) Turkish central bank's decision on interest rates affect TRY quotes? FXPrimus expert: The past rate cuts by Turkish President Erdogan led to a dramatic decline in the price of the Turkish lira, inflation hit 85.5% last year and as a result the overall cost of living of the country had dramatically increased . In a big U-turn, the central bank of Turkey is expected to increase interest rates to 20% to target the negative impacts of a rising inflation and attract investors to its currency.   FXMAG.COM: How will Thursday's (22.06) Bank of England interest rate decision affect GBP quotes? FXPrimus expert: The Market is already pricing in an interest rate hike from the Bank of England and given that CPI data on the 21st of June was higher than expected and at 8.7%, the BoE has no other choice but to act. More interest rate hikes will be expected after this one to target inflation but this will have negative effect on other aspects of the economy i.e. Bank crisis   FXMAG.COM: In the mid-term, how will last week's Fed and ECB decisions affect the US and European stock markets? FXPrimus expert: As interest rates increase, stock investors become unwilling to trade stock prices as the value for future earnings becomes less attractive against bonds which have a higher yield today, the FED have paused interest rate hikes but it remains to be seen in the upcoming economic data releases whether they will change course. The ECB has slowed the pace at which the interest rates where increased however they have indicated that more hikes are yet to come.

The first half of the year ends on a positive note for equities and not so much for the bonds. This is the exact opposite of what was predicted. The bond markets were supposed to recover due to economic pains which should have led to a more dovish central bank landscape, while equities should have suffered due to the economic woes, slowing spending and recession. But no. Equities did well. Even though profits fell, they fell less than expected and more importantly, AI saved the day sending the Big Tech stocks to a nice bull market. Bonds on the other hand tumbled as US spending and growth remained resilient. The latter convinced the Federal Reserve (FeD) that it should keep hiking the interest rates. The spread between the US 2 and 10-year yield hit nearly 110bp, as an indication of recession in the coming months.  But last week's strong economic data released in the US, combined with Friday's softer-than-expected PCE figures supported, yet again, the idea of a soft landing and further fueled the rally in stocks. As such, the S&P500 hit a fresh year high at the last trading day of the first half and gained more than 17% so far this year, while Nasdaq 100 soared more than 40%! Apple hit $194 per share, and closed last week with a valuation above $3 trillion.   Of course, this incredible performance makes many investors wonder whether the equit rally could continue in the second half.     On the data dock  The Reserve Bank of Australia (RBA) is expected to keep its rate unchanged at this week's policy meeting, after being partly responsible of the latest hawkish spree in global central bank expectations when it raised rates unexpectedly the last time. A no action from the RBA could calm down the nerves this week. But for that, we must also see loosening in US jobs data. Due Friday, the US NFP is expected to print more than 220K nonfarm job additions in June, with steady wage growth of around 0.3% over the month. The best scenario for stock investors is a strong NFP read combined with softening wages growth.   In China, Caixin manufacturing index for China came in slightly better than expected, and slightly above the 50 threshold, though sentiment weakened to an 8 month low and new orders rose at a softer pace. China could recover in the H2 amid People's Bank of China's (PBoC) efforts to boost growth, but we won't get the growth bang that we were looking for. That means that we will probably bypass a dangerous long-lasting rally in energy and commodity prices, which could help central banks contain inflationary pressures with more success.   For now, oil prices remain mostly ranged despite OPEC's malicious efforts to boost them artificially. The barrel of crude jumped past the $70 level on the back of a broad-based risk rally following the US softer than expected PCE read, which fueled some dovish central bank expectations. The Chinese data also give some support this morning, but the 50-DMA, near $71.30pb will likely act as a solid resistance. This week, risks remain tilted to the upside, as OPEC meets with the industry heads. This week's meeting is not a policy meeting so there won't be any production cuts, or any important decision from OPEC, but what we could well hear slowing demand forecasts, which would then bring traders to assess another production cut from OPEC down the road. In all cases, we have seen clearly that cutting production hasn't been enough for a sustained price rally so far. Therefore, any rally triggered by comments could be interesting top selling opportunities for short-term traders.   Tesla delivered a record number of cars worldwide in Q2, something like 466K cars, as Elon Musk is up to aggressively cutting prices to boost volume. It looks like it is paying off. The latest figures will likely keep Tesla shares on a positive path to challenge the $280 level again. But competition is not far. The Chinese BYD did better than Tesla, selling more than 700K cars last quarter, its best-ever quarter as well. BYD shares jumped 2.70% in Hong Kong.   

