Macro Edge – Trading Opportunities In Macro Markets
How are the macro winds blowing?
Macro Edge tells you what you need to know about macro developments in financial markets, together with our latest trading ideas.
Summarized and presented to you in charts!
Heed The Dollar’s Warning. Macro Trading Opportunities
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The USD continues to strengthen broadly, and macro markets remain stuck in their negativity, warning of worse to come for risk assets.
- The USD continues to rally, except against the EUR. Given how macro conditions and markets remain weak, renewed Dollar strength is signaling further sell offs
- CNY has broken out vs the Dollar in a bad way, and continues to make new lows for the year. If CNY continues to weaken vs the USD, expect more selling in global risk assets
- Although UST yields are rallying, the US yield curve remains deeply inverted at multiple points, base metals are still weak, and breakevens remain low
- Given how macro markets have aligned over the past few months, we are looking at further, and possibly steeper, sell offs
- USD strength remains broad based
- Stress levels in USD funding markets are obviously high, and still increasing. Global USD funding conditions are critical to how far financial contagion spreads, and how deep the recession is
- USDCNY is very weak and looking bearish. CNY’s shift, and it being one of the last to weaken vs the USD, heralds a shift in the global cycle, which does not bode well for economic growth and risk assets
- Commodity markets are aligned with the USD and the US yield curve, signaling serious deterioration in global conditions
- WTI remains off its Russian war highs, Aluminum remains very weak, Copper has broken below major support, and Iron Ore looks set to break below its recent range
- US 10y and 30y yields have bounced strongly after breaking below key support in early August, and could retest their current cycle highs. However, UST yields can fall sharply given global conditions, and how other markets have been trending
Trading Ideas – Performance
Trading Ideas – Commentary
- Re-entered Dollar longs against EUR, GBP, AUD, and CAD, as broad USD strength continues
- Entered a short position in Copper’s December 2022 contract in anticipation of further weakness given deteriorating global economic conditions, and bearish indications from other macro markets
- US long yields have turned, although it remains to be seen if a top has been made. Our long TLT call position is still in the red, but we purchased a year long expiry for this reason, to give the market time to make a top (if it does!)
- Went long TLT calls with 1 year expiry, as strong bids for USTs look to be on the horizon as the global cycle shifts
- Stronger USD, with significantly weaker CNY, is a huge warning signal
- Re-inverting yield curve, plummeting breakevens, base metals breaking lower, and now even tumbling oil prices, are all ominous signs
- Closed the straddle on GLD for a net profit of 115%
- Decision to straddle gold using GLD options, instead of putting on an outright long position, has paid off handsomely, with gold tumbling down to ~$1700 after failing its retest of 2000
Trading Ideas
- Long USD:
- Well established trend, in place for >11 months in most major currency pairs
- Recent sharp increases in the Dollar’s value signals that global economic growth is going to take a turn for the worse. Global USD funding markets will tighten even more, driving the USD even higher
- US yield curve’s inversion in early April, and mid June (even as the Fed turned hawkish) is a clear warning sign
- USDCNY has started to move higher rapidly, indicating high levels of stress in global USD funding markets
- USD longs in general should do well, but of the G7 currencies, look to go long the USD vs:
- EUR
- CAD
- GBP
- AUD
- JPY
- Long 10y or 30y US Treasuries:
- Yield curve re-inversion (2s10s, 5s10s) signals the coming end of the current economic growth cycle, which means that nominal yields will start to turn down soon
- Monthly & yearly trends in yields are bearish, and looking for an opportunity to short yields is in alignment with long term trends
- 10y yields have broken below key 2.71% support – keep an eye on whether the breakout is sustained
- Trade can be expressed:
- Long TLT, or long TLT Calls
- Long US T Note/Bond Futures, or long Calls on Futures
- Short Commodities:
- Short oil, copper, aluminum, iron ore, given that so many macro markets are indicating more macro weakness to come
- Oil and copper are the most liquid and accessible markets to trade using futures, or E-mini futures
- Can express the short oil trade by shorting XLE, or purchasing puts on XLE (see ETF Edge)
- Short oil, copper, aluminum, iron ore, given that so many macro markets are indicating more macro weakness to come
Charts for this week’s report can be found in the slides at the beginning of the article.
