News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Stocks, Gold, Bitcoin Tumble Ahead of Fed Meeting - MKT Call: Macro

Stocks, Gold, Bitcoin Tumble Ahead of Fed Meeting - MKT Call: Macro

Christopher Vecchio, CFA, Senior Strategist
Advertisement

MKT CALL: MACRO OVERVIEW:

  • While seasonal tendencies across asset classes typically cater to a ‘risk on’ attitude, the famed Santa Claus rally is nowhere to be seen thus far.
  • US stocks have dropped meaningfully over the past few days, even as the US S&P 500 tagged a fresh all-time closing high just last week.
  • As the Fed signals a more aggressive stance, rate hike odds have been dragged forward, depressing longer-term growth and inflation expectations.

Ho-Ho-Hold Your Horses

In this week’s edition of MKT Call: Macro (formerly The Macro Setup), we discussed how different corners of financial markets are readying themselves for the December Fed meeting, the final rate decision of 2021. While seasonal tendencies across asset classes typically cater to a ‘risk on’ attitude, the famed Santa Claus rally is nowhere to be seen thus far.

US stocks have dropped meaningfully over the past few days, even as the US S&P 500 tagged a fresh all-time closing high just last week. Disruptive, growth stocks in the tech sector have been hit hardest, as the prospect of accelerated tapering has sapped investor appetite for assets that don’t produce significant revenues or return capital to shareholders. That includes cryptocurrency, as Bitcoin and Ethereum have technically entered bear markets (down over -20% from their all-time highs).

For gold prices, even as US inflation rates have hit their highest level since the early-1980s, bids have been scant as rising US real yields – 10-year real yields are up by 20-bps over the past month – have taken the shine off of precious metals. As the Fed signals a more aggressive stance, rate hike odds have been dragged forward, depressing longer-term growth and inflation expectations. Markets are still of the mindset that the inflation story is transitory, even if Fed Chair Jerome Powell has officially retired the phrase from the Fed’s lexicon.

*For commentary from Dan Nathan, Guy Adami, and myself on the US Dollar (via the DXY Index), the US S&P 500, gold prices, Bitcoin, among others, please watch the video embedded at the top of this article.

CHARTS OF THE WEEK

Eurodollar Futures Contract Spread (DECEMBER 2021-DECEMBER 2023) [ORANGE], US 2s5s10s Butterfly [BLUE], DXY Index [WHITE]: DAILY TIMEFRAME(JANUARY 2021 to DECEMBER 2021) (Chart 1)

Stocks, Gold, Bitcoin Tumble Ahead of Fed Meeting - MKT Call: Macro

GOLD PRICE TECHNICAL ANALYSIS: DAILY TIMEFRAME (MAY 2020 TO DECEMBER 2021) (CHART 2)

Stocks, Gold, Bitcoin Tumble Ahead of Fed Meeting - MKT Call: Macro

DXY INDEX PRICE TECHNICAL ANALYSIS: DAILY TIMEFRAME (SEPTEMBER 2020 TO DECMEBER 2021) (CHART 3)

Stocks, Gold, Bitcoin Tumble Ahead of Fed Meeting - MKT Call: Macro

--- Written by Christopher Vecchio, CFA, Senior Strategist

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES