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AU10Y

ridethepig | Australian Yields for the Yearly Close📌 @ridethepig AU02Y Market Commentary 18.12.2020 This position which arises after the telegraphed breakout from the 10Y and thus creates space for the front end. A typical manoeuvre for the AU and NZ yields: The analysis of the starting position shows us that the control now exists on the bid; because we know that it is the path of least resistance, so the rule is; when the market is strong we are buyers and when weak, we are sellers. The AUD which is being "flanked" from all sides (FED, RBNZ et al) now has commodity shortages entering into play to put the cherry on top. Remain bid AUD for as long as possible; maintain contact with commodities for this cycle. Thanks for keeping the feedback coming 👍 or 👎
TVC:AU02YLong
by ridethepig
Aussie Yields Exploding!· The prediction I made of Australian Yields needing rebalancing earlier in the year points to slightly above average AUD buying throughout 2021 finally came to fruition. · NZ and AU 10Y Yields bounced strongly first after the sweep of lows. The analysis of the starting position showed us that the control now exists on the bid; because we know that it is the path of least resistance, so the rule is; when the market is strong we are buyers and when weak, we are sellers. · Commodity shortages/outperformance means that the signal is strong to stay long AUD and reduce hedges, adding to domestic AUD exposure.
TVC:AU02Y
by ridethepig
5
10 Year Rates Rocket on inflation fearsBond Yields are going higher and fast. Since January bond yields have increased across the board, rising quickly in the USA, Australia, New Zealand and Canada especially. Economies are rebounding and looking to show significant GDP growth during 2021 thanks to the rollout of the vaccine and reopening. This growth may (In the case of the US) be fuelled by additional fiscal stimulus but is certainly being underpinned by monetary stimulus which kept rates low during 2020. The rise in bond yields can be attributed directly to investors expectations of future inflation expectations. The growing rates signals that investors are seeing inflation rising faster than what Central Banks have predicted and predicting that Central Banks to lift rates earlier than most have indicated (typically around 2024). The perceived rise in inflation is largely driven by rapidly rising commodity prices. Commodity prices are at either all time highs or at record levels not seen for at least 10-15 years in the case of Copper and Iron Ore. As commodity prices increase this will flow through into inflation into the economy. E.g. Rising Iron ore prices drives up the price of steel, which makes everything from houses to cars to more expensive. It is important to note that this is all "predicted inflation", inflation in most economies is well below the levels needed for Central Banks to act. (See numbers below). Fed Chair, Jerome Powell has a view that a rebounding economy can live with slightly higher rates and a rise in commodity prices is not enough to drive inflation across the whole market. His view is that when wages and consumer prices lift, we would start to have a problem. US Actual = 1.4% Target = Moderately above 2.0% AU Actual = 0.9% Target = 2-3% CA Actual = 1.6% Target = Sustainably above 2% NZ Actual = 1.4% Target = sustained at 2% per annum Powell argues that the rise in commodity prices can be easily absorbed, and believes that much of that rise is just a temporary condition reflecting the reopening, and that prices will revert back to “normal” levels over time. However, investors are seeing that if inflation takes off, the Fed and other Central Banks will be unable to hold rates at current low levels. And if the current trend in higher yields continues, this will have significant impacts for the stock market.
TVC:AU10Y
by majicktrader
2
AUDJPY Up and AwayAs the gap rapidly grows between the Australian 10 Year Rates and Japanese 10 Year Rate, the AUDJP carry trade becomes even more desirable. This week as the pair soared above 83.50 - levels that it has not seen since late in 2018 and the currency pair is currently trading around 83.6. There are several fundamental factors driving this trend. Australia's economy is rebounding and this is sending Australian 10 year rates higher. This is despite the RBA increasing its QE program at is last meeting in February. The commodity boom in copper and Iron Ore is creating demand for the Australian dollar and sending it even higher Meanwhile Japan is struggling with the virus. While it's 10 year rates are rebounding in percentage terms, the absolute gains are well below the basis point gains being by Australian 10 year rates. Meanwhile bets are growing that The Bank of Japan will signal negative interest rates at its meeting in March - so this is keeping the lid on the Japanese rates for now. With the fundamentals favouring continued growth, and without a major risk reset, it is likely that the growing gap between the two countries 10 year rates will continue to expand. This means $84 and $85 will be within the currency pair's sights.
