Something Amiss?

*Fed was more Dovish than expected.

*Fed’s Powell referred to slower growth in Q1, consumer spending is lower, inflation expectations are softer. While at the same time Powell said the U.S. economic expansion is still doing well.

*Fed downgraded expectations for GDP growth and said it would stop the balance sheet shrinking process.

*The Fed Dot Plot still shows an interest rate hike next year is in the cards.

The Market is expecting a rate cut this year, with a 40% probability priced in currently.  Treasuries rallied across the board yesterday. The USD weakened and stocks ticked slightly higher.

Where does this leave us.

Equities should have taken the news positively, but are trading slightly lower this morning.  The U.S. markets are at key technical levels and the question for investors are many:

-Is the Fed more worried about growth than they are letting on?

-Is the Fed just buying time to see how the previous rate hikes affect the economy, and that they can wait to see if inflation rises or growth slows before its next move.

-Is the Fed worried about the global economic weakness and political uncertainty and wants to assure that growth and confidence remains.

-Has the Fed caved to political pressure……

S&P is holding just under the recent highs and resistance at 2825/2850   Seems like a good level to hedge some exposure, cover if we trade above 2850.

The USD reacted negatively to the news from the Fed, this morning it is retracing slightly.  The yield difference between the Euro, CHF, and JPY all favor the USD.

Look for retest of 95.80 level on USD index, a break will see us test 96.00.  Failure should lead to test of 94.80.

Gold bounced off the $1298/1300 support on the news from the Fed. Is now in middle of $1300/$1325 range. We think a weaker USD and dovish Fed will help gold trade higher.

Government bonds have been trading well recently and got a further boost from the various central banks the past few weeks.

U.S. 10 year yield:  2.54%

Italy 10 year yield:  2.51%

New Zealand 10 year yield:  2.03%

Australia 10 year yield:  1.90%

Canada 10 year yield:  1.67%

U.K 10 year yield:  1.16%

France 10 year yield:  .46%

Germany 10 year yield: 0.08%

Japan 10 year yield:  -0.04%

Switzerland 10 year yield:  -.34%

Contact us if you are interested in receiving real time trading signals.
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TickerDate OpenedEntry PriceStopTarget PriceCurrent Price% Change
Short COPPERUSMAY1928/02295.00303.00280.00294.50+0,17%
Long CAMECO (CCJ:xnys)12/0311.9211.2013.0012.17+2,10%
Long Call Option XAUUSD18/0313.0914.78+12.91%
Short Call Option XAUUSD18/035.118.75-71,23%

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