Post

More from @tedtalksmacro

ted

@tedtalksmacro

May 1, 2023

1/ Wednesday sees the Fed deliver their policy update for May.

Expectations are for this to be the final 25bps hike for this tightening cycle, so will it?

And what about QT and rate cuts later this year?

Let's investigate 👇

2/ The Fed have led this tightening cycle (along with the RBNZ) by hiking +475bps in just over 12 months.

Tightening is approaching it's final stages as we reach the Fed's terminal rate communicated that was communicated to the market back in March.

3/ A 25bps hike would put us right where the majority of FOMC participants see the terminal rate for this cycle --> 500-525bps.

So based on Fed forward guidance, this hike should be the last.

The market gives a 92% probability that the Fed hike by 25bps on Wednesday.

Read 14 tweets

ted

@tedtalksmacro

May 1, 2023

1/ A thread discussing the US dollar.

- Drivers of DXY in 2023 (up, down or sideways)
- DXY correlations / why the USD matters.

Let's go👇

2/ Firstly, let's understand how the DXY is measured and then take a look generally, at what makes currencies move.

DXY is a measure of the dollar's performance against a basket of other fiat currencies. Narratives/news specific to a non-dollar currency, will also move the DXY.

3/ The Euro makes up ~58% of the basket, and thus moves the DXY with most power.

What the Euro does, the DXY will do the opposite. So it pays to track what's going on in Europe, not just the US, to understand where the DXY is headed!

Other notable weights:
JPY - 14%
GBP - 12%

Read 12 tweets

ted

@tedtalksmacro

Apr 25, 2023

1/ While most data is lagging, what tends to lead price is monetary + fiscal liquidity...

Let's quickly investigate whether liquidity has peaked or if new highs are to come👇

2/ The recent surge in global liquidity has been owed to:

- US debt ceiling situation --> Treasury drawing down on their cash reserves,
- Banking crisis --> Fed balance sheet expansion to backstop failing banks,
- China restarting their economy post-COVID --> stimulate with $$

3/ Tracking liquidity would've kept you on the right side of the risk asset reversals + trend so far this year.

Net USD liquidity is now greater than when the Fed commenced QT in April 2022! However, over the coming months, the US debt ceiling situation could quickly change that

Read 14 tweets

ted

@tedtalksmacro

Feb 19, 2023

1/ There's a new player in town!

China's central bank performed it's single-largest liquidity injection on Friday, to help support their economy out of historically depressed levels.

+ there's more to come 🇨🇳

2/ China boasts the world's second largest economy and has recently expanded at a pace ~2.2% faster than the US.

The People's Bank of China (PBoC) are the world's third largest central bank with ~$6T in assets and play a key role in global liquidity.

3/ While most analysts are focused on how the Fed tightening will reprice risk assets this cycle, they're failing to consider the scale of easing in the east.

Japan (4th largest CB) + China are injecting liquidity into global markets, easily outpacing the Fed tightening efforts.

Read 11 tweets

ted

@tedtalksmacro

Feb 10, 2023

1/ In December, I mentioned some themes to watch out for this year... here's a more detailed thread of those ideas; I'll update this post in real-time as developments occur.

This year will provide a very challenging environment to trade!

Theme #1 'Central banks pause by Q2' 📝

2/ The US Federal Reserve hiked rates by 400bps in 2022 + there's more to come in 2023.

The December 'dot plot' showed that the Fed see the terminal rate for this cycle >5%, which was higher than what they'd previously projected in September.

3/ What does the market think? 🤔

Current pricing suggests that the Fed will hike to 4.75% in March (25bps) and then again to 5.00% in May, before pausing at June's meeting.

It became evident at February's FOMC meeting, that the tightening process is drawing to a close...

Read 17 tweets

ted

@tedtalksmacro

Jan 30, 2023

1/ BTC has been around since 2009, and so far we can say that #Bitcoin bear markets typically end:

🔻 After price moves -85% off the previous bull market high.

⏱ ~470 days before the next halving

[A thread on a macro bottom + new bull cycle]

2/ BTC is +44% in January alone, traders are beginning to wonder if the lows are already in and many people are sidelined 🤷‍♂️

Institutional capitulation has seemingly peaked, the 2024 Bitcoin halving is becoming closer by the day and the Fed are close to pausing rate hikes.

3/ There are many, many metrics and arguments that you can use to attempt calling a macro-bottom on BTC, but I'm going to keep it simple...

Let's compare the current bear market drawdown to previous cycles, especially with regard to time, price and macro-economic context.

Read 17 tweets

Share this page!

Enter URL or ID to Unroll

ted

Try unrolling a thread yourself!

More from @tedtalksmacro

ted

ted

ted

ted

ted

ted

Did Thread Reader help you today?

Don't want to be a Premium member but still want to support us?

Send Email!