Federal Bank’s Interest Rate Hike and technical analytic eye on its effect on the economy, bond yields, Foreign Exchange and commodities

As predicted, and as has been talked about all over the business and finance world, we did see a rate hike by the Fed on June 13, 2018. Saying that the opportunity this week probably lies in the 1-month bond especially when looking at the yield numbers given the Fed announcement,  its worth mentioning what effect that has had on the various markets including especially the debt markets. Throwing out a couple different charts here just to cycle through but whats grabbing my attention is the difference between say the 1-month yield at 1.8% compared to the 10-year yield at 3%  –

So, in the long run, where would one thing the interest rates are going is the best you can get out of a 10-year yield is only a per cent higher than a 1 month? Not a whole lot of confidence in that 10 yr bond and it certainly isn’t a good long-term picture for the economy and interest rates in the United States, that being said, it is tough to find a decent return anywhere and that is part of the problem. Now they are raising the interest rates as predicted, but remember they do not meet every month and they do say they maybe want to raise interest rates 3 or maybe 4 times this year, so they do not meet in August or October, but you do have the potential for 2-3 more rate hikes this year making it interesting to see whats happening in the bond markets because it dictates more that what Federal reserve lending rates do.

Now you compare that to what the U.S dollar has been doing in anticipation over the last couple of weeks even just from a technical standpoint, we say the dollar come into what I would argue as a strong resistance at that 95 level low but it has tanked down from there!Screen Shot 2018-06-15 at 4.08.35 AM.png

You look at that compared to what the Euro has done which is quite the opposite and turning up – Screen Shot 2018-06-15 at 4.12.47 AM.png

So with this interest rate rise I absolutely expect to see a weaker dollar over the next couple of weeks, the Euro climbing back up to at least 120, and looks like the Dow will be coming down too, so all of this could end up looking really strong for commodities and not just Gold, Silver but Oil as well, which inherently as also come of some dip and looks like its going to start bouncing back up- Screen Shot 2018-06-15 at 4.17.03 AM.png

Remember each of the last times we’ve seen rate hike increases, we have seen gold rally- Screen Shot 2018-06-15 at 4.19.14 AM.png

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Blog at WordPress.com.

Up ↑

%d bloggers like this: