"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 12 hours Gold: The Religion Of Currency
  • 2 days Economists Polarized On Trump’s Tariff Plan
  • 2 days Why Are Investors Overlooking Gold Stocks?
  • 3 days The App That Democratized Trading Is Now Worth $5B
  • 3 days Super-Cycles: Why Gold Is Set For A Breakout
  • 3 days U.S. Sanctions Russia For Election Meddling And Cyberattacks
  • 3 days Snap Shares Tank Over ‘Slap Rihanna’ Campaign
  • 3 days How Low Can Bitcoin Go?
  • 3 days Amazon’s Japan HQ Raided In Anti-Monopoly Push
  • 3 days Is Barrick Gold Close To Finding A Bottom?
  • 3 days Morgan Stanley’s Top 10 Short-Term Stock Picks
  • 4 days China: The Land Of The Ultra-Rich
  • 4 days Alibaba Soars On Reports Of China Listing
  • 4 days What Killed Toys ‘R’ Us?
  • 4 days SEC And IRS Take An Aggressive Stance On Cryptocurrencies
  • 4 days Bears And Bulls Face Off In Gold Markets
  • 4 days Bitcoin Is Winning Over The Housing Market
  • 4 days Markets Slide Sideways As Trade War Fears Linger
  • 4 days Why Aren’t Millennials Investing?
  • 5 days Bitcoin And Banking: The Next Mobile Payment Revolution
Snap Shares Tank Over ‘Slap Rihanna’ Campaign

Snap Shares Tank Over ‘Slap Rihanna’ Campaign

Snapchat’s share prices tumbled after…

Ashraf Laidi

Ashraf Laidi

Ashraf Laidi is the author of "Currency Trading and Intermarket Analysis: How to Profit from the Shifting Currents in Global Markets" - Wiley Trading.

More Info

Stocks, Bonds, USD: What Rate Hike?

The US July jobs report was strong, or at least clearly better than the June report. 215K in NFP, 2.1% average hourly earnings y/y, unemployment rate unchanged at 5.3% and the participation rate also unchanged at 62.6%. The big rally in the US dollar was completely eroded, with EURUSD clawing back all of the 120-pips it lost immediately after the release. The only currencies not to end higher against the USD were CHF (due to renewed SNB jawboning), CAD (disappointing CAD jobs) and GBP and SEK.

Stocks, Bonds, USD: What Rate Hike?
Larger Image

Yields fall for 4th straight week

Our interpretation of the US jobs report is that it is strong enough to openthe door open for a September rate hike (in the event that August figures arestrong across the board), but not sufficiently strong to eliminate the debate,and thereby maintaining the probability for the Fed to hold in September andwait until December, for which more data will be required.

Consequently, US bond yields fall for the 4th straight week, testing below their 55 and 200-week moving averages. The 2.15% support should likely hold for now, but if the bond market is supposedly pricing higher chances for a September hike, then falling yields imply either the bond market does not agree, or/and it is anticipating slowing growth and weakening inflation ahead.

And what would happen to the existing bullishness in bonds by speculators, highlighted in our piece from earlier this week.

Into the weeklies for stock indices

It's time to ignore the daily chart and turn to the weekliesfor the Dow Jones Industrials Index and S&P500.  While the S&P500retests its 200-DMA, the DJIA has already fallen below both its 55 and 200-DMA, trading3.0% below the 200-DMA, the farthest away since November 2012—the yearwhen Apple began a 45% decline off its highs. The DJIA is also alreadytrading below its 55-WMA, dragged down by Chevron, Caterpillar, Exxon and Dupontbeing the worst performer in the index over the last 4 weeks.

Whether this means the next stop in the S&P500 is 2048, or the next stop in the DJIA is near its 100-WMA at 16,956, remains to be seen. Interestingly, both levels correspond to key levels of support. As long as hawkish members of the Fed continue to hint at rising odds of an autumn rate hike, stocks will not be helped.

This month will be filled with muscle-flexing speeches from most FOMC members. And stock won't like it.


Back to homepage

Leave a comment

Leave a comment

Sign Up For The Safehaven Newsletter