top of page
Mar 8, 20234 min read

0DTE options / Powell : higher for longer, Term rate 5.6% / BoJ meeting next & NFP Friday





  • French nationwide strike to extend as pension reform fight intensifies

  • Powell : “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated", the historical record cautions strongly against prematurely loosening policy. We will stay the course until the job is done.", last speech Powell mentioned 'disinflation' a few times... changing his mind like a headless chicken..>>> overall, we still think we could see approx. 6 % Fed peak rate, sticky inflation, services inflation, more resilient inflation etc, but Fed will keep to 25bps (extending for longer into July perhaps..)... markets putting a 50/50 probability of 50bps in March (up from zero in Feb and 30% yesterday morning) >>> The speed and severity of this Fed tightening over the last year is the boldest most of us have seen in our 30-40y+ careers

  • U.S : Cox Automotive on Tuesday reported wholesale used vehicle prices increased 4.3% in February from January — marking the largest increase between the two months since 2009

  • RBA : The Reserve Bank of Australia is “closer” to pausing its record series of interest rate rises, its governor, Philip Lowe >>> AUD broken down on charts

  • 0DTE options could turn 5% intraday market decline into 25% rout -JPMorgan

  • Chinese mutual funds suffer biggest net outflow in 31 months. Market split on financial measures announced at National People's Congress. China’s energy transition sees ‘staggering’ progress on renewables — and a coal power boom

  • The UK’s RMT union has called off a strike next week against Network Rail after receiving a new pay offer

 

Markets :

  • U.S : Terminal up about 18bps yesterday, to about 5.6%, inflation moving from transitory/passing soon to Structural (more resilient) >>> higher for longer, inversion deepest since 1981, all sorts of record broken, BoJ event and NFP next

  • SPX500 chart below, no drama for now, more weakness overnight in HSI Techs, long duration type names still more likely to suffer/struggle in months ahead

  • Crude Oil struggling again, the likes of XAG broken down technically (too much weight from real yields), key level XAUUSD around here $1800

  • USD firmer again, CABLE broken down, USDJPY continues in the absence of BoJ action (more likely in April-Mai), though clearly meeting starting tomorrow could lead to a surprise!

  • HYG, JNK yield spread look too low

 




And : Every time the Philly fed manufacturing index dipped below -25, a recession took hold of the economy We’re now at -24.3... overall there are 'signs' that we could be near turning point - but we won't know for a few months


"The question Fed Chair Powell needs to be asked is “what do you think you are doing?”. Powell has yet to explain how raising rates will tackle profit-led inflation. Pursuing higher unemployment seems an ineffective response." - UBS





BOJ's move to curb bond short-selling is working, with side effects - Nikkei Asia - more manipulation from BoJ '''it's less profitable for short-sellers''


This may sound crazy, far-fetched and to be ignored. It is not possible to ignore, given their size in daily trading these days









SPX500 - still looks ok for the bulls... it won't on a close below 3940 area






41 views0 comments

Comments

bottom of page