Weekly Macro Matters
Macro Matters – Weekly review, w/c May 22
Macro Matters – Weekly review, w/c May 22
TradeDay Macro Matters
Macroeconomic/Geopolitical Developments
• US debt ceiling agreement imminent
• Treasury yields rise as Fed hawks resurface
US Debt Ceiling Set to Be Resolved
House Speaker Kevin McCarthy indicates a deal to raise the debt ceiling may be finalized soon. With the brinkmanship subsiding, markets have rallied positively. However, the focus may quickly shift back to concerns over a slowing US economy.
Treasury Yields Climb Sharply
Yields on US Treasuries have risen significantly, driven by expectations of further Fed rate hikes.
• 2-Year Yield: Broke above 4.25%, signaling a possible June rate hike.
• 10-Year Yield: Surged past 3.64%, reaching highs not seen since March.
Hawkish commentary from FOMC members like Thomas Barkin supports the likelihood of additional tightening to combat inflation.
The US
• USD Recovery: The Dollar Index has broken a seven-month downtrend, fueled by rising rate expectations. Key support now lies at 102.80.
• NASDAQ Surge: The tech-heavy NASDAQ continues its remarkable 2023 rally, but overbought momentum indicators suggest caution.
• Earnings Season Wrap-Up: While tech stocks like Alphabet and Microsoft outperformed, broader markets like the S&P 500 show weaker advance/decline trends, signaling underlying fragility.
Europe
• UK Inflation in Focus: Headline CPI is expected to drop to 8.3%, but persistent core inflation at 6.2% may keep the Bank of England on track for additional rate hikes.
• German DAX Hits All-Time Highs: Risk-on sentiment has pushed the DAX above 16,000, with further gains likely unless profit-taking sets in.
Asia
• USD/JPY Breakout: Yield differentials continue to drive USD/JPY higher, as the US 10-year yield rises while the JGB remains stagnant.
• Nikkei Soars: Japanese stocks reach multi-decade highs, though overbought conditions suggest potential for a pullback.
Commodities
• Oil: Choppy trading continues as mixed factors like Chinese data and US debt ceiling optimism weigh on sentiment. Resistance at $73.89 will be crucial.
• Gold: A stronger USD and reduced safe-haven demand have pushed Gold futures below $1970, signaling further downside toward $1900.
On the Calendar
Macro Data:
• 22 May: Eurozone Consumer Confidence
• 23 May: Flash PMIs (Japan, Eurozone, UK, US), New Home Sales
• 24 May: UK CPI, German Ifo, FOMC Minutes
• 25 May: US Weekly Jobless Claims, Pending Home Sales
• 26 May: UK Retail Sales, US Core PCE Inflation, Michigan Sentiment
Please see our Terms of Use for additional details and restrictions.
Permitted products: Tradeday traders are allowed to trade listed Futures products only; we allow trading on the following exchanges: CME, CBOT, NYMEX, and COMEX. Trading of Stocks, Options, Forex, Cryptocurrency, and CFDs are not permitted nor available in our program or platforms.
Risk Disclosure: Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. You should only put capital at risk that you can afford to lose. Past performance is not necessarily indicative of future results.
Evaluation Challenge Disclaimer: The trader pass rate of the evaluation program was 28.2% between October 2023 and March 2024. The evaluation is a realistic simulation of trading under actual market conditions and is difficult to pass even for experienced traders. Testimonials appearing on this website may not be representative of other clients or customers and are not a guarantee of future performance or success.
Simulated Trading; CFTC Rule 4.41: During the Evaluation Challenge, users trade in simulated markets. Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
Refund Policy: TradeDay works with a number of third-party service providers that require immediate commitment from TradeDay when an account is opened, as such we are unable to offer a refund after purchase. If you are unsure that TradeDay is the right place for you we strongly recommend you take the 14-day free trial where there is no obligation to purchase, and no credit card is needed to sign up. All membership fees are considered used in full.
TradeDay is not registered in any capacity with the SEC or CFTC.28.2