TVC:AU10Y
by majicktrader
AUDNZD leaning AUD way despite growing NZD yields outshiningNZ Ten Year Yields have rocketed up in recent days, reaching a high of 1.54% yesterday. This is a major climb from its yearly opening where it hovered around 1%. While Australian 10 Year Yields are also growing this year, a more dovish RBA has helped to cap yield gains. At its recent meeting, the RBA opted to increase its quantitative easing program by a further A$100 billion. This is to keep the Central Bank in line with its global peers in a move to stamp out any speculation of premature tapering. So while the disparity between the two rates continues to climb, the AUDNZD, which is typically strongly correlated with the difference between the two currencies has chosen to diverge and move higher. The continued climb in Iron Ore and Copper prices has provided significant strength to the Aussie and helped it keep ahead of its rival neighbour for now.
TVC:AU10Y
by majicktrader
2
NZ 10 Year Yields edge past AU - AUDNZD may fallWhile CA, US, JP and AU yields have dropped in the general risk off mood across markets, NZ Yields have gone against the grain and in the "yield- off" between the AU and NZ 10 Year Yields, NZ has just edged past their pacific neighbour, with the 1% target in mind. The AUDUSD is still trading at around $1.07, however indications are that this may dive lower, as the currency trade typically lags the yield rate differential by 1-3 days.
TVC:AU10Y
by majicktrader
'Giant Panda' surrender of the AUD bid📌 Surrendering of the AUD bid The following play is an example of how easily a premature surrender of the ladder can lead to a correction. In light of that, for the news flow we have a two course dinner: 1️⃣ A dovish RBA on deck notably showing signs of distress with Australian 10Y Yield and opening the door for more QE. This is going to keep the downward pressure on AUD in the immediate term while CB's and governments around the globe prepare to tap into the overdraft one more time. 2️⃣ Regular readers will know we have been tracking PBOC for some time. The "Giant Panda" has been spotted (more than once on the AUD bid and quite practicably so. The importance here comes from them effectively pressing the release valve via banning Australian coal. 3️⃣ Any last minute USD outflows ahead of election event risk will be positive CAD in the immediate term. A Trump victory would then likely unwind those, while a Biden sweep I suspect accelerates the flows from US to Canada. 📌 The following swing that we are tracking is a combinatory complication . From a flows perspective, sellers can resign after testing the previous resistance turned support, with the threat of penetration towards the previous centre in the orderblock. The floor will depend on risk passing, for now let's keep working shorts and use CAD to park as a defensive move to ride the pig on any last minute U.S election outflows; 0.930x -> 0.900x looks within reach. Thanks as usual for keeping the feedback coming 👍 or 👎
Short
by ridethepig
2
ridethepig | Australian YieldsThe gridlock continues with CB's keeping Yields interlocked for as long as possible. An attack on the highs is inevitable if you ask me, sellers base is just not strong enough. 📌 Recession Strategy US will lead for the purpose of these flows, buyers may still make concessions and allow a retest of 0.82% lows but anything else looks very difficult. The counter-play here to the topside will cause severe damage to the economy as inflation enters back into the game. I will be doing a detailed post on inflation as there have been a number of questions coming in around how it will develop. We need to keep tracking the supply side to really get into the heart of the matter. The post is going to cover much more about the reversal of globalisation , government intervention, more protectionism, productivity taking another hammer via covid, less tech and etc and how to work with these moves.
TVC:AU10YLong
by ridethepig
1
ridethepig | Australian Yields breaking out? Smells like it...I would have preferred it if Aussie Yields could have sought the break for the close last week, the decision to hold up here, rather than forcing the pass is notable that Yield curve control is really coming through. Which is an appendage to the following position in AUD: Those aiming for this macro swing position are effectively trading the artificial Fed control over USD supply side . As long as the printers are on full blast, the move from Fed towards a more lenient Yield curve control playbook will be done in broad daylight, as I have been saying for some time, they were faced with a decision as to whether they wanted a stronger currency or stronger equity market. After witnessing the Whitehouse policies being funded by Keynsian economics it is a disaster for confidence in the LONG RUN for the US. Capital is beginning to slowly migrate towards Europe and Asia. Get used to China and Russia having a larger seat at the table; hence we need to keep a close eye on Australia - China relations as the elephant in the room. What is important in the positional play is not the attack, but rather how price responds at support levels. We are wanting to only add exposure in periods of consolidation, calm waters. Do not let the loud noise and sharp spikes affect your decisiveness.
