7 Aug 2013
Fed Heads jawboning keeping rates higher, but greenback not following suit - yet
FXstreet.com (Barcelona) - Over the last two weeks, the various Fed Governors and FOMC committee members who have spoken publicly have made every effort to prepare the public for “tapering”.
The Fed’s Evans latest to talk up “tapering” to audiences
Back in June, the “tapering” word had started to make the rounds and it led to a spike in rates up to 2.723% on the 10-year Treasury and a short-term pullback in equity markets. However, rates fell and stocks reversed higher after Ben Bernanke came out and eased the “tapering” concerns with very dovish comments in a speech of his own.
Now, rates are right back up to near 2.723% resistance (they actually traded above that level last Thursday prior to Friday’s “weak” US jobs report which sent them back to the downside) and stocks are starting to waiver a little bit as the tapering talk is heating up again.
We know the various Fed Heads who have spoken recently favor commencing tapering efforts in either September or October. What we do not yet know is whether “Helicopter Ben” is on board with these gentlemen or not. Will he back up their comments with hawkish language of his own? Or, will he simply plan to leave the tapering to whoever takes over for him at the end of his term? Bernanke doesn’t have any speeches scheduled this week or next, so we will have to rely on economic data flow as a guide to what they may do or say next.
Outlook for DXY and Treasury yields
As of right now, the 10-year Treasury Note Yield is close enough to the 2.723% resistance level that a few strong data points here in the US could push rates up through there and put them on a track for 3%. Then again, some poor data would send them back down towards 2.5% in a hurry.
The DXY is a different animal in that its movements also depend heavily on what’s going on in Europe, Japan, Britain and in the other “major” countries. As of right now, technicians are calling for just a bit more downside in the index and then an explosive move to the upside – perhaps coinciding with a breakout in rates. Technicians say to watch 80.71 - 81.13 as levels where the upside for the DXY could begin.
The Fed’s Evans latest to talk up “tapering” to audiences
Back in June, the “tapering” word had started to make the rounds and it led to a spike in rates up to 2.723% on the 10-year Treasury and a short-term pullback in equity markets. However, rates fell and stocks reversed higher after Ben Bernanke came out and eased the “tapering” concerns with very dovish comments in a speech of his own.
Now, rates are right back up to near 2.723% resistance (they actually traded above that level last Thursday prior to Friday’s “weak” US jobs report which sent them back to the downside) and stocks are starting to waiver a little bit as the tapering talk is heating up again.
We know the various Fed Heads who have spoken recently favor commencing tapering efforts in either September or October. What we do not yet know is whether “Helicopter Ben” is on board with these gentlemen or not. Will he back up their comments with hawkish language of his own? Or, will he simply plan to leave the tapering to whoever takes over for him at the end of his term? Bernanke doesn’t have any speeches scheduled this week or next, so we will have to rely on economic data flow as a guide to what they may do or say next.
Outlook for DXY and Treasury yields
As of right now, the 10-year Treasury Note Yield is close enough to the 2.723% resistance level that a few strong data points here in the US could push rates up through there and put them on a track for 3%. Then again, some poor data would send them back down towards 2.5% in a hurry.
The DXY is a different animal in that its movements also depend heavily on what’s going on in Europe, Japan, Britain and in the other “major” countries. As of right now, technicians are calling for just a bit more downside in the index and then an explosive move to the upside – perhaps coinciding with a breakout in rates. Technicians say to watch 80.71 - 81.13 as levels where the upside for the DXY could begin.