Yesterday's targets, yields and the yield curve
|Yesterday's prices contained the potential to trade dead or explode such as the EUR/USD on Tuesday. No middle ground existed to yesterday's potential as the choice was either/or. The market choice was trade dead as the S&P's traded 40 points, 6 points for WTI.
Yesterday's targets achieved destinations. WTI Achieved Target 107, Brent Achieved target 110.
SPX Achieved Target 4034 while NASDAQ Achieved Target at 111703.00.
EURUSD Target 1.0587 and highs at 1.0568.
Yield curve
The yield curve from a day trade perspective is a symphony with movements at a basic 6 points. Anymore than 6 points is a bonus and a free money trade. Yields includes the 3 month as the 3 month yield is no different than the 2 year, 10, 20 and 30. Its a vital component to the overall yield curve.
As yields progress throughout the week, the count changes from 6 - 29 points or an average at 17 points. Above 17 points includes only the 20 and 30 year yields. Yields are married into 1 symphony orchestra as correlations between and among yields correlate +97%.
The total yield curve runs at 2.73 with the highest potential to move overall about 66 points. The long end at the 20 and 30 yields contains the greatest movements to the overall 66 curve. The overall curve may split at 33 points to cover 3 month to 10 year then 20 and 30's.
Interested may view btwomey.com for many examples to yield spread analysis between nations, how to factor yields to currency prices and to forecast currency prices from yields. Europe and negative rates is factored and transformed as well for the EUR/USD.
ts simple math by using a calculator but all worked out in detail and shown. Yields most vital for USD/JPY are 2, 3, 5 and on rare days, the 7 year yield. The number 7 is a bible number and a vital constant to markets, financial instruments and prices. For USD/JPY, the 7 purpose is to act as resistance.
The current 10 year to 3 month spread is most vital to forecast and view the domestic interest rate. Current spreads run 1.88 and a good target for the FED's continued raise campaign.
The 10 year to 2 runs 2.80, then 20 to 2 runs 3.06 and 0.46 to the 30 and 2 year. Overall spread runs 0.46 to 1.88 and 0.46 to 3.06 on the high side. Current 0.46 is built in for support from current 1.0.
The current Effective Fed Funds rate runs 0.83 and another raise places the effective rate at 1.08 for a 50 point raise and 0.95 for a 25 point raise.
Yields vital points
2 year = 2.64, 2.65.
3 Year = 2.87,
5 year = 2.93, 2.94.
7 year = 2.97, 3.01.
10 year = 2.9450, 3.0135.
20 year = 3.33, 3.47.
30 year = 3.12, 3.13.
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