Fed's Audacious Pivot
CLUB/EDGE client post Wed Sept 18th. Focus on big rate cuts, dollar & yield spike, warning for banks, and payroll risks.
Everything Got Hit
Except the dollar. LOL
The dollar was the only winner today, which is really weird considering the size of the cut.
Big cuts would depreciate the USD even more...
Yes, I wrote that.
Give it time.
For the day, I ended up being right - but not exactly for the right reasons!
I warned that I expected a bond pullback, but I phrased it wrongly: "Time For Yield Spike".
Result: short-end rates crashed but longer-duration rates didn't.
I warned that as TLT pulled back, I expected yen and gold to follow. That worked AFTER it didn't.
Result: After the cut & Powell presser, we had sharp intraday rallies across the board. Then soon after we got this news maker, and ALL that was up went straight down:
FITCH ON US BANKS: SHORTER ASSET DURATIONS WILL LEAD TO FASTER REPRICING OF FIXED-RATE ASSETS, POTENTIALLY INCREASING NET INTEREST INCOME VOLATILITY.
Translation: duration evaporation will cause banks to lose net interest income. That's bad.
GOLD had jumped +1% after the FOMC statement only to settle 1% lower by the bell. Silver fell 2.5% because silver is more dramatic - and economic growth sensitive.
DXY touched 99.89 briefly before bouncing.
I did warn that “where yields go dollar will follow”.
Result: yields (for the most part) spiked and USD (for the most part) followed. DXY closed right at my 100.20 price target. Lol