Do You Want To Make Money Trading?
Learn how to, and more, in our Trading Courses.
King Dollar Showing The Way. Macro Trading Opportunities
Click on the slides above and press CTRL+SHIFT+F to view in full screen. If the slides aren’t loading, you can read them over here.
King Dollar looks to be exerting its strength again.
However, other markets have yet to follow its lead. Is it just a matter of time?
- The USD has continued its rally. Given how macro conditions and markets remain weak, renewed Dollar strength is probably a signal of further sell offs, even though other markets have yet to make firm moves lower at this point
- CNY has broken out vs the Dollar in a bad way, and has made new lows for the year. If CNY continues to weaken vs the USD, expect more selling in global risk assets
- The US yield curve remains deeply inverted at multiple points, base metals are still weak, and US breakevens remain low
- Given how macro markets have aligned over the past few months, we are looking at further, and possibly steeper, sell offs
- USD strength remains broad based
- Stress levels in USD funding markets are obviously high, and still increasing. Global USD funding conditions are critical to how far financial contagion spreads, and how deep the recession is
- USDCNY is very weak and looking bearish. CNY’s shift, and it being one of the last to weaken vs the USD, heralds a shift in the global cycle, which does not bode well for economic growth and risk assets
- Commodity markets are aligned with the USD and the US yield curve, signaling serious deterioration in global conditions
- WTI remains off its Russian war highs, Aluminum remains very weak, Copper’s bounce may have topped out, and Iron Ore prices are consolidating
- US 10y and 30y yields have bounced strongly after breaking below key support in early August, and could retest their current cycle highs. However, conditions are lined up for UST yields to fall sharply given global conditions, and how other markets have been trending
Trading Ideas – Performance
Trading Ideas – Commentary
- Re-entered shorts in EURUSD and GBPUSD. May take more long Dollar positions vs CAD and AUD depending on how price action unfolds
- US long yields have turned, although it remains to be seen if a top has been made. Our long TLT call position is still in the red, but we purchased a year long expiry for this reason, to give the market time to make a top (if it does!)
- Went long TLT calls with 1 year expiry, as strong bids for USTs look to be on the horizon as the global cycle shifts
- Stronger USD, with significantly weaker CNY, is a huge warning signal
- Re-inverting yield curve, plummeting breakevens, base metals breaking lower, and now even tumbling oil prices, are all ominous signs
- Closed the straddle on GLD for a net profit of 115%
- Decision to straddle gold using GLD options, instead of putting on an outright long position, has paid off handsomely, with gold tumbling down to ~$1700 after failing its retest of 2000
Trading Ideas
- Long USD
- Well established trend, in place for >11 months in most major currency pairs
- Recent sharp increases in the Dollar’s value signals that global economic growth is going to take a turn for the worse. Global USD funding markets will tighten even more, driving the USD even higher
- US yield curve’s inversion in early April, and mid June (even as the Fed turned hawkish) is a clear warning sign
- USDCNY has started to move higher rapidly, indicating high levels of stress in global USD funding markets
- USD longs in general should do well, but of the G7 currencies, look to go long the USD vs:
- EUR
- CAD
- GBP
- AUD
- JPY
- Long 10y or 30y US Treasuries
- Yield curve re-inversion (2s10s, 5s10s) signals the coming end of the current economic growth cycle, which means that nominal yields will start to turn down soon
- Monthly & yearly trends in yields are bearish, and looking for an opportunity to short yields is in alignment with long term trends
- 10y yields have broken below key 2.71% support – keep an eye on whether the breakout is sustained
- Trade can be expressed:
- Long TLT, or long TLT Calls
- Long US T Note/Bond Futures, or long Calls on Futures
- Short Commodities
Charts for this week’s report can be found in the slides at the beginning of the article.
Do You Want To Make Money Trading?
Learn how to, and more, in our Trading Courses.
CNY Shouts A Warning! Macro Trading Opportunities
Click on the slides above and press CTRL+SHIFT+F to view in full screen. If the slides aren’t loading, you can read them over here.
