stopped out in soybean by a pretty huge gap down. apparently, USDA has raised its estimates for soybean supply. oh well..
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Global Macro Trading (runnermint)
- Thread starter runnermint
- Start date
stopped out in soybean by a pretty huge gap down. apparently, USDA has raised its estimates for soybean supply. oh well..
VIX has retreated from this week's high at 21.91 and trading at 17.74 at this point in time and we note that at 20 level it serves as a benchmark between fear and calm
S&P seems to breaking 1600 level upwards despite a lower-than-expected annualized US GDP at 1.8% (on intraday trading, this feels like sentiments in the market wants to buy)
with that said, i'm still short bias on S&P because i feel that the greater story out there is still tapering of QE albeit better data - US durable goods orders, new home sales and consumer confidence for the month of May
bond yields from developed markets (DMs) have traded higher (i.e. bond prices traded lower) because of bernanke tapering effect. yield curve on US treasuries have been steepening with the 10y yield closing on 3.0%. furthermore, the break-even rates (difference in yields of 10y-UST and TIPS) have traded lower implying that inflation expectations have been reduced. in fact, it seems the broad market is worrying for a case of deflation instead. as such, the better economic data we experienced for the past couple of days are providing a temporary respite to the sell-off that took place after bernanke's may congressional testimony and was further worsened by last week's FOMC statement
moreover, the spike we have seen last tuesday-wednesday in china's 7 day repo rate has signaled that the chinese interbank market is on a very unstable footing because of excess credit growth and this situation is exacerbated by the growing number of non-performing loans created under the shadow banking system. yes, PBoC (china's central bank) has recently made an official statement to provide liquidity for smaller-sized banks if the need arises but we should take note that movements in the chinese markets are largely driven by policy actions. afterall, china is a centrally planned economy and its central government plays a pivotal role in the marketplace.
one observation that i can't seem to reconcile is the strength in yen and weakness in nikkei. 2 weeks ago, market commentaries and i have mentioned that bond volatility in the JGB market has rattled investors to run for cover. now that 10y JGB yield has stabilized, it did not bring about a resumption in yen and nikkei (weakening & strengthening) respectively. one possible reason for this stabilization which i could think of is, we note that the spreads between JGBs and bonds of DMs have widened recently and in fact they have risen to their highest levels in two years, it might just very well signal that JGBs are regaining their safe-haven status and broadly speaking, market sentiments across major indices are still selling equities and bonds and that include those of the emerging markets' space. a great amount of unwinding is taking place because i'm guessing many investors are switching to cash now, especially now that bonds and equities are trading on anti-correlation, different from what we traditionally observe in sell-offs
runnermint
S&P seems to breaking 1600 level upwards despite a lower-than-expected annualized US GDP at 1.8% (on intraday trading, this feels like sentiments in the market wants to buy)
with that said, i'm still short bias on S&P because i feel that the greater story out there is still tapering of QE albeit better data - US durable goods orders, new home sales and consumer confidence for the month of May
bond yields from developed markets (DMs) have traded higher (i.e. bond prices traded lower) because of bernanke tapering effect. yield curve on US treasuries have been steepening with the 10y yield closing on 3.0%. furthermore, the break-even rates (difference in yields of 10y-UST and TIPS) have traded lower implying that inflation expectations have been reduced. in fact, it seems the broad market is worrying for a case of deflation instead. as such, the better economic data we experienced for the past couple of days are providing a temporary respite to the sell-off that took place after bernanke's may congressional testimony and was further worsened by last week's FOMC statement
moreover, the spike we have seen last tuesday-wednesday in china's 7 day repo rate has signaled that the chinese interbank market is on a very unstable footing because of excess credit growth and this situation is exacerbated by the growing number of non-performing loans created under the shadow banking system. yes, PBoC (china's central bank) has recently made an official statement to provide liquidity for smaller-sized banks if the need arises but we should take note that movements in the chinese markets are largely driven by policy actions. afterall, china is a centrally planned economy and its central government plays a pivotal role in the marketplace.
one observation that i can't seem to reconcile is the strength in yen and weakness in nikkei. 2 weeks ago, market commentaries and i have mentioned that bond volatility in the JGB market has rattled investors to run for cover. now that 10y JGB yield has stabilized, it did not bring about a resumption in yen and nikkei (weakening & strengthening) respectively. one possible reason for this stabilization which i could think of is, we note that the spreads between JGBs and bonds of DMs have widened recently and in fact they have risen to their highest levels in two years, it might just very well signal that JGBs are regaining their safe-haven status and broadly speaking, market sentiments across major indices are still selling equities and bonds and that include those of the emerging markets' space. a great amount of unwinding is taking place because i'm guessing many investors are switching to cash now, especially now that bonds and equities are trading on anti-correlation, different from what we traditionally observe in sell-offs
runnermint
short gold
short eur/jpy (spot)
short eur/jpy (spot)
Quote from Ghost of Cutten:
Question - gold is down a lot in a short time, what made you short it now, and where would you exit if wrong? What kind of price move do you expect, to want to short it here?
Hi ghost, thanks for the question
i think the current market environment still believes in the following factors that are causing the selling in gold (i might have cherry picked these reasons, please take it with a pinch of salt):
higher bond yields and stronger USD
lower inflation expectations
waning consumer demand
some may opine that central banks' diversification into gold and rising inflation rate in the longer term may lend some support for gold. however, i trade short to medium term plays and right now the market sentiments is in a selling mode. as such, if the longer term view does transpire in the future, i will reassess the situation and perhaps, i will long gold
i will exit if gold trades back up to 1300 and it might hit this price for the following 2 reasons:
1. a temporary pull back and the medium term picture is still short bias
2. a flight-to-safety situation takes place. this would need to coincide with an increased level of fear in the marketplace and i will be observing the VIX, yields, money market and other indications
the risks of rising inflation expectations play a rather minor role now as the market seems to be more worried about a deflation instead
i'm looking at 1200 as the first support. if it's broken, i will be looking at 1100 and similarly, if gold breaks 1100, the next level would be 1000. on the monthly time frame, the 1000 level looks like a pretty strong support and it might just be here that gold rebounds, provided that it's supported by fundamentals as well
runnermint
i've been absent from my thread for close to a month as i was and am still busy with back-testing some trading strategies. i see that this activity will carry on for the foreseeable future and thus, i have decided to discontinue this thread as it has come to a point that i do not think i'm able to commit myself to contribute more to ET forums. thanks to everyone who have posted in here. trade on.
runnermint
runnermint