FX Daily: Dollar late to the party Treasuries are hitting key levels on big US data surprises, but the dollar is not finding real support. The dollar may be mirroring some lingering reluctance to align with the dot plot’s two hikes, but market conditions point to a stronger greenback in the near term, barring a substantial downside surprise in payrolls today. Watch jobs numbers in Canada too.   USD: Surprisingly soft The large and unexpected jump to almost 500k in ADP private payroll numbers yesterday left clear marks across asset classes. Despite some recovery later in the session, US equities took a hit, and European ones closed with a nearly 3.0% loss. Treasuries are now trading around the two key benchmarks: 5.0% for the 2Y and 4.0% for the 10Y after a disastrous session for bonds. This would appear to be the perfect recipe for a substantial dollar rally, which hasn’t materialised however, and we are observing instead some dollar selling this morning. Indeed, the dollar had already moved in advance of yesterday’s release as the minutes had offered clear hawkish hints on Wednesday. Incidentally, markets still appear unconvinced to fully price in two rate hikes by the Fed despite the strong ADP (which arguably aren’t hard data, and have been misleading at times) and ISM services figures. The Fed funds curve has not shifted particularly higher, with the peak rate still seen at 36bp from here, so 14bp short of dot plot projections. In a way, the dollar might still be mirroring that lingering market pricing-dot plot gap. At the same time, the market backdrop does seem to point at dollar strength at this juncture, as we doubt this morning’s mild USD correction will have legs unless US payrolls released later today move in the direction of ADP figures and surprise on the downside. The consensus for the headline jobs number is 230k, but may be higher after the strong ADP read. Unemployment is also expected to tick lower to 3.6% and some focus will, as usual, fall on wage growth. Barring major disappointments, it should not take much to keep the Fed’s hawkish narrative going, and markets should have room to keep inching closer to the pricing in two rate hikes. The path for a more supported dollar in the near term appears to be the most obvious one, in our view, and a return above 104.00 in DXY in the coming days looks likely.

FX Daily: Dollar late to the party Treasuries are hitting key levels on big US data surprises, but the dollar is not finding real support. The dollar may be mirroring some lingering reluctance to align with the dot plot’s two hikes, but market conditions point to a stronger greenback in the near term, barring a substantial downside surprise in payrolls today. Watch jobs numbers in Canada too.   USD: Surprisingly soft The large and unexpected jump to almost 500k in ADP private payroll numbers yesterday left clear marks across asset classes. Despite some recovery later in the session, US equities took a hit, and European ones closed with a nearly 3.0% loss. Treasuries are now trading around the two key benchmarks: 5.0% for the 2Y and 4.0% for the 10Y after a disastrous session for bonds. This would appear to be the perfect recipe for a substantial dollar rally, which hasn’t materialised however, and we are observing instead some dollar selling this morning. Indeed, the dollar had already moved in advance of yesterday’s release as the minutes had offered clear hawkish hints on Wednesday. Incidentally, markets still appear unconvinced to fully price in two rate hikes by the Fed despite the strong ADP (which arguably aren’t hard data, and have been misleading at times) and ISM services figures. The Fed funds curve has not shifted particularly higher, with the peak rate still seen at 36bp from here, so 14bp short of dot plot projections. In a way, the dollar might still be mirroring that lingering market pricing-dot plot gap. At the same time, the market backdrop does seem to point at dollar strength at this juncture, as we doubt this morning’s mild USD correction will have legs unless US payrolls released later today move in the direction of ADP figures and surprise on the downside. The consensus for the headline jobs number is 230k, but may be higher after the strong ADP read. Unemployment is also expected to tick lower to 3.6% and some focus will, as usual, fall on wage growth. Barring major disappointments, it should not take much to keep the Fed’s hawkish narrative going, and markets should have room to keep inching closer to the pricing in two rate hikes. The path for a more supported dollar in the near term appears to be the most obvious one, in our view, and a return above 104.00 in DXY in the coming days looks likely.

ASW tightening for the rest of the year Given CZGBs supply dynamics, which are trending towards pre-Covid levels, and fiscal consolidation, which is a positive outlier among CEE peers, we expect the asset swap spread (ASW) to return to negative territory, a historically usual level for the spread vs the interest rate swap (IRS) curve. On the CZGBs side, we expect the government's consolidation package to take the main spotlight in late summer/early fall and later the MinFin to start focusing on CZGBs supply for next year, which should be positive for bonds. Moreover, on the IRS side, the market is already pricing in a near return of the Czech National Bank rate to the equilibrium level of 3% at this point, which should limit the further decline of the long-end in the IRS curve. Overall, we are positive on CZGBs and see a case for significant ASW tightening in the second half of the year.   10y CZGBs ASW (bp)

The recent US Consumer Price Index (CPI) reading has caused some ripples in the market, prompting discussions on its implications for future monetary policy by the Federal Reserve. We reached out to Marco Turatti, an expert in the field, to shed light on the matter. According to Turatti, the CPI numbers came as a downside surprise, with both the headline and core components showing a decline on both monthly and annual bases. This decline in prices has been even faster than the previous rise, with the Producer Price Index (PPI) leading the way. Despite the rally in equities and bonds, Turatti notes that there has been minimal change in rate expectations. The likelihood of a 25 basis points hike this month remains unchanged at 92%, and the terminal rate is only down by 3 basis points to an expected level of 5.37% by November.     FXMAG.COM: Please comment on the US CPI reading. What does it mean in terms of further Fed monetary policy?   Marco Turatti:  The CPI number yesterday was a downside ''surprise'' in both its headline and core components, both on a monthly and annual basis. The decline in prices is even faster than the previous rise, with the PPI leading the way. Despite the equity and bond rally, very little has changed in terms of rate expectations: the chance of a 25 bps hike this month is unchanged at 92%, as is the terminal rate, down only 3 bps to the 5.37% level expected for November (meaning a second hike is not yet priced in). Prices are going down but wages (and second hike effects) may worry: their real growth is now at the highest since March 2021 (1.2%).

