Another Fed FOMC meet, another inaction. The federal reserve has now gone 54 consecutive meetings without raising interest rates. They keep jawboning, saying that they will raise rates at some indiscriminate point in the future but today the stock market did not believe them and rallied. If they keep crying wolf, soon their ability to manipulate markets with minced words will run out of juice. For the Federal Reserve, in regards to hiking rates, It's time to shit or get off the pot!
Why do we even care about rate hikes? Well, theoretically it has all sorts of implications for the economy, but as this market has made clear traders do not care about the real economy so by proxy neither do I. I just care about making money and if the Fed actually does as they have been threatening for years and actually raises rates that means that there are two blatantly obvious trades that should make us money. The first is to be long the USD. The second is to be short USTreasuries/ long Treasury Note Yields. Let's take a look at the chart for 10yr note yields.
Why do we even care about rate hikes? Well, theoretically it has all sorts of implications for the economy, but as this market has made clear traders do not care about the real economy so by proxy neither do I. I just care about making money and if the Fed actually does as they have been threatening for years and actually raises rates that means that there are two blatantly obvious trades that should make us money. The first is to be long the USD. The second is to be short USTreasuries/ long Treasury Note Yields. Let's take a look at the chart for 10yr note yields.
The daily chart of 10yr yields is currently in a short term uptrend working off major resistance. However, the first step to a bull market is to get over that daily pivot point/50dma around 23.15
The Weekly chart is showing support at what is now a convergence of the 50 & 200wk MA, again here the 23.34 Pivot is a critical obstacle that must be cleared if yields are to indeed rise.
The P&F for 10yr Treasury Yields confirms that we are indeed in a Bullish cycle for yields after the triple top breakout on may 12, 2015
A quick look at the P&F of the USD also confirms that the Dollar is in a Bullish Uptrend.
These charts are confirming that the market is giving the Federal Reserve the benefit of the doubt and is indeed currently pricing in higher rates. Using this information we can feel more confident in placing trades that take advantage of Declining Treasury Note Prices/ Increasing Treasury Note Yields and a Stronger USD. However, for these trades to work as anticipated and not potentially suffer some sort of violent unwinding it is critical that the Federal Reserve does as they say they will and actually raise rates, which with their track record is anything but set in stone.....
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