U.S. Treasuries have had a great week….thus far. We want to continue to allocate the USTs when yields bounce to the top of our range – currently 2.54%(top of range) on the 10yr yield. So today, with yields approaching the low end of our range (2.42%), you start trimming gains. USTs remain our favorite long position in macro today.
Equities: I’m interested in the Nasdaq’s to be honest – we do own some as of late yesterday as the Composite hit the low end of our range yesterday, we’ll buy the dip for a trade. Implied volatility is at massive premium in the S&P 500 (+96%) WITH the VIX signaling immediate term trade overbought. VIX has moved to bullish trend, so whatever we do in equities on the long side will be brief. The trend line in the S&P 500 is still firmly intact (2819) – however the immediate term “trade” line has snapped.
China: Shanghai Index is back to bearish trend -10% m/m as tariff increases loom but negotiations are ongoing.
Yen: the USD/JPY has now moved to “bearish” trend (bullish Yen futures). We’ll be buying dips here back to the low end of our range in the Futures (top end of the USD/JPY.
ES (bullish) 2876-2924
10yr yield (bearish) 2.42-2.54%
VIX (bullish) 1398-2098
Gold (bullish) 1269-1299
USD/JPY (Bearish) 1.0969-1.1146
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