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US stocks close near session lows

  
Analysis, US Market
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Stocks still off into the close

The US stock indices sold off into the close and are closing near the low levels for the day.

  • The Dow and S&P are lower for the 2nd consecutive day
  • Utilities and Communications lag
  • Materials and Real Estate lead
A look at the indices at the close show:
  • Dow -249.40 points or -0.72% at 34496.84
  • S&P index -30.31 points or -0.69% at 4361.04
  • NASDAQ index -93.33 points or -0.64% at 14486.21
WTI crude oil futures hit this highest level in 7 years. The US treasury market was closed in observance of Columbus Day.  But concerns about higher interest rates persistent the market. The U.S. Treasury will auction off three and 10 year notes tomorrow at 1 PM ET. They will auction off 30 year bonds on Wednesday.

European equity close: Late-day improvement but uneven trading

  
Analysis, Global Indices

Closing changes for the main European bourses:

  • German DAX -0.1%
  • UK FTSE 100 +0.5%
  • French CAC +0.1%
  • Spain IBEX -0.8%
  • Italy MIB -0.6%
A week ago, German stocks looked like they might spring back but it’s treading water near the lows now. In today’s trade it found some life late as US equities improved but there’s no follow through from last Thursday’s rally, which was the biggest in months.
Closing changes for the main European bourses:

Bitcoin passed the test, now it passes $57,000

  
Analysis, BITCOIN

A lesson in what happens when something can’t go down

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Bitcoin is up $3200, or 6%, since Friday and has broken above $57,000 for the first time since May.
On Friday, I was highlighting the mounting case for buying it. We’ve seen a barrage of negative news lately including a(nother) ban from China and it became increasingly clear the White House has also taking aim at crypto.
Yet none of those headlines even dented bitcoin. When something can’t fall on bad news, it’s not going to fall at all.

Trading 101: USDJPY & the US 10 year yield

  
  Analysis

Close correlation – How can you know unless you are told?

If you are trading the USDJPY pair you will want to have a US10 year yield overlay on your chart. Why? Because the pair tracks the US 10 year yield vey closely.
Close correlation - How can you know unless you are told?
So, the recent break of 1.60 on the US10 year is opening up a retest of 1.800 ish. This means that USDJPY could have a 130+ point run up higher this week towards 114. All of this on Fed taper hopes for November + inflation fears forcing central banker’s hands.
US10US oil

Natural gas: Prices edging higher & German inventory levels very low

  
  Analysis

Germany has a problem

Energy will be in focus for the near term as China, India and Lebanon all face shortages.
A cold winter in Europe could be a real concern. Here are the current gas storage levels in Germany. Notice how low they are.
Germany has a problem
Natural gas till holding near term daily support. This is a key level for now marked on the chart. That will need to break lower to give confidence in last week’s ‘blow off’ top actually being a blow off top.
Gas

3 reasons gold will fall further, target for year-end in 2021 & 2022 price

  
  Analysis

An extract from ABN Amro on gold, analysts looking for USD1700 by the end of this year and USD1500 at end 2022.

Citing 3 reasons.
1. Tighter global monetary policy ahead:
  • Fed to start hiking early 2023
  • Bank of England and Bank of Canada to probably hike before then
  • ECB, Bank of Japan, Reserve Bank of Australia, Riksbank and the Swiss National Bank will likely hike later
  • Only in China has the central bank been easing in piecemeal steps to support the economy.
If you are unfamiliar with the transmission of monetary policy into gold pricing ABN Amro go on:
  • Tighter monetary policy is in general negative for gold prices, also because yields on government bonds have a tendency to rise
What that means is that gold does not pay ‘interest’ (it does not pay anything and indeed holders of physical gold can be charged storage fees). Hence rising rates on fiat diminish the attractiveness of gold.
2. 2-year UST real yields to rise:
  • “There are two dynamics at play here. First, we expect the 2yr US treasury yields to rise a bit more than what markets are now expecting. Moreover, we think that inflationary pressures will ease. This results in higher 2y US real yields and that will weigh on gold prices going forward.”
3. ABN Amro see the USD as rising further ahead.
  •  “This will likely be a modest increase. Higher US dollar is generally negative for gold prices.”
Gold chart …
An extract from ABN Amro on gold, analysts looking for USD1700 by the end of this year and USD1500 at end 2022. 
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