Early in the European session, gold (XAU/USD) is trading around 1,894.45, above the 21 SMA, and below the 200 EMA located at 1,904. On the H1 chart, we can see that gold broke the bearish trend channel formed since August 8 and it is expected to consolidate above 1/8 Murray located at 1,890 in the next few hours.     If this scenario occurs, then the instrument could reach the 200 EMA located at 1,904 or go up to 2/8 Murray located at 1,906. 10-year US Treasury yields are trading above 4.3% as investors expect the Fed to continue raising interest rates in September 2023. Bonds and gold are inversely correlated. Since these are overbought, a fall in bonds is expected in the next few days, so it will be seen as an opportunity to buy gold.   We can see that gold is overbought according to the 1-hour chart. Hence, we could expect a technical correction to occur in the next few hours towards the 1,888 area and then from there, a technical rebound could follow.   In case the XAU/USD pair continues to rise, we could expect it to reach 1,906. We could use this opportunity to sell. The eagle indicator is showing an overbought signal. We expect gold to reach the 1,888 level and this will give us an opportunity to buy at a low price. Conversely, a sharp break below the low reached so far around 1,885, could be seen as a continuation of the downward movement. Therefore, the instrument could reach 1,875 and finally 1,867.  

Remember that 'back to school' feeling at the end of summer? A tedious car journey home after holiday fun, knowing you'll be picking up where you left off? I'm afraid we've got a very similar feeling about the global economy right now. 'Are we nearly there yet?'. No. Very few reasons to be cheerful Lana del Rey's Summertime Sadness classic comes to mind as we gear up for autumn. And I'm not just talking about chaotic weather or even, in my case, disappointing macro data. Most of us have had the chance to recharge and rethink over the past couple of months. and I'm afraid all that R&R has done little to brighten our mood as to where the world's economy is right now. Sure, the US economy has been holding up better than we thought. And yes, the eurozone economy grew again in the second quarter. Gradually retreating headline inflation should at least lower the burden on disposable incomes. And let's be thankful for the build-up of national gas reserves in Europe, which should allow us to avoid an energy supply crisis this winter unless things turn truly arctic. But that's about as upbeat as I can get. We still predict very subdued growth to recessions in many economies for the second half of the year and the start of 2024. The stuttering of the Chinese economy seems to be more than only a temporary blip; it seems to be transitioning towards a weaker growth path as the real estate sector, high debt and the ‘de-risking’ strategy of the EU and the US all continue to weigh on the country's growth outlook. In the US, the big question is whether the economy is resilient enough to absorb yet another potential risk factor. After spring's banking turmoil, the debt ceiling excitement, and more generally, the impact of higher Fed rates, the next big thing is the resumption of student loan repayments, starting in September. Together with the delayed impact of all the other drag factors, these repayments should finally push the US economy into recession at the start of next year. And then there's Europe. Despite the weather turmoil, the summer holiday season seems to have been the last hurrah for services and domestic demand in the eurozone. Judging from the latest disappointing confidence indicators, the bloc's economy looks set to fall back into anaemic growth once again   Little late summer warmth This downbeat growth story does have an upbeat consequence; inflationary pressure should ease further. It's probably not going to be enough to bring inflation rates back to central banks’ targets, but they should be low enough to see the peak in policy rate hikes. Central bankers would be crazy to call an end to those hikes officially; they don't want to add to speculation about when the first cuts might come, thereby pushing the yield further into inversion. And there's also the credibility issue - you never know, prices might start to accelerate again. So, expect major central bankers to remain hawkish at least until the end of the year. In our base case, we have no further rate hikes from the US Federal Reserve and one final rate rise by the European Central Bank.   However, in both cases, these are very close calls, and the next central bank meetings are truly data-dependent. Sometimes, a Golden Fall or Indian Summer can make up for any summertime sadness. But it doesn’t look as if the global economy will be basking in any sort of warmth in the coming weeks. The bells are indeed ringing loud and clear. Vacation's over; school is here. And while I'm certainly too old for such lessons, I'm taken back to that gloomy, somewhat anxious feeling I had as a kid as summer wanes and the hard work must begin once again.   Our key calls this month: • United States: The US confounded 2023 recession expectations, but with loan delinquencies on the rise, savings being exhausted, credit access curtailed and student loan repayments restarting, financial stress will increase. We continue to forecast the Federal Reserve will not carry through with the final threatened interest rate rise. • Eurozone: The third quarter may still be saved by tourism in the eurozone, but the latest data points to a more pronounced slowdown in the coming months. Inflation is falling, but a last interest rate hike in September is not yet off the table. The European Central Bank will be hesitant to loosen significantly in 2024. • China: The latest activity data has worsened across nearly every component. Markets have given up looking for fiscal stimulus, and have started making comparisons with 1990s Japan. We don’t agree with the Japanification hypothesis, but clearly a substantial adjustment is underway, and we have trimmed our growth forecasts accordingly. • United Kingdom: Uncomfortably high inflation and wage growth should seal the deal on a September rate hike from the Bank of England. But emerging economic weakness suggests the top of the tightening cycle is near, and our base case is a pause in November. • Central and Eastern Europe (CEE): Economic activity in the first half of the year has been disappointing, leading us to expect a gloomier full-year outlook. Despite this, we see a divergence in economic policy responses, driven by countryspecific challenges. • Commodities: Oil prices have strengthened over the summer as fundamentals tighten, whilst natural gas prices have been volatile, with potential strike action in Australia leading to LNG supply uncertainty. Chinese concerns are weighing on metals, but grain markets appear more relaxed despite the collapse of the Black Sea deal. • Market rates: The path of least resistance is for longer tenor rates to remain under upward pressure in the US and the eurozone and for curves to remain under disinversion (steepening) pressure. We remain bearish on bonds and anticipate further upward pressure on market rates from a tactical view. • FX: Stubborn resilience in US activity data and risk-off waves from China have translated into a strengthening of the dollar over the summer. We still think this won’t last much longer and see Fed cuts from early 2024 paving the way for EUR:USD real rate convergence. Admittedly, downside risks to our EUR/USD bullish view have grown.     Inflation has only been falling for a matter of months across major economies, but the debate surrounding a possible “second wave” is well underway. Social media is littered with charts like the ones below, overlaying the recent inflation wave against the experience of the 1970s. These charts are largely nonsense; the past is not a perfect gauge for the future, especially given the second 1970s wave can be traced back to another huge oil crisis. But central bankers have made no secret that nightmares of that period are shaping today's policy decisions. Policymakers are telling us they plan to keep rates at these elevated levels for quite some time.

