1. Eve Of Rate Announcements: BoC Hike, Fed Hold?
It’s the eve of rate decisions from the Bank of Canada and the Federal Reserve.
The Bank of Canada is expected to raise rates by 25 basis points, while the Federal Reserve is expected to hold.
Both central banks will hold press conferences after their announcements, and they’ll be worth listening to closely. What’s said during those press conferences will tell us how the central banks are thinking and where interest rates could go next.
Also keep in mind: a day before rate announcement, market tends to be calmer. After the announcement, we see a move. But real trend comes later on Thursday or Friday.
2. Yields Cool Off, but Don’t Get Comfortable
Yields have cooled off a bit, with the 10-year Treasury yield at 4.9% and the 30-year at 5.3%. They’ve come down quite a bit over the past week or so.
But this could all change if the Federal Reserve strikes a very hawkish tone or oil prices move higher. Also, keep in mind that the overall trend in yields continues to point upward.
Global yields also remain elevated, and that’s something to watch closely.
Also, yields cooling somewhat hints that there’s some rotation. But data has to confirm this.
3. Gold Clings to $4,000 as Platinum and Palladium Get Crushed
Gold has been under pressure lately, trading around $4,000 but finding support near that level. We’ve flagged this several times: $4,000 is a key level, and we’re watching it closely.
If yields start moving higher, with the U.S. dollar already rising, gold could face even more pressure. A move below $4,000 could be dangerous and potentially send prices lower.
Silver has broken below $55 and is finding some support around $53. As we’ve said before, $53 to $55 is a key support range. A move below that range could be dangerous for the precious metal.
Copper continues to be choppy. Not much is happening, but prices remain elevated. Meanwhile, platinum and palladium have been selling off sharply over the past month or so.
4. The Hot Names Cool Off, and Boring Wins
The S&P 500 tested its 50-day moving average again but wasn’t able to close above it. We continue to watch this closely, as the moving average has acted as a key level for the index for years.
Memory stocks have come down a bit, but there’s still plenty of excitement around them.
Meanwhile, investors paying attention to more boring names, such as consumer staples, have seen a robust move to the upside lately.
This is something we’ve flagged before: boring names were getting beaten up, and investors could rush back into them as the hot names cooled off. That rotation is playing out very well.
5. Bitcoin Slips Below $80,000 & Forex
Bitcoin has dropped below $80,000. At the time of writing, it’s hovering near that level but remains below it. The next big support level is around $76,000 to $77,000. A break below that range could make Bitcoin look very ugly very quickly.
The U.S. dollar is spiking. We are watching the dollar index at 102.5. If it breaks above that level, the U.S. dollar could make a bigger move to the upside.
The euro remains weak against the U.S. dollar, while the Japanese yen continues to be choppy.
The Canadian dollar has jumped a bit over the past week or so, but it remains fragile against the U.S. dollar. The Canadian dollar could make its next move after the Bank of Canada’s rate decision tomorrow.