The old adage is that magazine covers are a jinx. That’s particularly true with The Economist but Barron’s has had some doozies, including making the case for Pfizer earlier this year (it’s down 40% since).

The cover this week certainly raised alarm bells but it may prove to be one of the better-timed calls in the magazine’s history.

US 10-year yields are down to 4.56% from a high of 5.02% on October 23 and 4.92% at the start of the week.

There are a few reasons to think this top in yields (and bottom in bonds will last).

1) The wave of buying

The FOMO that hit the bond market this week showed just how much money was waiting on the sidelines waiting to buy Treasuries and Treasury-proxies. Everyone was waiting for the BOJ, Fed, quarterly refunding and non-farm payrolls. When all those events were benign, the buying hit. Now there might have been some derivative squeezes in there or short covering, but I think that by-and-large, it was real money. There is much more behind that and if we get back close to 5%, it will be there.

2) The psychology was a tell

A couple weeks ago, people were talking about a rise to 6 or 7% yields. That kind of talk is always a dead-giveaway about a market that’s gotten ahead of itself. It was the same thing when people were talking about $100,000 bitcoin, $200 oil or dozens of other big trends. Whenever the hyperbole starts, the move usually ends.

3) The economy is slowing down

The data is beginning to show what the Fed wants to see. It’s tough to say right now whether inflation will get stuck at 3.5% or fall all the way to 2.0% but it’s not-reaccelerating. Ultimately, we will go where the data takes us but with non-farm payrolls and ISM services slowing, it’s a good bet that more weakness is coming.

The big hurdle in the week ahead will be another 10-year Treasury auction. I expect yields to range in the 4.50-4.75% area for a time and we will see if buyers show up near the top of that range. If so, it will confirm the top.

This article was written by Adam Button at www.forexlive.com.

There are reports of an earthquake being felt in New Delhi, with buildings shaking. A related report cites a 6.2 magnitude earthquake in the Nepal region, however the USGS classifies it at 5.6.

It’s 11:45 pm local time in New Delhi so people would be indoors. The duration was a reported 40-50 seconds.

New Delhi is in northern India, near Nepal and the fault lines that run near the border. Given the 33 million people that live in the city and the quality of infrastructure, even a small earthquake could be a major tragedy.

Notable earthquakes have hit the area in history but it’s certainly not known for them. The later two in 1956 and 1960 only caused injuries but there is fear that the city could eventually be hit by a large earthquake, one of which was recorded in 1720.

This one appears to be some distance away so the shaking in the city would have been much less than near the epicenter and given preliminary reports, it’s unlikely there is notable damage.

This article was written by Adam Button at www.forexlive.com.

The Nasdaq Composite opened higher yesterday
following the less hawkish than expected Fed decision where the central bank left interest rates unchanged once
again and Fed Chair Powell said
that they “have not yet made any decision on future meetings” suggesting that
they may not hike at all anymore.

On
the data front, yesterday the US
Jobless Claims missed expectations once again with Continuing
Claims now rising at a fast pace. At this point, it’s hard to see the Nasdaq Composite rallying on bad
data as the recession becomes more likely, but the market might like it in the
short-term because it would decrease Treasury yields and increase rate cut
odds. Anyway, the technicals should help in determining the most likely
direction with the key levels in place.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite opened higher yesterday as the positive risk sentiment from the FOMC
meeting extended to the following day. The price broke above the key 13174 resistance, and it
now looks likely that the buyers could reach the trendline around
the 13400 level. That’s where we can expect the sellers to step in more
aggressively as they will have a much better risk to reward setup to position
for a drop into the 12274 support.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more closely the
upside gap above the 13174 resistance. We can also notice though, that the
price is a bit overstretched as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
buyers would have a much better risk to reward setup if they waited for a
pullback into the minor upward trendline where they will also find the 38.2% Fibonacci
retracement level and the red 21 moving average for confluence. The
sellers, on the other hand, will want to see the price breaking lower to
invalidate the bullish setup and position for a drop into the 12274
support.

Upcoming
Events

Today, we conclude the week with the US NFP report
and the ISM Services PMI.

This article was written by FL Contributors at www.forexlive.com.

• Eurozone September unemployment rate 6.5% vs 6.4% expected
• Germany September trade balance €16.5 billion vs €16.3 billion expected
• Fears high as Hezbollah leader set to speak for the first time since the war
• BOE’s Hauser says banks must guard against faster bank runs

Markets:

• EUR/USD up 28 pips to 1.0648
• WTI crude oil up 44-cents to $82.90
• US 10-year yields down 2.2 bps to 4.64%
• STOXX 600 flat
• Gold up $1 to $1987
• NZD leads, USD lags

Germany posted a robust trade surplus of €16.5 billion for September, although its exports showed a modest decline of 2.4% month-over-month. Meanwhile, France’s industrial production fell by 0.5%, and the Eurozone saw a slight uptick in unemployment, rising to 6.5% compared to the anticipated 6.4%. The data didn’t affect the euro but it crept up in the past two hours as the US dollar began to slide as a fresh bid for bonds appeared.