Secured financing for future operations Since its inception, XTPL has financed itself mainly through share issues (total proceeds of PLN 40mn in 2016-20). In 2020, the company decided to issue series A registered bonds convertible into series U shares of the company (total value of the bonds is PLN 3.6mn). As a result of discussions with bondholders in July 2022, bonds worth PLN 0.2mn (2.993 series A bonds) were redeemed, and for the remaining bonds worth PLN 3.4mn, the maturity date was extended from July 30, 2022, to January 30, 2024, and the interest rate was increased from 2% to 5% per annum.     At the end of 1Q23, the company held PLN 3.7mn in cash and bank deposits. In 2Q23, 275,000 shares were issued at a price of PLN 133 per share (total value PLN 36.6mn, issue cost PLN 2mn). Taking into account the share issue and the estimated net loss, the company should have about PLN 40mn in cash at the end of 2Q23. Such a level of funds should ensure a solid base to carry out investments in business growth planned for 2023-26 (the financing of investments also includes funds generated from operations and proceeds from grants).   Incentive scheme In April 2019, an incentive program was passed. On the basis of the program resolution, a conditional increase in share capital was made by issuing no more than 182,622 Series R ordinary shares with a nominal value of PLN 0.10 each. Series R shares will be available for acquisition by holders of registered series A subscription warrants issued in a number not exceeding 182,622 at a price of PLN 165.84. The incentive program covers the years 2019-21. Participants in the program will have the right to exercise the warrants no later than April 23, 2029. On March 31, 2022, XTPL employees and associates were granted the right to purchase 22,105 shares and 50,000 warrants. The valuation of the granted financial instruments in 2022 amounts to PLN 1,149 thousand and was included in the financial data for 2022. From 2019 to the end of 2022, the costs of the incentive program totaled PLN 16.2mn.   2Q23 results preview The company will publish its 2Q23 results on September 20, 2023, probably after the close of the trading session. According to preliminary data released by the company, we assume PLN 3mn in revenue in 2Q23, down q/q and y/y. We assume R&D costs at a similar level q/q and slightly lower y/y. Increased activity on the sales side should boost G&A expenses. We assume a slightly positive balance on financing activities q/q. In summary, we assume worse net income q/q and y/y, due to lower sales (lower subsidy income y/y) and rising costs, due to investments in sales growth. We note that the high volume of orders for DPS equipment in 1H23 should have a positive impact on revenue recognized in 2H23.  

US and European equity futures markets trade higher with Asian markets also climbing on cautious optimism the Federal Reserve may decide to pause rate hikes after US core inflation advanced the least in two years. The dollar and Treasury yield both trade softer ahead of US retail sales with the euro ticking higher as traders' price in a two-third chance of a rate hike from the European Central Bank later today. Crude trades near a ten-month high on concerns about a supply shortfall, copper higher on yuan strength while gold prices have steadied following a two-day decline.   Equities: S&P 500 futures are holding up well against recent weakness trading around the 4,530 level despite yesterday’s higher-than-expected US inflation opening the door for the Fed to hike interest rates one more time in December. Arm IPO was priced at the top end of the range at $51 per share with trading set to being today. Adobe earnings after the US market close could be a key event for the AI-related cluster of stocks. FX: The US dollar wobbled on the CPI release but could not close the day higher with Treasury yields slipping. EUR in the spotlight today as ECB decision is due, and EURUSD has found support at 1.07 for now with a rate hike priced in with over 65% probability. USDJPY trades softer after government minister talked about the need for strong economic measures. Yuan strengthened further with authorities increasing bill sales in Hong Kong to soak up yuan liquidity making it more expensive to short the currency. Commodities: Brent holds above $92 and WTI near $90 after the IEA joined OPEC’s warnings of a supply shortfall in the coming months, thereby supporting a rally that started back in June when Saudi Arabia curbed supply to boost prices. Softening the rally was a weekly US stock report showing rising stocks and production near the 2020 record. Near-term the market looks overbought and in need of a pullback. Gold looking for support ahead of $1900 with a hawkish FOMC pause back on the agenda while copper trades firmer with a stronger yuan offsetting a rise in LME stocks to a two-year high Fixed income: The US yield curve bull-steepened yesterday despite higher-than-expected CPI numbers, indicating that the Federal Reserve might be approaching the end of the hiking cycle. Yet, long-term yields remained flat as the 30-year auction showed a drop in indirect demand and tailed by 1bps despite pricing at the highest yield since 2011. Overall, we remain cautious, favouring the front part of the yield curve over a long duration. Bonds will gain as the economy starts to show signs of deceleration. Still, larger coupon auction sizes and a hawkish BOJ will support long-term yields unless a tail event materializes. We still see 10-year yields rising further to test strong resistance at 4.5%. Today, the focus will be on the ECB, which markets expect to hike. Due to a recession in Germany and in Netherlands, we believe that the ECB will deliver a hawkish pause today, which might result in a short-lived bond rally. Macro: US CPI surprised to the upside, but it did not alter the markets thinking around the Fed. Core CPI rose 0.3% MoM, or +0.278% unrounded, above the prior/expected +0.2%, with core YoY printing 4.3%, down from July's 4.7%, and in line with expectations. Headline print was in line with expectations at 0.6% MoM, up from +0.2% on account of energy price increases, with YoY lifting to 3.7% from 3.2%, above the expected 3.6%. The PBoC announced plans to issue RMB15 billion Central Bank Bills in Hong Kong on September 19, which is going to tighten CNH (offshore renminbi) liquidity further In the news: Asset managers BlackRock and Amundi are warning that US recession risks are rising – full story in the FT. Germany is facing big structural problems in its manufacturing sector with gloom taking over among workers – full story in the FT. The EU is weighing tariffs against China over flooding the market with cheap electric vehicles – full story on Reuters. Technical analysis: S&P 500. Key at resistance at 4,540. Key Support at 4,340. Nasdaq 100 15,561 is key resistance. EURUSD downtrend, support at 1.0685, Expect short-term bounce to 1.08. AUDJPY testing resistance at 95.00. Crude oil uptrend stretched, expect a correction lower Macro events: ECB Main Refinancing Rate exp. unchanged at 4.25% (1215 GMT), US Retail Sales (Aug) exp. 0.1% vs 0.7% prior (1230 GMT), US Initial Jobless Claims exp. 225k vs 216k prior (1230 GMT), US PPI (Aug) exp. 0.4% vs 0.3% prior (1230 GMT), Commodities events:  EIA’s Weekly Natural Gas Storage Change (1430 GMT) Earnings events: Adobe reports FY23 Q3 earnings (ending 31 August) after the US market close with analyst expecting revenue growth of 10% y/y and EPS of $3.98 up 63% y/y. Read our earnings preview here.  