TVC:AU10YLong
by ridethepig
1
ridethepig | AUD Market Commentary 2020.01.10Ending the week with instructive profit taking from bulls in exemplary fashion....Average hourly earnings disappointing but nothing to write home about. Highlights in the report going to manufacturing jobs getting crushed via protectionism and those maintaining longs now have a free hand to play the next short-term swing. I love it when USD goes for a walk. The move in play for the coming sessions and looks difficult to defend against. I am tracking 0.6925x to prevent the breakup for bulls this week and trigger profit taking. After an exchange of direction flanking works decisively well and the execution timing-wise is of importance. For those tracking the 2020 AUD Macro map and digging into the fundamental side I would highly recommend checking the following diagram: Thanks for keeping the support coming with likes, comments and etc. If you have any questions/charts as usual jump into the comments and we can open the conversations. Good luck all those in AUD.
Short
by ridethepig
6
ridethepig | Aus 10yr Holding SupportA noteworthy breakout in Aus 10yr with the technical damage already done as bulls remain supportive at the lows. The 38.2% from the impulsive leg, although still yet to be tested will cap any further downside in the coming weeks. Here we are dealing with the capture of the pinned retrace. We have heaped up the size of our attack, but have to face up to the disappointment that said 38.2% cheerfully remains open and unlocked for a further test. The rascal was not locked yet, at the most only 'partially' ...however the issue of how to execute the impulsive nature in the attack is easily solved with the technical break. The risk to reasoning here comes from the final diagram: AUD is becoming supported by the improvements in capex intentions which is picking up faster than expected. Government infrastructure is too important and remains high before expiry in 2021. As long as the consumer re-leverages and we activity in the corp sector improves AUD will present the correct procedure for bulls and with the intention of avoiding a loss in momentum, we must track the breakout in this case the AU 10yr. We can update the thread over the coming Weeks, Months and Quarters so feel free to jump in with your idea generation and we can further the discussion for all. Thanks for keeping the support coming with likes, comments and etc!
TVC:AU10
by ridethepig
1
Remaining Nimble in AUDUSD and selling the closeThere are a few opportunities which we have discussed privately on AUD and why it is a good time to be getting long on AUD crosses (namely AUDCAD or AUDJPY). Here I am nervous over USD strength as we begin pricing in a Q3 hike there so with Gold moving down in an impulse move (see attached ideas for more colour on that topic) the short here seems reasonable. Well if we dig deeper on the RBA side, I strongly disagree with the doves that any cuts are around the corner. Lowe does not seem like a man who is desperate to move. The pause globally in central banks has helped equities but markets will test the limits again very soon. A test of the lows by default here seems only a matter of time, I expect a move like this in nature. Best of luck to those who are positioning for the sell-side next week for this 5th and final wave down to the lows.
Short
by ridethepig
AUD/USD AU vs. US 10 -year bond yield.China Q4 GDP Growth is expected to be at the slowest pace since 2009 at 6,4% YoY. This will probably also drag AUD down because of the high export to China. Meanwhile the Australian rate will be unchanged for quite a bit, where the Housing market index is also due to fall over the curs of 2019. Australian Housing market have been rallying for long time, Now the banks are stepping in to make it harder for consumers to apply for a mortgage loan. The GDP growth is also expected to be at a steady level through out the year. The widening spread between the Bond yield´s is also an indicator of a weaker AUD. After the US 10Y bond yield crossed the AU10Y in start 2018 AUD declined throughout the year. While bond yield´s are still expected to widen, we could see a weaker AUD until mid-year. Holding short position and will add again at 0,70100 and around 0.68200 if it will go that far. meanwhile Monitoring closely the AU data.
Short
by Fx-AlphaStrats
2