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The Fed’s Strategic QE Reserve Slush Fund hit a new low yesterday. This is the opposite of usual end of month behavior when the thing usually spikes. Tick tock.
Record leverage including the use of Treasuries as repo collateral has created a tinder box, and yesterday, somebody lit a match. Primary Dealer Crisis Now, Crisis Later
But of course, today they’re bouncing back from a day late 5 day cycle low. As I write the ES, 24 hour futures are bumping against trend resistance. A continuation of the rally here would suggest more upside. while a rollover below 5735 or so would suggest at least a test of the low. If they do head up, look for resistance around 5740, 5745 or 5755. Market Broke for Second Wind
Over in the Treasury market, the month end coupon issue has been put to bed, and cycle oscillators say, the market should rally and yield should pull back a bit in the short term. But so far, the uptrend in yield remains intact. If the 10 year yield doesn’t drop back below 4.20 next week, then I’d look for 4.45. Primary Dealer Crisis Now, Crisis Later
Meanwhile more T-bills and less coupon issuance mean more cash or Repo Madness, if you will. Mid month should be rally time. Liquidity Measures Show Markets Stretched to the Limit
Gold finally had a measurable pullback, but the uptrend is intact. Gold Approaches Its Long Term Target
Residents of Planet Crypton must hold off on their celebration of a high base breakout measuring to 90,000. But if BTC holds above 67k, it’s merely delay, not denial.
In FX, the EUR has put in a short term bottom as expected but 1.085 is critical. It needs to hold or the EUR/USD goes nowhere and could subsequently break down. But if it holds, the next target would be around 109.50 followed by 110.50.
For moron the markets see:
- Primary Dealer Crisis Now, Crisis Later October 31, 2024
- Swing Trade Screen Picks – Picking a Few Nickels With Steamroller Still Coming October 29, 2024
- Market Broke for Second Wind October 27, 2024
- Gold Approaches Its Long Term Target October 26, 2024
- Liquidity Measures Show Markets Stretched to the Limit October 21, 2024
- Get Your Red Hots Here October 3, 2024
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