This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

Market Outlook: July 8, 2021

RJO Futures
Visit: RJO Futures


Senior Asset Manager

A notable development yesterday was a POSITIVE momentum shift on the WEEKLY chart in the US Dollar Index. Not a favorable development for commodity bulls in the intermediate term I’m afraid.  The US Dollar and Bond Yields have essentially been moving in the opposite direction of consensus and this coupled with the flattening of the yield curve recently, we think this is foreshadowing a period of risk off developing in macro.  Furthermore, our technical view of the Energy space is beginning to sour in our intermediate term outlook.  Now, that doesn’t mean we won’t take a shot at a long side, likely short-dated trade in Crude Oil, as a matter of fact we’re close to pulling the trigger here.  Momentum indicators remain positive in all time frames, an OS reading of 10 this morning, and we’re closing in on the low end of our range.  We still think following a corrective period, Energy prices could be a strong buy into year-end.

Fed Minutes and Bond Yields:

The FOMC Minutes expressed some anxieties over tapering QE purchases.  The likely starting point will be pairing back their mortgage backed securities purchases in an attempt to cool off the burning hot real estate market.  The next 2 Fed meetings, including the Jackson Hole Forum, will likely express a better a time line of the taper. Regarding bond yields, what I do know is this. 

The US Treasury is set to bring $821B new bond issuances to market in the Q3 2021 – and purchase $240B worth via QE operations.  This is opposed to the $280B new bond issuances in Q2, of which the Fed subsequently purchased … $240B worth. 

Now, doing the first grade math, that’s going to leave a boat load of excess debt just sitting out there up for grabs … at negative real rates too mind you.   I’m having a hard time fathoming there could be any sort of demand to purchase long dated debt at meager rates of return, and when adjusted for inflation – a negative rate of return.  In my belief, the flood of excess debt carrying meager to negative rates of return still makes purchasing US Treasury Bonds the worst long-term investment on the board, but even still…watch out for the squeeze. 

USD vs EUR Outlook:

US Dollar:

– the dollar could easily correct from here, but it’s likely a buy on the next corrective set-back. 

-Momentum has now moved to positive on the weekly

-if we embark on Scenario, the USD is an overweight long position in the model.

-USD is tracking yields lower this morning, but like the falling 10yr yield – we don’t think this lasts

-The Fed is leaning Hawkish


-the ECB went dovish (pledged more PEPP at their mid-June meeting)

-the ECB also sounds more like the Fed circa Q3/Q4 2020 – pledging to let inflation “run hot” and above their 2% target for a period of time.  BEARISH EURO

-large topping formation and momentum has downshifted to NEGATIVE on the weekly

We’re in the “witching hour” of markets in my opinion.  Trapped between cycles, and the current cycle is likely not going out without a fight.  Earnings season is coming upon us, and we still think Scenario 2 continues to fight for more upside in equities and commodities in the near-term.  Pay attention, and keep your profit and risk parameters tight – cash is not a terrible option either. 

MarketTrend > 6 moRange LowRange HighMomentumOB/OS
Nasdaq 100Bullish14,34814,880Positive1
Russell 2000Bullish22492304Negative1
10yr YieldNeutral1.24%1.47%Negative3

These are proprietary trading ranges from RJO Futures. They are calculated by a customized standard deviation tool.

Originally Posted on July 8, 2021 – Market Outlook: July 8, 2021

Disclosure: RJO Futures

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.

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 RJO Futures and is being posted with permission from RJO Futures. The views expressed in this material are solely those of the author and/or RJO 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.

Disclosure: Forex

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.

Disclosure: Margin Trading

Trading on margin is only for sophisticated investors with high risk tolerance. You may lose more than your initial investment.

For additional information regarding margin loan rates, see

Disclosure: Futures Trading

Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at

trading top