Sunday, October 7, 2018

USD as a 'Buffer Strategy' Post Interest Rate Hikes

Tech Stocks Significant Correction Move & Yields on the Rise 

With the USD softness at this time. The way we approach its weakness for now is quite independent as it would likewise be used as a buffer strategy that once the FED raises rates the USD would be coming from its low pre-adjusted for inflation levels the 4th quarter 2018. 

Besides with the USD - DXY failure to break through its 3 month MA with barely a low touching at 93.85 have recovered rather quick enough post #ADP data that registered a high at 96.12 for the week from a corrective session low at 95.00 basis pt. Likewise triggered the abrupt rise of US yields well above 3.10 levels.
And this would be well in line with our projection for 10 year US yields to stay above 3% and relatively closer to 3.10/35 presumed point range heading into the end of 4th quarter 2018 & into the 1st quarter 2019. But was actually surprising to see gains as early as the first week of October for yields to cover 10 basis breaking 3.10 levels then. Thus Equities tend to be on the defensive moving forward.
Even when the major indices like the DOW registered record levels, the accelerated US 10 year Treasury notes at 3.22% along side the 30 year bond yield at 3.33% have initially capped equities continued run. 

1 comment:

  1. NASDAQ TECH has taken the lead so far in 2018 where it has outperformed almost all major indices across the board. For the last quarter of 2018 it is just right that a corrective phase prior to the closing of the year may well be in order.

    The manner that it had taken its course would be the same general market pace on a reasonable decline is expected. As secular forces are still making their presence felt through market volatility.