SPY, Broad Markets & the FOMC Playbook
Güncellendi
FOMC @ 2:00 PM EST reaction will see one of 3 Events:
1. 75BPS is priced - leading to a move higher to recent intra-week Highs.
2. 75BPS is priced - leading to a tighter range into Powell.
3. 100 - 125 BPS is not priced - leading to a breakdown and a VIXplosion to 31
and VIX Curve inversion.
Powell's conviction @ 2:30 PM EST sets the Equity Complex in further motion of
which there are 3 events:
1. Powell indicates the FED is making progress but needs to see further Data and
intends to remain vigilant.
2. Powell indicates the FED sees further Risks to Inflation and needs to bring
Fed Funds aggressively towards the Inflation Rate.
3. Powell indicates the FOMC's trend toward Higher Rates will need to remain
consistent in order to maintain stability with November an important
timeframe for the FED.
______________________________________________________________________
Nature abhors a Vacuum.
As does the US Dollar - Any spike above 110 leads to 111.71s.
Dot Plots, Terminal Rates... will all see an adjustment, one that has made
higher velocity movements recently.
The Yield Curve - with 1's over 4%, 2's approaching 4%, and a new Inversion
dipping into prior lows and exceeding them @ - 0.487% - doubling the
prior 2 most recent curve inversions.
The Market Signals are quite clear - indicating the FED will raise 100BPS as
a flood of Global Central Banks Rate decisions are set in motion this week
and next.
Competition is building among them. Powell will not be sanguine.
That will not happen today IMHO.
Powell will be direct in the extreme once again as the FED has no
intention of back off until 8 months after their final rate increase.
This is the history of Interest Rate Cycles - this one will be shorter
and far more volatile than prior cycles.
______________________________________________________________________
Yes, we are at the lower end of the Risk Range, but nowhere near the lows.
It is important to remember, RIsk compounds from elevated levels - which
provides vacuous sucking sounds time and again.
______________________________________________________________________
Time favors the Spread, if you are using leverage, the October Monthly Expiry is
the safer Trade into an October Straddle - direction neutrality the higher probability
of profit.
The tightest spread is preferred as the IV is elevated, should it come down, close the
position as IV can move in either direction today, it is VIX Settlement.
Lack of volatility - is the lowest probability providing the performance.
The key to success is to close the position within a few days.
I am taking ATH only.
______________________________________________________________________
Trade Safe & Good Luck.
1. 75BPS is priced - leading to a move higher to recent intra-week Highs.
2. 75BPS is priced - leading to a tighter range into Powell.
3. 100 - 125 BPS is not priced - leading to a breakdown and a VIXplosion to 31
and VIX Curve inversion.
Powell's conviction @ 2:30 PM EST sets the Equity Complex in further motion of
which there are 3 events:
1. Powell indicates the FED is making progress but needs to see further Data and
intends to remain vigilant.
2. Powell indicates the FED sees further Risks to Inflation and needs to bring
Fed Funds aggressively towards the Inflation Rate.
3. Powell indicates the FOMC's trend toward Higher Rates will need to remain
consistent in order to maintain stability with November an important
timeframe for the FED.
______________________________________________________________________
Nature abhors a Vacuum.
As does the US Dollar - Any spike above 110 leads to 111.71s.
Dot Plots, Terminal Rates... will all see an adjustment, one that has made
higher velocity movements recently.
The Yield Curve - with 1's over 4%, 2's approaching 4%, and a new Inversion
dipping into prior lows and exceeding them @ - 0.487% - doubling the
prior 2 most recent curve inversions.
The Market Signals are quite clear - indicating the FED will raise 100BPS as
a flood of Global Central Banks Rate decisions are set in motion this week
and next.
Competition is building among them. Powell will not be sanguine.
That will not happen today IMHO.
Powell will be direct in the extreme once again as the FED has no
intention of back off until 8 months after their final rate increase.
This is the history of Interest Rate Cycles - this one will be shorter
and far more volatile than prior cycles.
______________________________________________________________________
Yes, we are at the lower end of the Risk Range, but nowhere near the lows.
It is important to remember, RIsk compounds from elevated levels - which
provides vacuous sucking sounds time and again.
______________________________________________________________________
Time favors the Spread, if you are using leverage, the October Monthly Expiry is
the safer Trade into an October Straddle - direction neutrality the higher probability
of profit.
The tightest spread is preferred as the IV is elevated, should it come down, close the
position as IV can move in either direction today, it is VIX Settlement.
Lack of volatility - is the lowest probability providing the performance.
The key to success is to close the position within a few days.
I am taking ATH only.
______________________________________________________________________
Trade Safe & Good Luck.
Not
The FSR's continue to support the Demand Destruction actions.Please read November 2021 and May 2022 if you have not.
They are consistent and more importantly congruent.
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