|Wed, June 29, 16|
In the overnight session, Global Futures are in the second session of ignoring decreasing T10Y Yields. The disconnect stems from a disorder called buy the dip a narrative concentrated by groupthink. Such thinking is dangerous to market stabilization as we saw in last Friday’s events crashing global markets in a matter of hours on a Brexit vote. Risk currencies continue to catch a bid in the overnight and US pre-cash morning session such as USDJPY, GBPUSD, AUDJPY, and CADUSD, but on a relative strength index of 60min time frame are near the overbought region. WTI is in the 15hr of a 48.50 ceiling on the 60min as the market is using moving averages of high time frame as overhead resistance. Interesting to note, Gold/Silver along with DXY have been bidding together as of recent that is a real time credibility watch of the FED. DXY is backing off the 96 handle today at 95.83 pre US cash session, we believe a healthy retracement to the 95.43 region, then to only start the next leg up unless a central bank doesn’t whack the FX. US SPX on a 120 min scale has had 20 bars of prints with only 1 down candle depicting a market of buying the dip disorder along with market overseers protecting the wave function. Pimco’s Fels prior session says he is getting ready for stagflation as the yield curve 10s less 2s is clearly sending a scare. FACTSETs recent forecasts show a decline in estimated earnings for the SPX in 2Q is -5.2%. In an interesting twist last week, the FED reported on a stress test of 33 banks pass a VIX of 70. We believe stress in EU Banks <EUFN> could spiral into much stress heading into late summer months pulling in other global financial banks such as US banks.
|Fri, June 28, 16|
US10 Y, DE10 Y, and GB 10 Y have produced a slight V shape bottom in the overnight session as global equity receive a bid. Risk on currencies such as USDJPY, AUDJPY, EURUSD, and GBPUSD have seen slight appreciation in the overnight session. Appears that markets are taking a slight breather or counter function to the selling triggered by Brexit. DXY maintains the 96 handle as we’ve seen steep devaluations in the CNYUSD by the PBOC.