The canary in the global macro coal mine, CNY, has weakened further against the USD.
Macro markets really are not confirming the rally in equities, and the CNY might have signaled the end of the summer rally.
- The USD firmed up last week, and could have made its high for the summer, although we must wait for markets to confirm this. Macro conditions and markets remain weak, and the USD continuing its rally will signal further sell offs in risk assets
- CNY has broken out vs the Dollar in a bad way, and is looking to test May’s lows. If CNY continues to weaken vs the USD, expect more selling in global risk assets
- The US yield curve remains deeply inverted at multiple points, base metals are still weak, and US breakevens remain low
- Given how macro markets have aligned over the past few months, we are looking at further, and possibly steeper, sell offs
- USD strength remains broad based
- Stress levels in USD funding markets are obviously high, and still increasing. Global USD funding conditions are critical to how far financial contagion spreads, and how deep the recession is
- USDCNY is very weak and looking bearish. CNY’s shift, and it being one of the last to weaken vs the USD, heralds a shift in the global cycle, which does not bode well for economic growth and risk assets
- Commodity markets are aligned with the USD and the US yield curve, signaling serious deterioration in global conditions
- WTI is now trading in the 80s, Aluminum remains very weak, Copper’s bounce may have topped out, and Iron Ore prices are at the cusp of breaking lower
- US 10y and 30y yields have bounced strongly after breaking below key support in early August. However, conditions are lined up for UST yields to fall sharply given global conditions, and how other markets have been trending
Trading Ideas – Performance
Trading Ideas – Commentary
- US long yields have turned, although it remains to be seen if a top has been made. Our long TLT call position is still in the red, but we purchased a year long expiry for this reason, to give the market time to make a top (if it does!)
- Went long TLT calls with 1 year expiry, as strong bids for USTs look to be on the horizon as the global cycle shifts
- Stronger USD, with significantly weaker CNY, is a huge warning signal
- Re-inverting yield curve, plummeting breakevens, base metals breaking lower, and now even tumbling oil prices, are all ominous signs
- Stopped out of EURUSD, AUDUSD, and GBPUSD shorts for a profit of 4.14%, 3.92%, and 3.21% respectively
- Looking to re-enter USD longs again if the trend remains bearish
- Closed the straddle on GLD for a net profit of 115%
- Decision to straddle gold using GLD options, instead of putting on an outright long position, has paid off handsomely, with gold tumbling down to ~$1700 after failing its retest of 2000
Trading Ideas
- Long USD:
- Well established trend, in place for >11 months in most major currency pairs
- Recent sharp increases in the Dollar’s value signals that global economic growth is going to take a turn for the worse. Global USD funding markets will tighten even more, driving the USD even higher
- US yield curve’s inversion in early April, and mid June (even as the Fed turned hawkish) is a clear warning sign
- USDCNY has started to move higher rapidly, indicating high levels of stress in global USD funding markets
- USD longs in general should do well, but of the G7 currencies, look to go long the USD vs:
- EUR
- CAD
- GBP
- AUD
- JPY
- Long 10y or 30y US Treasuries:
- Yield curve re-inversion (2s10s, 5s10s) signals the coming end of the current economic growth cycle, which means that nominal yields will start to turn down soon
- Monthly & yearly trends in yields are bearish, and looking for an opportunity to short yields is in alignment with long term trends
- 10y yields have broken below key 2.71% support – keep an eye on whether the breakout is sustained
- Trade can be expressed:
- Long TLT, or long TLT Calls
- Long US T Note/Bond Futures, or long Calls on Futures
- Short Commodities:
- Short oil, copper, aluminum, iron ore, given that so many macro markets are indicating more macro weakness to come
- Oil and copper are the most liquid and accessible markets to trade using futures
- Can express the short oil trade by shorting XLE, or purchasing puts on XLE (see ETF Edge)
- Short oil, copper, aluminum, iron ore, given that so many macro markets are indicating more macro weakness to come
Charts for this week’s report can be found in the slides at the beginning of the article.
Do You Want To Make Money Trading?
Learn how to, and more, in our Trading Courses.
Dollar Weakness Continues. Macro Trading Opportunities
Click on the slides above and press CTRL+SHIFT+F to view in full screen. If the slides aren’t loading, you can read them over here.
