19 February 2011

Benchmarks : Weekly Update

  • This past week, other central banks' willingness to tighten vis a vis the Fed became very apparent (eg Bini Smaghi "ECB may raise rates as price pressures rise", China rate hike and increased reserve requirements, BOE's implicit acceptance of market forward curve). This contrasting stance is the trigger for continuation of the USD downtrend after a brief 2-week pause. If not for Middle East tensions, I think the USD would be even lower by now.
  • USDX : Think last week = start of new downleg which will lead us to test 76.88 and 75.63 (for last week, close on close from 78.46 to 77.66)
  • US10YY : Lower yield (-6bp) on the week but not enough to crystallize an evening star reversal. Just about clinging on to the higher yield outlook. I plead guilty to thesis drift, but think new reason (hedge commodities) to hang onto short UST positions valid.
  • S&P500 : Gone square S&P (and short Simsci). The former technically wrong. But price pressures and margin compressions worry me, hence, locked in a leveraged 6% gain first.
  • Gold : Uptrend continuation after a difficult 4-month shakeout period. Buy any dips hereafter.
  • Finally, have a look at the 2nd table from Surly Trader. CPI surely will be higher going forward, taking market rates up with it. 
  • P&L progressing nicely. Ahead of budget now.

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