TLT is approaching a technical double top area as the Feb. 1st FOMC meeting looms. Fed futures are currently pricing in a 475-500 bps terminal rate, however some fed speakers over the days have indicated a desire to exceed 500 bps this year. Market thus far hasn't bought that narrative and expects the Fed will be forced to pivot later this year due to...
Fed Funds Futures (ZQ) CBOT:ZQ1! , 2-Yr Yield (2YY) CBOT_MINI:2YY1! , 10-Yr Yield (10Y) CBOT_MINI:10Y1! This is the third report in the series “Year of the Rabbit: Short-tailed Trading”. US Consumer Price Index (CPI) declined 0.1% in December 2022 on a seasonally adjusted basis, after increasing 0.1% in November, the U.S. Bureau of Labor Statistics...
30 day federal funds interest rates ... analysis of COT Futures Only - Percent of Open Interest and OBV, volume of effective federal funds ...
CME: SOFR Futures ( CME:SR31! ), E-Micro S&P 500 ( CME_MINI:MES1! ) While football fans are fervently following the 2022 World Cup, we analogize the Federal Reserve’s year-long battle with surging inflation to a football match. In this game, the Core CPI had an early advantage over the Fed Funds Rate, at 6.00% vs. 0.25% in January. The Fed mounted decisive...
One of the more watched interest rate settings in markets is the so-called ‘terminal’ interest rate – the point in the interest rate futures curve that reflects the highest point of future rate expectations – said differently, where the market feels a central bank could take its key policy rate by a specific date. For those who really want to understand fed funds...
CBOT:ZQ1! We are in a rising interest rate environment. But wait, which rate are you talking about? All eyes are on the Federal Reserve. But could you really borrow money at the Fed Funds rate? If not, why is it a big deal? Most of us deal with different types of interest rates, such as those for bank deposit, mortgage loan, home equity loan, auto loan, credit...
As I have been watching less and less crypto YT'rs, I have been drawn to bonds and bond data analysts as they seem to have a better understanding of overall market economic shifts and since I haven't published anything in a while, I wanted to get a brief heads up. Just a quick look at of the target rate probability ahead of the 21st of Sept, 2022 Fed meeting....
Growth, Employment, Inflation - aka what's left of the Economy. 1. Employment - seeking roughly a reduction of 12 Million Jobs. 2. Growth - reduction of 50% for S&P 500 from Highs. 3. Inflation - Leads until Rate Lag breaks everything. _________________________________________________________________________________ Capital Stocks Powell - Bonds are...
Fed Fund Futures exploding higher -> major dovish signal (higher price = less hikes).
Whois buying all this MBS Junk that Fred and Wilma need to sell? No One... absolutely not a soul. In fact, Fred has to buy some, yeah right, it's not working out. Balance sheet reduction (QT) remains the key metric to observe as Fred, Wilma, and Dino went Bam Bam on the Bid recently. Truly a modern stone-age family, this house of Flinstone. If I recall...
..the market is green today, as the decline in rate hike expectations is a supportive factor. Most of the retreat is attributable to recent dovish comments (e.g. Bostic), which were suggesting a temporary pause in the fall and Ackman rightfully so trashed this as a big mistake yesterday. Expect this trend to reverse as soon as supply issue blow up again as we...
The fed fund futures seem to be disconnected from reality and in my opinion the primary driver of the markets right now. On their last meeting the Fed signaled a target rate of 1.75-2% by end of the year so over the 6 remaining meetings an average .25 rate hike per meeting. Economists think this will be a bit higher with 2x .5 hikes and 4x .25 hikes. As of today...
..go vertical ahead of the FOMC meeting. US-Natgas with highest level since 2008. Not so "transitory"..
..now price in in a higher average rate for December as at any time during the year.
The "peak inflation narrative" saw a resurgence yesterday, after 10Y yields dropped by over 10 bps intraday, but well..today's Philly Fed Index put an end to such ideas (input costs highest since 1979). FFR futures now price in 2.57% for the end of the year.
..(December contracts) are making new lows (chart is inverted) pointing to almost 10 hikes for the year now.
..markets are selling off. Rate hike expectations are exploding, suggesting that the Fed is still way behind the curve. The other aspect is the dangerous geopolitical situation that is still highly underestimated by markets (Ukraine/Yemen).
Future now officially price in eight rate hikes for the year, but the stock market still refuses to capitulate.