Middle East tensions set to see lower European open US markets finished the week higher after the latest September jobs report showed the US economy added a staggering 336k jobs in September, while August was revised up to 227k, pushing long-term yields sharply higher, and the US-10 year and 30-year yield hitting fresh 16-year highs.   Having spent most of the last few weeks fretting about the prospect of another rate hike and higher rates for longer the thinking now appears to be that a resilient economy and jobs market could mean that companies will be able to deliver better revenues and earnings growth, even with yields at current levels. While that logic comes across as sound on the face of it that rather precludes the idea that rates can't go higher from here. Before the horrific events in Israel over the weekend, the market was pricing in the probable prospect that we may get another 25bps rate hike in November, however what happens if the decline in oil prices that we saw at the end of last week takes another sustained leg higher, if those events morph into a wider crisis across the Middle East?     Consumers may well be resilient now and able to absorb a few more months of rising prices, but the recent pay settlements agreed in recent weeks have yet to feed through into the wage numbers which might mean the US central bank has to raise rates by more than is currently priced.   In a sign that the US consumer is already reaching its limits when it comes to spending on credit cards, US consumer credit for August declined by -$15.6bn, the most in 3 years, against an expectation of an increase of $11.7bn. Some of that decline may be down to the resumption student loan repayments, while auto-loan payments also fell.     That said the events over the weekend and the Hamas atrocities in Israel, and the latter's reaction to them and subsequent declaration of war, have prompted a move into the US dollar, gold as well as a modest bid into bonds, as concerns over escalation risks move to front of mind. With the US Columbus Day holiday likely to keep US trading activity subdued, we expect to see European markets open modestly lower this morning, while oil prices have rebounded from the lows of last week.    For now, the market reaction has been fairly contained as we look towards this week's release of the latest Fed minutes as well as the September CPI report, but attention will never be far from events in Israel given the risk we could escalate further if Iran gets drawn into the fray, which is entirely possible if Israel decides that it bears responsibility for the attack.     EUR/USD – continues to pull away from the lows of last week, with support at the 1.0400 level which is 50% pullback of the 0.9535/1.1275 up move, followed by 1.0200. To stabilise we need to move through 1.0620 for a retest of the 1.0740 area.    GBP/USD – the rebound off the lows last week at the 1.2030/40 area, needs to overcome the 1.2300 area to signal a move back to the 1.2430 area and 200-day SMA. A move below 1.2000 targets the 1.1835 area which equates to a 50% retracement of the move from the record lows at 1.0330 to the recent peaks at 1.3145.       EUR/GBP – still range trading with resistance at the 0.8700 area and resistance at the 200-day SMA at 0.8720, which is capping the upside. A break of 0.8720 targets the 0.8800 area, however while below the bias remains for a move back to the 0.8620 area.   USD/JPY – has managed to hold above the spike lows of last week. With no official confirmation that intervention took place, any further moves back to the 150.16 highs could be choppy. Below 147.30 signals the top is in and a possible move towards 145.00.   FTSE100 is expected to open unchanged at 7,494   DAX is expected to open 71 points lower at 15,158   CAC40 is expected to open 24 points lower at 7,036  