Cable managed to climb through yesterday’s best level to a one-week high of 1.2230, running some minor stops above yesterday’s high before paring back slightly. News out of the UK was light and the move was driven by the dollar side of the equation. On the Bank of England pricing now indicates only a 16% chance of BOE hike in December, rising to 25% later before switching to cuts in the back half of 2024.

USD/JPY slacked off to 150.20 after rising as high as 150.52 in Asia. Sellers appear to be lining up around that 150.50 level as it held several times over the past day.

The winner so far is NZD, which is up 24 pips or 0.37%. That’s despite a mediocre risk background in light of Apple’s 2.5% decline post-earnings.

This article was written by Adam Button at www.forexlive.com.

Trend
trading is a strategy that involves
identifying the direction of a market’s momentum and making trades in alignment
with that direction. It’s a popular approach among traders because it can
potentially yield significant profits over time. However, like any trading
strategy, it requires careful planning, discipline, and knowledge. Here are
some tips to help you succeed as a trend trader.

1. Understand the Basics: Before you start trend trading,
   make sure you understand the basics of the stock market and trading. This
   includes knowing how to read charts, understanding different types of
   orders (like stop-loss orders), and being familiar with various trading
   platforms.
2. Identify the Trend: The first step in trend trading is to identify the
   trend. This can be done by looking at the price action over a certain
   period. If the price is consistently moving upwards, it’s an uptrend. If
   it’s consistently moving downwards, it’s a downtrend.
3. Use Technical Analysis: Technical analysis is crucial in trend trading.
   Indicators like moving averages, relative strength index (RSI), and MACD
   can help you identify trends and potential reversal points. For instance,
   if a stock’s price crosses its moving average, it might indicate a trend
   change.
4. Set a Stop Loss: A stop loss is an order that automatically sells your
   position if the price drops to a certain level. It’s a way to limit your
   losses if the trend reverses. Always set a stop loss when you enter a
   trade.
5. Be Patient: Trend trading is not about making quick profits. It’s
   about riding the trend for as long as it lasts, which could be weeks,
   months, or even years. Be patient and let your profits run.
6. Don’t Chase the Market: If you’ve missed the start of a trend, don’t try to
   jump in late. Chasing the market can lead to poor decision-making and
   increased risk. Wait for the next opportunity instead.
7. Manage Your Risk: Never risk more than you can afford to lose. A common
   rule is to never risk more than 1-2% of your trading capital on a single
   trade. This way, even if a trade goes against you, it won’t wipe out your
   account.
8. Keep Learning: The financial markets are constantly changing, and so
   should your knowledge. Keep learning about new strategies, tools, and
   trends. Read books, take courses, and learn from experienced traders.
9. Review Your Trades: Regularly review your trades to identify what’s
   working and what’s not. This will help you refine your strategy and
   improve your trading performance over time.
10. Stay Disciplined: Stick to your trading plan and don’t let emotions
    drive your decisions. It’s easy to get carried away by fear or greed, but
    discipline is key to long-term success in trend trading.

Remember, successful trend trading takes time and practice.
Start with a demo account to test your strategy before risking real money. And
always keep in mind that while trend trading can be profitable, it also
involves significant risk.

This article was written by FL Contributors at www.forexlive.com.

Contrarian trading
is an investment style that goes against prevailing market trends by
buying assets that are performing poorly and then selling when they perform
well. Contrarian traders believe that people who say the market is going up do
so only when they are fully invested and have no more purchasing power. At this
point, the market is at a peak; when people predict a downturn, they have
already sold out, and the market can only go up.

Here are
some tips for contrarian trading:

1.
Research
and Knowledge:
Before you start contrarian trading, it’s crucial to understand the market
conditions and the factors affecting the prices. Read financial news, reports,
and follow market trends.

2.
Patience: Contrarian trading often requires a
longer time horizon for returns. It’s important to be patient and wait for your
investments to yield results.

3.
Risk
Management: Like
any other trading strategy, contrarian trading involves risks. Make sure to
diversify your portfolio to mitigate potential losses.

4.
Discipline: Stick to your investment plan even if
the market moves in the opposite direction. Don’t let emotions drive your
trading decisions.

