2022-07-25

Fed Week

The market is looking for a 75 bps rate hike on Wednesday. Speculators are split between 50 and 75 bps for September. Fed guidance will impact the market, but since the Fed is clueless and reversing course within weeks of giving guidance, traders won't place too much value on Fed language after the intitial hit. More important will be inversion of the curves. If the Fed remains hawkish, do the yields start hitting extreme inversion last seen in the early 1980s?

On Monday morning, the strength in the Mexican peso is bullish since peso is inversely correlated with VIX. If it holds, it's favorable for stocks. Bonds pulled back. European markets such as Germany have barely bounced

BTC pulled back again. If this week will be bullish in general, this should be the low for BTC. It can go as low as $20,800 without breaking its uptrend though.
S&P 500 divided by DAX, both in local currency. Possible top?
As discussed in recent posts, the ideal situation for a rally is a pullback into the Fed meeting, followed by the final leg of the rally. A pullback in the U.S. dollar looks like the most important component for a rally right here given that bonds have already rallied quite a bit, but the weaker dollar could support commodities and energy.

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