The Dollar continues to weaken, and “risk” assets in general continue to rally, as markets reacted bullishly to the US CPI’s slight deceleration.
But is that really bullish?
A falling CPI really only confirms what macro markets have been indicating for months now – looming deflation.
- The USD extends its losses, as the summer “risk” rally continues with US CPI starting to decelerate. Markets have been indicating increasing risks of deflation for months now, and it seems like the US CPI is moving to reflect this:
- The US yield curve remains deeply inverted at multiple points, base metals are still weak, and US breakevens remain low
- CNY is still threatening to break out vs the Dollar in a bad way. If CNY breaks out, i.e. weakens decisively vs the USD past current levels, expect more selling in global risk assets
- Given how macro markets have aligned over the past few months, we are looking at further, and possibly steeper, sell offs
- USD strength remains broad based
- Stress levels in USD funding markets are obviously high, and still increasing. Global USD funding conditions are critical to how far financial contagion spreads, and how deep the recession is
- USDCNY is very weak and looking bearish. CNY’s shift, and it being one of the last to weaken vs the USD, heralds a shift in the global cycle, which does not bode well for economic growth and risk assets
- Commodity markets are aligned with the USD and the US yield curve to signal serious deterioration in global conditions
- WTI has fallen back to $90, and Aluminum remains very weak, although Copper has bounced strongly off its mid July lows, and Iron Ore prices have started to consolidate
- US 10y and 30y yields have bounced strongly after breaking below key support in early August. However, conditions are lined up for UST yields to fall sharply given global conditions, and how other markets have been trending
Trading Ideas – Performance
Trading Ideas – Commentary
- US long yields have turned, although it remains to be seen if a top has been made. Our long TLT call position is still in the red, but we purchased a year long expiry for this reason, to give the market time to make a top (if it does!)
- Went long TLT calls with 1 year expiry, as strong bids for USTs look to be on the horizon as the global cycle shifts
- Stronger USD, with significantly weaker CNY, is a huge warning signal
- Re-inverting yield curve, plummeting breakevens, base metals breaking lower, and now even tumbling oil prices, are all ominous signs
- Stopped out of EURUSD, AUDUSD, and GBPUSD shorts for a profit of 4.14%, 3.92%, and 3.21% respectively
- Looking to re-enter USD longs again if the trend remains bearish
- Closed the straddle on GLD for a net profit of 115%
- Decision to straddle gold using GLD options, instead of putting on an outright long position, has paid off handsomely, with gold tumbling down to ~$1700 after failing its retest of 2000
Trading Ideas
- Long USD:
- Well established trend, in place for >11 months in most major currency pairs
- Recent sharp increases in the Dollar’s value signals that global economic growth is going to take a turn for the worse. Global USD funding markets will tighten even more, driving the USD even higher
- US yield curve’s inversion in early April, and mid June (even as the Fed turned hawkish) is a clear warning sign
- USDCNY has started to move higher rapidly, indicating high levels of stress in global USD funding markets
- USD longs in general should do well, but of the G7 currencies, look to go long the USD vs:
- EUR
- CAD
- GBP
- AUD
- JPY
- Long 10y or 30y US Treasuries:
- Yield curve re-inversion (2s10s, 5s10s) signals the coming end of the current economic growth cycle, which means that nominal yields will start to turn down soon
- Monthly & yearly trends in yields are bearish, and looking for an opportunity to short yields is in alignment with long term trends
- 10y yields have broken below key 2.71% support – keep an eye on whether the breakout is sustained
- Trade can be expressed:
- Long TLT, or long TLT Calls
- Long US T Note/Bond Futures, or long Calls on Futures
- Short Commodities:
- Short oil, copper, aluminum, iron ore, given that so many macro markets are indicating more macro weakness to come
- Oil and copper are the most liquid and accessible markets to trade using futures
- Can express the short oil trade by shorting XLE, or purchasing puts on XLE (see ETF Edge)
- Short oil, copper, aluminum, iron ore, given that so many macro markets are indicating more macro weakness to come
Do You Want To Make Money Trading?