Investing is an essential part of securing your financial future, and the first step to creating a sound investment portfolio is educating yourself on the different types of investments available. Commodities can be an excellent option for those who want to diversify their investment strategies beyond stocks and bonds. Commodities are often seen as risky investments due to their high volatility. Yet, if you're willing to take the time to understand how they work and develop some strategies for trading them long-term, they can be advantageous additions to any portfolio. Here, we will discuss how beginners can start investing in commodities and help create a successful portfolio with minimal risk involved.   Understand the different types of commodities available for investment  Investing in commodities can be an attractive financial opportunity for those looking to diversify their investment portfolio or hedge against inflation. Many commodities include precious metals, energy sources like crude oil and natural gas, and agricultural products such as wheat, corn and soybeans. Each commodity has its unique market dynamics, which supply and demand, geopolitical tensions, and weather conditions can affect it.     Understanding the different types of commodities available for investment can help investors make informed decisions about where to allocate their money, depending on their goals and risk tolerance. With the proper knowledge and approach, commodity investing can be valuable to an individual's investment strategy. Learn more here about the different commodities available for investment.     Research current market trends and the supply/demand dynamics of commodities  Before investing in commodities, it is essential to research and analyse the current market trends and supply/demand dynamics of the specific commodities you are interested in. It can involve keeping up-to-date with global news, geopolitical events, and economic indicators that could impact commodity prices.    It is also essential to understand how supply and demand affect commodity prices. For example, if there is an increase in demand for a particular commodity but a decrease in supply, the cost of that commodity will likely go up. Conducting thorough research and staying informed can help investors make well-informed decisions when investing in commodities.    Learn about the risks associated with investing in commodities and how to manage them  Investing in commodities comes with its fair share of risks, and beginners must understand them before diving into the market. One common risk associated with commodity investing is volatility. Commodities are known for their volatile nature, and prices can fluctuate significantly in a short amount of time.    Another risk is the influence of external factors such as weather conditions, geopolitical tensions, and economic policies. These factors can impact the supply and demand dynamics of commodities and, in turn, affect their prices.    To manage these risks, beginners should consider diversifying their investments across different types of commodities to minimise their exposure to a single commodity's price fluctuations. Additionally, conducting thorough research and staying informed about market trends can help mitigate risks associated with commodity investing.    Determine an investment strategy that fits your budget and risk tolerance  Once you understand the different types of commodities, market trends, and risks associated with investing in commodities, the next step is to determine an investment strategy that fits your budget and risk tolerance. It is important to remember that commodity investing should only be considered part of a well-diversified portfolio and not the sole focus of an investment strategy. Consider the amount of capital you are willing to invest and your risk tolerance before deciding on a method.     Some common strategies for commodity investing include buying physical commodities such as gold or silver, trading futures contracts, or investing in commodity ETFs (exchange-traded funds). It is also essential to regularly review and adjust your investment strategy as needed.    Choose a reliable broker to execute trades on your behalf  To invest in commodities, you must use a broker to execute trades on your behalf. Choosing a reliable and reputable broker with experience in commodity trading is crucial. Look for brokers that offer competitive fees, have a user-friendly trading platform, and provide access to various types of commodities.    It is also essential to do your due diligence and research the broker before deciding. Reading reviews and seeking recommendations from experienced commodity investors can also help you choose the right broker for your investment needs.    Open an account and begin trading commodities  Once you have chosen a reliable broker, the next step is opening an account and trading commodities. Most brokers will require you to fill out an application and provide identification documents before opening an account. Some brokers may also need a minimum deposit amount to start trading.    Before making any trades, it is essential to thoroughly understand the trading platform and any associated fees or charges. Start with small investments and gradually increase your exposure to commodities as you gain experience and confidence in the market.  //

Monitoring Hungary: The moment of truth approaches In our latest update, we reassess our Hungarian economic and market forecasts. We think that over the coming weeks, it will become clear whether the risks to our base case scenario have materialised. We remain positive but cautious as we await the new data.   Hungary: at a glance The Hungarian government responded to the nine questions from the European Commission, and our sources indicate that the net 90-day review period has recommenced. There are just under 10 days remaining until the final decision. The technical recession probably ended in the third quarter of this year, and the next GDP figure will therefore bring a moment of truth. Nevertheless, a full-year recession cannot be avoided. Recent retail sales and industrial production data have disappointed, and the question remains whether we can expect a turnaround in the short term. Real wages will flip back to positive by September, but we doubt that the impact on consumption will be significant and we expect the labour market to remain tight. Energy price-related consequences of geopolitical risks will be a crucial factor in determining whether the current account will have a slight surplus by the year-end. Recent inflation dynamics have shown more promise than we or the market expected, giving the National Bank of Hungary (NBH) ammunition to argue for larger rate cuts. On the other hand, the biggest question remains whether the risk environment will allow the central bank to continue the rate-cutting cycle at the same pace. While the government revised the 2023 ESA-based deficit target to 5.2% of GDP, we need more evidence to assess whether the updated target can be met or not. The forint survived the first rate cut in the base rate without major damage. After some short-lived weakness and volatility, the forint should continue to strengthen. In the rates space, we can expect further steepening of the IRS curve again, while in bonds we need to see progress in the EU money story and a clearer fiscal policy picture for a significant rally.   Quarterly forecasts   Will the longest technical recession end in the third quarter? Hungary has been in a technical recession for a year now, with economic activity contracting in all sectors except agriculture in the first half of 2023. The positive contribution from agriculture in the second quarter was not enough to pull the economy out of a technical recession, as the collapse in domestic demand weighed on all sectors. This time around, we expect the technical recession to end in the third quarter on the back of the agricultural outperformance. Favourable weather conditions combined with a good harvest season support our view. 14 November will be the moment of truth – when the third quarter GDP data is due. Nonetheless, agriculture alone will prove insufficient in generating a positive balance in the entire economy this year. In our view, a 0.5% recession awaits us in 2023.   Real GDP (% YoY) and contributions (ppt)   Is the deterioration in export sales a turning point for industry? Industrial production surprised on the downside in August, as production volumes declined by 2.4% month-on-month, contributing to a sharp fall in output of 6.1% year-on-year. At a sectoral level, the picture remains unchanged from recent months, with volumes expanding only in the electrical and transport equipment sub-sectors. However, in contrast to the dynamics of recent months, this time export sales deteriorated in line with domestic sales – which may explain the large drawdown in overall output. We suspect that export sales may pick up as the dismal August figure was more the result of factory shutdowns, but subdued global demand limits the export outlook. Nevertheless, barring an ugly surprise in September, the expected industrial performance in the third quarter should be better than in the second quarter. This should help the economy to emerge from its technical recession.   Industrial production (IP) and Purchasing Manager Index (PMI)   Will the turnaround in real wages boost retail sales? The retail sector is suffering from the cost of living crisis. The volume of sales in August fell by 7.1% YoY, while on a monthly basis, the overall volume declined by 0.5%. At the component level, food and fuel sales both contracted, while non-food retailing stagnated compared to last month. These dynamics are broadly in line with those seen in previous months, but the main question now is whether the turnaround in real wages will lead to a pick-up in consumption. We suspect that the answer is no, as we believe that households will mainly deleverage and/or rebuild their savings before consumption picks up. In this regard, the 10-year low in households’ consumer confidence index supports our view. We therefore believe that the impact of the turnaround in real wages will not markedly boost consumption until 2024, leaving the rest of this year’s retail sales figures in the red.   Retail sales (RS) and consumer confidence    

