Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

FX & Rates

Two trends that are becoming clearer in these markets is the rise in yields and the rise in energy prices.Together they spell out a ‘reflationary’ stance which is inter-related to the market preparing for Fed tapering asset purchases. This is further supported by the recent move higher in US breakevens which are now set to trend up. While these may appear to be positive developments and signs of markets moving in the right direction, they do not come without risks.

Two trends that are becoming clearer in these markets is the rise in yields and the rise in energy prices.Together they spell out a ‘reflationary’ stance which is inter-related to the market preparing for Fed tapering asset purchases. This is further supported by the recent move higher in US breakevens which are now set to trend up. While these may appear to be positive developments and signs of markets moving in the right direction, they do not come without risks.

Cross Asset Strategy

<a target="_blank">Markets across the board appear to be returning to a reflationary stance, especially now that we have finally seen some decent activity in US Treasuries.</a>Considering Oil is making new trend highs and the worse-than-expected data in the US already likely to be behind us, it does appear that the catalysts for a turn in Bonds are in place. US 10Y yield looks likely to make it to 1.70% while 30Y yield to at least 2.26% if not 2.40%+ again.Longer-term charts that look at the US yield curve and estimate how steep it can go. These charts suggest that we could be on verge of a very significant uptrend in yields that takes us far beyond the highs posted earlier this year.

Markets across the board appear to be returning to a reflationary stance, especially now that we have finally seen some decent activity in US Treasuries.Considering Oil is making new trend highs and the worse-than-expected data in the US already likely to be behind us, it does appear that the catalysts for a turn in Bonds are in place. US 10Y yield looks likely to make it to 1.70% while 30Y yield to at least 2.26% if not 2.40%+ again.Longer-term charts that look at the US yield curve and estimate how steep it can go. These charts suggest that we could be on verge of a very significant uptrend in yields that takes us far beyond the highs posted earlier this year. 

The delivery of the ECB's policy stance and guidance this week raises questions about what is going on and which direction it is facing. The choice of words by the President is particularly interesting.

The delivery of the ECB's policy stance and guidance this week raises questions about what is going on and which direction it is facing. The choice of words by the President is particularly interesting. 

The recent moves higher in US long end yields, when coupled with a stable equity market environment (US), are likely to continue to support USDJPY and probably JPY crosses. USDJPY is strong above 110.70. Nearly all JPY crosses have something that points towards higher levels. AUDJPY and NZDJPY both posted bullish outside days. GBPJPY shows a decent bullish setup but we need to see a break through the 153.50 area. The 5+ figure correction down on EURJPY since June also looks to be over just when we trade at notable levels on EURUSD .While we are still waiting for breaks to be confirmed on many of these crosses, the emerging setups &amp; price action all highlight the risk of higher levels ahead.

The recent moves higher in US long end yields, when coupled with a stable equity market environment (US), are likely to continue to support USDJPY and probably JPY crosses. USDJPY is strong above 110.70. Nearly all JPY crosses have something that points towards higher levels. AUDJPY and NZDJPY both posted bullish outside days. GBPJPY shows a decent bullish setup but we need to see a break through the 153.50 area. The 5+ figure correction down on EURJPY since June also looks to be over just when we trade at notable levels on EURUSD .While we are still waiting for breaks to be confirmed on many of these crosses, the emerging setups &amp; price action all highlight the risk of higher levels ahead.

Technical Analysis

Korea Stock Exchange Kospi Index / Technical Analysis

The Kospi Index has fallen back to key levels that must again be watched closely.The rise in both <a href="https://www.smartkarma.com/entities/krw" target="_blank" data-smartkarma-citation="entities:22828:1" rel="noopener">KRW (USDKRW CURNCY)</a> and JPYKRW are early warning signs that there could be trouble ahead.A break below 3,252 would be an initial bearish sign while a close below 3,220 would confirm that there is likely to be notable danger ahead.

The Kospi Index has fallen back to key levels that must again be watched closely.The rise in both KRW (USDKRW CURNCY) and JPYKRW are early warning signs that there could be trouble ahead.A break below 3,252 would be an initial bearish sign while a close below 3,220 would confirm that there is likely to be notable danger ahead.

Japan

The Japanese yen is the official currency of Japan. 

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The Major Turn in Bonds

US Yields are on the rise again and this time we see indications that a significant trend is on the horizon that could take us beyond the highs in...

Shyam Devani

Europe & The ECB - The Lady

Does the choice of language by the ECB President reveal what might be happening beneath the surface? Ultimately actions speak louder than words.

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FX: JPY Crosses Ready to Move?

Rising yields and stable equities are providing support for USDJPY. JPY crosses are increasingly looking bullish though breaks are yet to be confirmed

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Kospi Index Retesting the Pivot Area

The Kospi Index has pulled back to important levels again and is looking vulnerable. What happens here is likely to be important

Shyam Devani

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