Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

<ul>
<li>Barring the spike at the start of the pandemic, US rates volatility is close to the upper end of the 10-year range, which does not bode well for EM rates.</li>
<li>EM rates have sold off relative to the US at a much faster pace than in other similar episodes on a combination of fiscal deterioration, monetary tightening, and political noise.</li>
<li>While the spread of EM local rates to the US is extremely wide, it is prudent to be selective and focus on relative-value and curve trades to minimize risks.</li>
</ul>


Barring the spike at the start of the pandemic, US rates volatility is close to the upper end of the 10-year range, which does not bode well for EM rates.
EM rates have sold off relative to the US at a much faster pace than in other similar episodes on a combination of fiscal deterioration, monetary tightening, and political noise.
While the spread of EM local rates to the US is extremely wide, it is prudent to be selective and focus on relative-value and curve trades to minimize risks.


EM Local Rates in the Line of Fire as US Rates Volatility Spikes Higher

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

Nasdaq-100 Stock Index / Technical Analysis

<ul>
<li>US 10yr yield is knocking on the 1.69% breakout pivot at a time when the NDX displays topping signals providing some clarity for risk in December.</li>
<li>NDX RSI bear divergence is maturing and lacking a final new high to complete a high conviction top signal (December).</li>
<li>The NDX wave 5 high sending a warning signal of the SPX topping in mid-December for a pullback cycle into early Q1.</li>
</ul>


US 10yr yield is knocking on the 1.69% breakout pivot at a time when the NDX displays topping signals providing some clarity for risk in December.
NDX RSI bear divergence is maturing and lacking a final new high to complete a high conviction top signal (December).
The NDX wave 5 high sending a warning signal of the SPX topping in mid-December for a pullback cycle into early Q1.


Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

Cross-Asset Liquidity Strategist

Implementing Research Using Alt Data & AI

CrossBorder Capital

CrossBorder Capital is a London-based independent investment advisory firm. Founded in 1996, it exploits a gap in the investment arena by focusing on Central bank liquidity. 

It specialises in the monitoring and analysis of global liquidity flows - an important determinant of asset prices, from currencies through to bonds, equities and real estate.

CrossBorder Capital implements its investment strategy and currently manages over US$ 350m.


Cross Asset Strategy

<ul>
<li>Flattening Treasury yield curves, particularly at the back-end, are rarely bullish for risk assets. </li>
<li>When combined, as now, with a steepening front-end they warn of upcoming credit problems.  </li>
<li>Bonds are telling us that economies are breaking-down.  Low ‘real’ carry compromises the long-term outlook for bonds, but we must not ignore their warning message for 2022  </li>
</ul>


Flattening Treasury yield curves, particularly at the back-end, are rarely bullish for risk assets. 
When combined, as now, with a steepening front-end they warn of upcoming credit problems.  
Bonds are telling us that economies are breaking-down.  Low ‘real’ carry compromises the long-term outlook for bonds, but we must not ignore their warning message for 2022  


<ul>
<li>US yields have jumped higher and the US dollar has strengthened on the back of higher-than-expected inflation prints and speculation of change at the Fed's helm.</li>
<li>EM rates have also moved higher as their correlation with US rates is currently on the high end of the historical range.</li>
<li>The bout of volatility has resulted in outliers, and therefore potential trading opportunities, within EM countries based on their performance relative to their respective betas.</li>
</ul>


US yields have jumped higher and the US dollar has strengthened on the back of higher-than-expected inflation prints and speculation of change at the Fed's helm.
EM rates have also moved higher as their correlation with US rates is currently on the high end of the historical range.
The bout of volatility has resulted in outliers, and therefore potential trading opportunities, within EM countries based on their performance relative to their respective betas.


Outliers Within EM Rates Amid Rising Volatility of US Rates

US Treasury (10 Yr Generic) / Technical Analysis

US 10yr yield call for a tactical top at 1.68% and pullback to 1.45% trendline unfolded in line but is showing squeeze risk of consensus long yield positioning.Yield plunge post NFP caught many by surprise amid a squeeze after hitting out top zone call at 1.68%. BOE was simply the trigger.RSI divergence and MACD postures warn of a yield undershoot.The slump in yield favors our XLU long/XLF short as well as gold/commodities. It also hints at inflation expectations taking a breather for the time being.

US 10yr yield call for a tactical top at 1.68% and pullback to 1.45% trendline unfolded in line but is showing squeeze risk of consensus long yield positioning.Yield plunge post NFP caught many by surprise amid a squeeze after hitting out top zone call at 1.68%. BOE was simply the trigger.RSI divergence and MACD postures warn of a yield undershoot.The slump in yield favors our XLU long/XLF short as well as gold/commodities. It also hints at inflation expectations taking a breather for the time being.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

US Treasury (10 Yr Generic) (GT10 GOVT)

EM Local Rates in the Line of Fire as US Rates Volatility Spikes Higher

With EM rates selling off relative to the US at a much faster pace than in other similar episodes in the past, it is prudent to focus on relative...

Gautam Jain, PhD, CFA

Yield Trajectory and NDX Wave 5 Warning

US 10yr yield is knocking on the 1.69% breakout pivot at a time when the NDX displays topping signals providing some clarity for risk in December.

Thomas Schroeder

A Wonkish Warning From Bonds For 2022

Equity investors are ignoring the warning message from World government bond markets for 2022. A steep front-end and flatter back-end of the term...

Michael J. Howell

Outliers Within EM Rates Amid Rising Volatility of US Rates

The bout of volatility ins US rates has resulted in outliers, and therefore potential trading opportunities, within EM countries based on their...

Gautam Jain, PhD, CFA

Yield Pullback Call Unfolding

US 10yr yield call for a tactical top at 1.68% and pullback to 1.45% trendline unfolded in line but is showing squeeze risk of consensus long yield...

Thomas Schroeder

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)