Asia Morning Bites 2 November 2023 Asian markets digest US Treasury yield swing ahead of payrolls release tomorrow.   Global macro and markets Global markets: If last night’s FOMC meeting was supposed to be a “hawkish pause”, then markets weren’t listening. Yields on the 2Y US Treasury note dropped 14.4bp, taking them below 5% (4.944%), and there was an even bigger drop at the longer end. 10Y yields fell 19.7bp to 4.734%, and implied rates now show a 25bp cut priced in at the June meeting in 2024. FX markets are still a bit mixed and may spend today catching up with the implications of the drop in yields. EURUSD is fractionally higher at 1.0582, having drifted lower for most of yesterday. The AUD is looking stronger, probably as markets (and ourselves) are firmly of the view that the RBA actually hikes rates again next week, closing the policy rate gap with the US a bit. AUDUSD is now up to 0.6418. Cable is also a little higher after a choppy session, and is currently trading at 1.2177, while the JPY has edged slightly down from yesterday’s highs to 150.65. Losses from the THB, KRW and IDR yesterday will likely reverse today and follow the AUD and JPY. US stock markets were lifted by the drop in bond yields. The S&P 500 rose 1.05%, while the NASDAQ was up 1.64%. Chinese stocks were broadly flat yesterday. G-7 macro: Here is a link to our US economist, and FX and rates strategists’ note on the FOMC meeting. The twin features of the Fed suggesting that higher yields are doing some of their work for them, plus lower supply issuance pressures at the longer end are probably the main causes of the big drop in yields overnight. Nevertheless, the Fed is still leaning towards higher, not lower rates, so last night’s bond swing may not be the end of the story just yet. Ahead of the non-farm payrolls release tomorrow, yesterday’s ADP print was 113K. That is close to its 89K reading last month, which was hopelessly inaccurate, so it is anyone’s guess if this is a useful, or contrarian steer ahead of payrolls. Perhaps more ominously, the manufacturing ISM slowed sharply. The headline ISM index was already in negative territory in September (49.0), but dropped to a much weaker 46.7 reading in October, with a sub-50 employment index too (46.8). New orders also dropped sharply to 45.5. Today’s US macro data is the final durable goods/factory orders data for September, which won’t have much additional bearing on the market in all likelihood. The Eurozone releases its own manufacturing PMI data today. Korea: Consumer price inflation unexpectedly rose to 3.8% YoY in October (vs 3.7% in September, 3.6% market consensus, 3.9% INGf). Korea’s inflation has been reheating for three months in a row after the recent low of 2.3% in July.  Food and energy was the main reason for the rise; fresh food (12.1%), gasoline (6.9%), public transportation fees (11.3%), taxi (20%), and dairy products (milk 14.3%). Core inflation excluding food and energy edged down to 3.2% YoY, but has stubbornly stayed around that level for four months. Looking ahead, we expect headline inflation to climb even more to touch the 4% level in November but we look for core inflation to ease down into the 2% range, mostly due to base effects. This will make it more likely that the BoK will hold its hawkish stance longer than expected, but another rate hike possibility is still low. Japan: Prime Minister Fumio Kishida is planning to announce an economic stimulus package. The planned size, JPY21.8 trillion, is smaller than in the pandemic era, but still higher than the market expected. But markets seem a little sceptical of the positive impact this stimulus package will have on the economy. A highlight of the stimulus is income and residential tax rebates to aid households (especially low-income households), hit by higher inflation. But the impact of tax rebates is usually smaller than cash transfers or shopping vouchers. Also, the rebates will only be temporary, thus the impact could be limited. Australia: Australia's trade surplus narrowed sharply in September. Exports fell 1.4% MoM, (partly reversing last month's 4.5% gain). But the main damage was done by a solid 7.5% MoM increase in imports, with imports of capital goods rising especially strongly, taking the surplus down from AUD10.2bn to AUD6.8bn.  Malaysia: Bank Negara Malaysia will meet today to discuss policy rates, and is unanimously expected to leave rates unchanged at 3.0%. inflation is currently only 1.9%YoY, so there is no need for them to tighten at this stage. 