5.
Analysis: Regularly analyze your trading
performance. Learn from your mistakes and make necessary adjustments to your
trading strategy.

Contrarian
trading is a strategy that involves going against the current market trends.
It’s about buying assets that are performing poorly and selling when they
perform well.

Here are some tips for successful
contrarian trading:

·
Understand
Market Psychology: Contrarian traders need to understand the psychology of the
market. They should be able to identify when investors are likely to act
irrationally, either due to fear or greed.

·
Do
Your Homework: Research is key in contrarian trading. You need to thoroughly
analyze the fundamentals of the underperforming assets before investing in
them.

·
Patience
is Key: Contrarian trading isn’t about quick profits. It often requires waiting
for the market to recognize an asset’s true value. Be patient and don’t rush
your trades.

·
Risk
Management: Contrarian trading can be risky. Ensure you have a solid risk
management strategy in place. This could involve setting stop losses or
diversifying your portfolio.

·
Stay
Disciplined: Stick to your investment plan even if the market moves against
you. Emotional decisions can lead to poor trading choices.

·
Regular
Review: Regularly review and adjust your trading strategies based on
performance and changing market conditions.

While
contrarian trading can be profitable, it’s not suitable for everyone. It
requires a deep understanding of market dynamics, a high tolerance for risk,
and the patience to wait for potentially long periods before seeing returns.

Remember,
contrarian trading isn’t for everyone. It requires a deep understanding of the
markets, patience, and a high tolerance for risk. But with careful planning and
execution, it can be a profitable trading strategy.

This article was written by FL Contributors at www.forexlive.com.

The US dollar has slacked off in the past hour and that’s opened the door towards a fresh one-week high in cable. GBP/USD is just a couple pips shy of yesterday’s high of 1.2225 and there could be some stops if it’s broken.

Even if it does break, I wouldn’t expect fireworks with non-farm payrolls just over an hour away.

As it stands, cable is on track for a third straight day of gains and fourth in the past five. In the bigger picture though, it’s consolidating near six-month lows. The next leg is going to depend on what the US dollar does. Positioning is crowded in dollar longs so if US data begins to weaken or the Fed takes a more-explicit neutral stance, then there could be some shifts.

In addition, equities are now in the seasonally-strongest portion of the year. If stock markets continue to climb then expect this pair to climb at the same time as it’s one of the higher-beta pairs.

This article was written by Adam Button at www.forexlive.com.

• Prior 5.25%
• Bank rate vote vs 3-6 expected
• Statement details to follow..

This article was written by Justin Low at www.forexlive.com.

Headlines:

• Is the bond market rout finally over?
• Dollar stays pinned down after yesterday’s retreat
• Equities perk up in European morning trade
• BOJ’s main message is to maintain easy policy, even if their actions contradict – report
• ECB’s Knot: Policy rates now are at a good ‚cruising altitude‘
• Eurozone October final manufacturing PMI 43.1 vs 43.0 prelim
• Germany October unemployment change 30k vs 15k expected
• Switzerland October CPI +1.7% vs +1.7% y/y expected
• US October Challenger layoffs 36.84k vs 47.46k prior

Markets:

• NZD leads, USD lags on the day
• European equities higher; S&P 500 futures up 0.6%
• US 10-year yields down 2.9 bps to 4.705%
• Gold up 0.3% to $1,987.87
• WTI crude up 1.4% to $81.56
• Bitcoin flat at $35,431

The reversal rally in bonds yesterday was the main story and the reverberations continue to be felt today, with yields also looking rather sluggish in European trading.

10-year Treasury yields are down at the lows near the 4.70% now and that is dragging the dollar down with it as risk trades continue to soar. The squeeze continues and will likely stay the course until we get to the US jobs report tomorrow.

Equities were cautiously optimistic early on before eventually running with a full on rally, as European indices are now clocking in 1.5% to 1.9% gains across the board. S&P 500 futures were up only 0.2% in the handover from Asia, but are now seen up 0.6% or 26 points on the day.

EUR/USD moved up from 1.0590 to 1.0630 levels while AUD/USD is largely holding gains at around 0.6430-40 levels on the day, up by 0.6%. The dollar is the laggard with USD/JPY trailing by 0.4% to 150.30 levels although not much changed from the end of Tokyo trading.

It’s all about the question if this is the top in yields and if so, that could as well signal a top in the dollar rally over the last few months.

This article was written by Justin Low at www.forexlive.com.

• Prior 47.46k

US-based employers announced 36,836 job cuts last month, a roughly 9% increase compared to the same period last year. That continues the trend of rising job cuts relative to the corresponding month a year ago and can be seen as a sign of softening in labour market conditions overall.

This article was written by Justin Low at www.forexlive.com.