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Posted 16 October 2022 - 05:13 PM
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Posted 16 October 2022 - 05:17 PM
NO WAY the FED will raise rates by 100bps; at the beginning of this cycle a 100bps would have provided an effective SHOCK EFFECT but now it
would PANIC the market.
Yeah, the consensus is 75bps in November, even some demanding 100bps
BUT remember NOVEMBER rate cut is weeks away.... many more economic reports from now until then
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Posted 16 October 2022 - 05:35 PM
TOM is BULLISH! has been for a while....
"I love trading during options expiration week. It's the one time when I have a pretty good idea of which market direction would likely benefit market makers. It doesn't provide us a guarantee, but, in my opinion, does tilt the odds heavily in our favor. I remember the current S&P 500 chart (significant downtrend) being in a similar position in March 2022, after the S&P 500 had been devastated for weeks - and then magically soared as net put premium to the tune of BILLIONS and BILLIONS of dollars completely vanished. As a quick reminder, here's what the S&P 500 looked like heading into that options expiration week and where we stand now:
Again, there are never any guarantees, but ANY TIME we see selloffs like the one we've seen in the past month, we typically bounce. That's what the blue-dotted vertical lines above highlight. I used a 21-day rate of change (ROC), which is the equivalent of one month, and each time we see this ROC near or move beneath -10%, we can begin to look for a rally. The fact that it's options-expiration week upcoming only adds to the odds of a likely reversal."
https://stockcharts....ons-ex-222.html
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Posted 16 October 2022 - 05:52 PM
It could be some are running scared after the UK disaster --- still in progress... - but two experienced traders sent this article to me:
The FED's error in delaying rate hikes does not inspire confidence but I want to think they will NOT MAKE ANOTHER MAJOR ERROR soon, e.g. allowing the TREASURIES market to tighten up:
The Fed’s Next Crisis Is Brewing in US Treasuries
The central bank can’t afford to let the world’s most important market seize up. It must act now to restore liquidity for Treasuries.
Perhaps there’s a solution that would allow the Fed to continue to battle inflation while also addressing what is rapidly becoming a potential crisis in the world’s most important market — US Treasuries.
The word “crisis” is not hyperbole. Liquidity is quickly evaporating. Volatility is soaring. Once unthinkable, even demand at the government’s debt auctions is becoming a concern. Conditions are so worrisome that Treasury Secretary Janet Yellen took the unusual step Wednesday of expressing concern about a potential breakdown in trading, saying after a speech in Washington that her department is “worried about a loss of adequate liquidity” in the $23.7 trillion market for US government securities. Make no mistake, if the Treasury market seizes up, the global economy and financial system will have much bigger problems than elevated inflation.
America's borrowing has soared since the financial crisis to service expanding budget deficits
Sources: US Treasury, Bloomberg
$22 = $22 trillion
But rather than slow, or even stop, the pace of rate increases, which would only resurrect the notion that there’s indeed a Fed “put” designed to bail out investors, the central bank could choose to slow quantitative tightening. Whereas quantitative easing, or QE, injects liquidity into the financial system through bond purchases, QT has the opposite effect. Instead of selling bonds, the Fed is allowing the $9 trillion or so of US Treasuries and mortgage securities it has accumulated on its balance sheet since the 2008 financial crisis to mature without replacing them. The amount of QT conducted by the Fed ramped up to the maximum of $95 billion per month in September from $47.4 billion.
The Fed's quantitative easing program boosted its assets to almost $9 trillion
Sources: Federal Reserve, Bloomberg
$9M = $9 trillion
The thing is, just like there’s no strong evidence that many years of QE had the desired effect of sparking inflation, it’s unlikely that QT will help temper inflation. What it is more likely to do – and is probably already doing – is cause havoc in the government bond market, the benchmark for all other markets that determine the cost of money for governments, companies and consumers. A Bloomberg index shows liquidity in the Treasury market is worse now than during the early days of the pandemic and the lockdowns, when no one knew what to expect. Similarly, implied volatility as measured by the ICE BofA MOVE Index is near its highest since 2009. And in an unusual development that shows just how dysfunctional the Treasury market has become, the newest, most liquid securities, known as on-the-run notes, trade at a discount to older, tougher-to-trade off-the-run securities, according to data compiled by Bloomberg. Daily swings in interest-rate swaps have become extreme, proving further evidence of disappearing liquidity.
https://www.bloomber...n-us-treasuries
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Posted 16 October 2022 - 05:56 PM
NO WAY the FED will raise rates by 100bps; at the beginning of this cycle a 100bps would have provided an effective SHOCK EFFECT but now it
would PANIC the market.
The market has started pricing in a chance of a 100 bps Fed rate hike in November.
Yeah, the consensus is 75bps in November, even some demanding 100bps
BUT remember NOVEMBER rate cut is weeks away.... many more economic reports from now until then
At this point it's no way they will do a .50 hike.
Member
Posted 17 October 2022 - 06:29 AM
This level right here at Dow 30k likely IS the battle.
As long as it does not turn out to be High of day, bulls have a shot at putting in a decent bottom....
Bears time window is closing, so if they do not fight back right about here, may be time look for long opps for a bit...
Should bulls fail here...well, that is a very different story...
Edited by K Wave, 17 October 2022 - 06:31 AM.
The strength of Government lies in the people's ignorance, and the Government knows this, and will therefore always oppose true enlightenment. - Leo Tolstoy
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Posted 17 October 2022 - 06:43 AM
VIX full arrowhead formation on 30 min...which way is it going to explode outta here??
The strength of Government lies in the people's ignorance, and the Government knows this, and will therefore always oppose true enlightenment. - Leo Tolstoy
Member
Posted 17 October 2022 - 06:47 AM
Yes major trading bottom likely not far away timewise.
The question still out there is, does the decline end in a panic wave?
Still think 4.15% on 20 yr is the level Bond bulls have to reclaim to prevent potential panic wave from developing.
The strength of Government lies in the people's ignorance, and the Government knows this, and will therefore always oppose true enlightenment. - Leo Tolstoy
Member
Posted 17 October 2022 - 06:52 AM
BIG SHORT USD/YEN position, stopped out of 3, added 5 more
I like this trade, I also think the BOJ will wait until the spike up loses steam before intervening
This has been quite resilient, still below zero, bullish case demands a rapid drop to below -200 and then reverse
160 is still the target for this wave...see if Uncle Buck can do it...
Could correspond with panic wave in Bonds.
But if TLT finds its footing soon, then Yen may get a reprieve earlier.
The strength of Government lies in the people's ignorance, and the Government knows this, and will therefore always oppose true enlightenment. - Leo Tolstoy
Member
Posted 17 October 2022 - 06:56 AM
Japan 20 and 30 yr rates trading at mutli-year highs again..
HOW MUCH LONGER can BOJ sit on the 10??
Maybe they have to get an actual crash day going in the Yen to get them to finally relent on their insanity...
Truly unbelievable the idiots we let rule over us...
Edited by K Wave, 17 October 2022 - 06:59 AM.
The strength of Government lies in the people's ignorance, and the Government knows this, and will therefore always oppose true enlightenment. - Leo Tolstoy