Mixed feelings By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   The Federal Reserve (Fed) President Jerome Powell pushed back against the rate cut bets at his speech given in Atlanta last Friday. He is of course playing the card of 'high for long' rates to tame inflation, yet he hinted that the Fed will probably not hike rates when it meets this month. He said that the US monetary policy is 'well into restrictive territory' and that the fell of effect of higher rates to combat inflation is working its way through economy. 'We are getting what we wanted to get,' said Powell. And indeed, inflation is cooling, people start to spend less, and the job market loosens. But in parallel, the financial conditions are loosening fast, as well. Hence the market optimism and stocks/bond gains become increasingly vulnerable to hawkish Fed comments, and/or strong economic data. The US jobs data will take the center stage this week. Investors expect further fall in US jobs openings, less than 200'000 job additions last month with slightly higher pay on month-on-month basis. The softer the data, the better the chances of keeping the Fed hawks away from the market.   Unsurprisingly, the part of Powell's speech where he pushed back against rate cut expectations went fully unheard by investors on Friday. On the contrary, the Fed rate cut expectations went through the roof when it became clear that the Fed will stay pat again this month. The US 2-year fell to nearly 4.50% on Friday, the 10-year yield tipped a toe below the 4.20% mark. The S&P500 flirted with the summer peak, flirted with the 4600 level and closed the week a touch below this level, while the rate sensitive Nasdaq closed a few points below the 16000 and iShares core US REIT ETF jumped nearly 2.70% last Friday.   The SPDR's energy ETF, on the other hand, barely closed above its 200-DMA, as last week's OPEC decision to cut the production supply by another 1mbpd and to extend the Saudi cuts into next year barely impressed oil bulls – even less so given the apparent frictions at the heart of the group regarding this supply cut strategy when prices keep falling. The decline in oil prices continues this Monday. The barrel of US crude remained aggressively sold near the 200-DMA last week, and we are about to step into the $70/73pb region which should give some support to the market. With the clear deterioration of the positive trend, and the lack of any apparent boost to the oil market following last week's OPEC meeting, there is a chance that we will see oil finish the year below the $70pb mark. An increasingly shaky OPEC unity, record US production, a slowing global economy, deteriorating global demand outlook and efforts to shift toward cleaner energy sources weigh heavier than the supply worries. As such, the $100pb level becomes an increasingly difficult target to reach. And even though the COP28 president Mr. Al Jaber said last weekend that there is 'no science' behind demands for phase-out of fossil fuels – yes 70'000 people flew to Dubai to hear that there is no evidence that fossil fuel is destroying climate – efforts to phase-out fossil fuel continues at full speed with solar panel installation surpassing the most optimistic estimates according to Climate Analytics.  In the FX, the US dollar's positive attempt above the 200-DMA was halted by Powell's speech on Friday – or more precisely by investors' careful extraction of all the dovish elements in that Powell speech. Both the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) will likely keep their rates unchanged this week, but the RBA will certainly sound hawkish faced with worries of 'home-grown' inflation. The AUDUSD stepped into the bullish consolidation zone following a 6+% jump since the October dip and could gather further strength this week. The EURUSD, on the other hand, remains under growing selling pressure despite FX traders' hesitancy regarding what to do with the US dollar. The pair sank to 1.0830 on Friday and is preparing to test the 200-DMA, which stands near 1.0820, to the downside. The easing Eurozone inflation, along with slowing European economies, boost the dovish ECB expectations. The final PMI data will confirm further contraction in the Eurozone last month, as the Eurozone GDP read will likely confirm a 0.1% contraction last quarter. Coming back to the EURUSD, the pair will likely see a solid support near 1.0800/1.0820, which includes the 200-DMA and the major 38.2% Fibonacci retracement on October – November rebound. And clearing this support should pave the way for an extended selloff toward 1.0730.    

UK inflation unexpectedly rises By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   Yesterday was just another day where another policymaker pushed back on the exaggerated rate cut expectations. Federal Reserve's (Fed) Christopher Waller said that the Fed should go 'methodically and carefully' to hit the 2% inflation target, which according to him is 'within striking distance', but 'with economic activity and labour markets in good shape' he sees 'no reason to move as quicky or cut as rapidly as in the past', and as is suggested by the market pricing. So that was it. Another enlightening moment went down the market's throat in the form of a selloff in both equities and bonds. The US 2-year yield – which captures the rate expectations rebounded 12bp, the 10-year yield jumped past the 4%, the US dollar index recovered to a month high and is testing the 200-DMA resistance to the upside this morning, while the S&P500 retreated 0.37%.   Waller spoke from the US yesterday, but many counterparts are wining, dining and speaking in the World Economic Forum in Davos this week, which doesn't only offer snowy and a beautiful scenery this January, but it also serves as a platform to many policymakers to bring the market back to reason. Expect more comments of this hawkish kind during this week. It turns out that one of the most popular topics of this year's WEF is rising inflationary risks due to the heating tensions in the Red Sea which disrupt the global trade roads and explode the shipping costs.