Currencies
Yields remain the force dominating the evolution of markets. A peak in yields would help European assets rebound, but the war in the Middle East could push higher energy prices, with negative consequences for Europe.
This week's Insight gauges the potential of a dollar breakout or breakdown and suggests a few trade ideas.
The sharp sell-off in long duration bonds (ticker TLT) has reached the collapsed 130-day complexity that implies a probable and playable rebound. More strategically, long-duration bonds yielding close to 5 percent are an excellent structural investment assuming central banks choose to slay inflation and the cost is a near-term recession. We discuss how to time and how to play the potential rebound.
In this report, we explore some trading opportunities after a volatile few weeks for FX markets.
We unveil the ‘Joshi rule’ real-time recession indicator as a much better version of the Federal Reserve’s own ‘Sahm rule’. And we identify what would trigger these recession indicators in this week’s and future US jobs reports. Plus: airlines, soybeans, and tin are all good rebound candidates based on their collapsed short-term complexities.
Introducing our Special Series to assess where Portugal, Italy, Greece, and Spain stand today. Stay tuned for more.
Aggressive monetary tightening has always led to recession, although the timing is uncertain. The effects of high interest rates are starting to be felt. Investors should stay risk off and buy government bonds as a safe haven investment with carry.
