- The Federal Reserve went into its blackout period with a bang Friday. The bank’s November 2nd policy decision is basically a forgone conclusion with a 75bps hike at a 93.7% probability, according to the CME’s FedWatch Tool. However, it is the communication regarding their December 14th policy decision in which they can use advantageously.
- As of Thursday, expectations for another 75bps hike in December were mounting with a 75.4% probability.
- Markets began exuding stresses Thursday night as the U.S. 10-year hit a new cycle high of 4.335%, and the Japanese Yen was falling precipitously to a fresh 32-year low.
- The Bank of Japan was forced to intervene once again, with September 22nd being the other. The bank purchased about $36.5 billion worth of Yen. However, given the lack of staying power the prior intervention had, the first since 1998, the BoJ needed a more coordinated effort.
- In comes the Fed Whisperer, the Wall Street Journal’s Nick Timiraos, whose 7:30 am CT article signaled a debate for the Fed’s December meeting, where they could step down to a 50bps hike.
- The news was aided by comments from San Francisco Fed President Daly, who said, “the Fed should avoid putting the economy in an unforced downturn … it’s time to consider slowing the pace of rate hikes”.
- It is also speculated the maneuver is politically motivated ahead of the midterms.
- The U.S. 10-year slipped as much as 20bps and the 2-year as much as 22bps. The yield of the 30-year remained sticky, and the curve was able to steepen.
- The S&P gained 2.4% on the session and more than 3% from its overnight low.
Xi’s Supreme Power
- China concluded its weeklong National Communist Party Congress on Saturday, and President Xi tightened his grip with an unprecedented third term.
- Video surfaced on Xi’s goons removing those who could create friction or stand between him and absolute power, including his predecessor Hu Jintao.
- Given Xi’s new supreme power and prior pressures on big tech, markets did not take kindly to what is ultimately more uncertainties. KWEB, the Chinese internet ETF, is lower by 12% ahead of the bell, a new record low.
- The Hang Seng is -6.36% in its worst day since 2008 and -11.88% on the month.
- Commodities are under pressure as the Chinese Yuan loses another 1.39% against the USD today, marking -2.60% on the month.
Big Week of Earnings
Originally Posted October 24, 2022 – Fed Whispering, Xi’s Supreme Power, and Big Week of Earnings
Disclosure: Blue Line Futures
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results. The information contained within is not to be construed as a recommendation of any investment product or service.
Disclosure: Interactive Brokers
Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Blue Line Futures and is being posted with permission from Blue Line Futures. The views expressed in this material are solely those of the author and/or Blue Line Futures and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
In accordance with EU regulation: The statements in this document shall not be considered as an objective or independent explanation of the matters. Please note that this document (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on dealing ahead of the dissemination or publication of investment research.
Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.
Any discussion or mention of an ETF is not to be construed as recommendation, promotion or solicitation. All investors should review and consider associated investment risks, charges and expenses of the investment company or fund prior to investing. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.