US 10Y : "FED vs MARKETS" |...who will win? | (Part.II)

TVC:US10Y   US Government Bonds 10 YR Yield
The market is waiting for one of the most important events that could give a clear direction for the coming months. Today FOMC will release interest rate decision and the main players ( DXY , GOLD , SP500 and EURUSD ) will suffer the consequences. Even if we cannot rule out a 25bp increase, most analysts believe that a pause may be the right choice, also because the usual press conference is not scheduled for the next FOMC meeting, so the board could take advantage of this opportunity, to explain this "temporary change in direction" to the market.

So, what will happen today? No I have an objective answer to this question, unfortunately I am not a guru but a simple Trader, so today we will limit ourselves to following events.

Having said that, from a technical point of view, we were lucky in March because we widely predicted this increase in yield rates from 3.30% area to a new high (wave 5 for Elliottians) in Part. I of this Analysis. On weekly chart the trend is bullish and the next technical levels are around 4.46%, 4.61% and 4.7%, but today US10Y could take any direction.

US 10Y : "FED vs MARKETS" |...who will win? | (Part.I)
(Click on chart below)

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Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have slowed in recent months but remain strong, and the unemployment rate has remained low. Inflation remains elevated.
The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that
could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
🔴 U.S. Treasury 10-year yields surpassed 16-year peaks touched in the previous session before pulling back while the yield curve flattened a bit, as investors paused selling bonds and re-assessed how far rates have come.
📈 U.S. benchmark 10-year yields hit 4.642% on Wednesday, their highest since 2007, as markets come to terms with the Federal Reserve's policy rates staying high for longer.
Federal Reserve Bank of Minneapolis President Neel Kashkari was one among several Fed voices to caution markets on the possibility of more hikes, saying on Wednesday that ample evidence of ongoing economic strength meant that more tightening might be in the pipeline. Fed Chair Jerome Powell is scheduled to speak later on Thursday, potentially giving markets some clues on the path of U.S. monetary policy.
Economic data coming out of the U.S. continues to defy investor expectations of an economic slowdown.

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By Anonymous Banker
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