Learn how to, and more, in our Trading Courses.
Is Dollar Weakness Over? Macro Trading Opportunities
Click on the slides above and press CTRL+SHIFT+F to view in full screen. If the slides aren’t loading, you can read them over here.
The Dollar took a break from selling off this week. Could this mark the end of its brief summer rally?
If so, be prepared for further sell offs across markets in the near future.
- The USD has stopped selling off, although it is too soon to tell if its period of weakness is over
- CNY is still threatening to break out vs the Dollar in a bad way. If CNY breaks out, i.e. weakens decisively vs the USD past current levels, expect more selling in global risk assets
- US long yields have broken below key support, the US yield curve remains deeply inverted at multiple points, base metals are still weak, and US breakevens remain low
- With so many markets in alignment, we are looking at further, and possibly steeper, sell offs
- USD strength remains broad based
- Stress levels in USD funding markets are obviously high, and still increasing. Global USD funding conditions are critical to how far financial contagion spreads, and how deep the recession is
- USDCNY is very weak and looking bearish. CNY’s shift, and it being one of the last to weaken vs the USD, heralds a shift in the global cycle, which does not bode well for economic growth and risk assets
- Commodity markets are aligned with the USD and the US yield curve to signal serious deterioration in global conditions
- WTI has fallen back to $90, Copper’s bounce looks stalled and Aluminum remains very weak, although Iron Ore managed a decent rally over the last week
- US 10y and 30y yields might have made their cycle highs after breaking below 2.71% and 3% respectively. If this breakout does not fail, conditions are lined up for UST yields to fall sharply
Trading Ideas – Performance
Trading Ideas – Commentary
- Stopped out of EURUSD, AUDUSD, and GBPUSD shorts for a profit of 4.14%, 3.92%, and 3.21% respectively
- Looking to re-enter USD longs again if the trend remains bearish
- Closed the straddle on GLD for a net profit of 115%
- Decision to straddle gold using GLD options, instead of putting on an outright long position, has paid off handsomely, with gold tumbling down to ~$1700 after failing its retest of 2000
- US long yields have turned, although it remains to be seen if a top has been made. Our long TLT call position is still in the red, but we purchased a year long expiry for this reason, to give the market time to make a top (if it does!)
- Went long TLT calls with 1 year expiry, as strong bids for USTs look to be on the horizon as the global cycle shifts
- Stronger USD, with significantly weaker CNY, is a huge warning signal
- Re-inverting yield curve, plummeting breakevens, base metals breaking lower, and now even tumbling oil prices, are all ominous signs
Trading Ideas
- Long USD:
- Well established trend, in place for >11 months in most major currency pairs
- Recent sharp increases in the Dollar’s value signals that global economic growth is going to take a turn for the worse. Global USD funding markets will tighten even more, driving the USD even higher
- US yield curve’s inversion in early April, and mid June (even as the Fed turned hawkish) is a clear warning sign
- USDCNY has started to move higher rapidly, indicating high levels of stress in global USD funding markets
- USD longs in general should do well, but of the G7 currencies, look to go long the USD vs:
- EUR
- CAD
- GBP
- AUD
- JPY
- Long 10y or 30y US Treasuries:
- Yield curve re-inversion (2s10s, 5s10s) signals the coming end of the current economic growth cycle, which means that nominal yields will start to turn down soon
- Monthly & yearly trends in yields are bearish, and looking for an opportunity to short yields is in alignment with long term trends
- Pay attention to 10y yields, and if they break below 2.71% support
- Trade can be expressed:
- Long TLT, or long TLT Calls
- Long US T Note/Bond Futures, or long Calls on Futures
- Short Commodities:
- Short oil, copper, aluminum, iron ore, given that so many macro markets are indicating more macro weakness to come
- Oil and copper are the most liquid and accessible markets to trade using futures
- Can express the short oil trade by shorting XLE, or purchasing puts on XLE (see ETF Edge)
- Short oil, copper, aluminum, iron ore, given that so many macro markets are indicating more macro weakness to come
Charts for this week’s report can be found in the slides at the beginning of the article.
Do You Want To Make Money Trading?
Learn how to, and more, in our Trading Courses.
