The US500 is retreating today amid continued uncertainty over the US debt limit. We are also seeing fairly mixed data from the US - a fairly strong PMI index for services, but for manufacturing back below 50 points, which could be a sign of a breathless economy. At the same time, in the face of heightened risk and increasing chances of a hike in June, yields are rising quite sharply.
It is worth noting that a similar situation happened recently, when the US500 was trading relatively high, close to 4200 points, and yields started a rally. The US500 only started an actual pullback 2 weeks later, which only ended when divergence closed. The strong rise in yields started on 12 May and given the same period when the indices reacted, we have to look at the date of 26 May, the coming Friday. It seems that stronger declines could start on Friday if indeed the Democrats do not get along with the Republicans by the end of this week. Then the talks will be moved to literally days before the X-date.
Source: xStation5
It is also worth noting the so-called "bear market rally". This is related to the upward correction in the downtrend. The US500 is currently behaving much better than in previous upward corrections in a downtrend. If the situation were to repeat itself, i.e. we are further in a downtrend, the potential for a downward correction from the current level is enormous. On the other hand, it seems that at least temporarily the US500 should react positively to a potential debt limit agreement. After that, the US500 may react to reduced liquidity if the financial sector throws itself into buying newly released bonds. Source: Bloomberg
US OPEN: Wall Street opens higher 🔼 Datadog and ARM in the spotlight 💥
Market wrap 🚨Oil slips below $100 supporting optimism across European and US stocks
Morning Wrap: US–Iran Peace Talks in the Shadow of Trump’s Ultimatum
Daily summary: Oil slumps 8% supporting Wall Street, precious metals and EURUSD
The material on this page does not constitute as financial advice and does not take into account your level of understanding, investment objectives, financial situation or any other particular needs.
All the information provided, including opinions, market research, mathematical results and technical analyses published on the website or transmitted to you by other means is provided for information purposes only and should in no event be interpreted as an offer of, or solicitation for, a transaction in any financial instrument, nor should the information provided be construed as advice of legal or fiscal nature.
Any investment decisions you make shall be based exclusively on your level of understanding, investment objectives, financial situation or any other particular needs. Any decision to act on information published on the website or transmitted to you by other means is entirely at your own risk. You are solely responsible for such decisions.
If you are in doubt or are not sure that you understand a particular product, instrument, service, or transaction, you should seek professional or legal advice before trading.
Investing in OTC Derivatives carries a high degree of risk, as they are leveraged based products and often small movements in the market could lead to much larger movements in the value of your investment and this could work against you or for you. Please ensure that you fully understand the risks involved, taking into account your investments objectives and level of experience, before trading, and if necessary, seek independent advice.
