The Fed is putting pressure on the stock market | 27 October 2023

#SP500:

The Fed has reduced its Treasury portfolio by $15 billion and is not doing enough to meet its QT target. Meanwhile, the US Treasury has increased its holdings at the Fed to $841 billion, taking $128 billion out of the financial system last week. Some $81 billion was offset by reducing the number of reverse repos with the Fed from $1.114 trillion with the Federal Reserve Bank of New York to $1.448 trillion. However, this was not enough as the money market accounts fell by $65 billion last week. The amount of government debt in the market has increased while liquidity and dollar cash are becoming less available. This is a negative signal for the stock market.

Trading recommendation: sell 4272 and take profit 4170.

XAUUSD:

The support level is advisable when opening positions to buy back for two reasons. Firstly, there is increasing demand for precious metals from jewellers and central banks around the world. Second, geopolitical tensions in the Middle East will have a positive impact on the price of gold as a safe-haven asset. The war between Israel and Palestine will force investment funds and banks to actively buy precious metals. Concerns over the conflict between Hamas and Israel remain a factor that may increase safe haven demand.

Trading recommendation: buy 1950 and take profit 1980.

#WTI:

Saudi Arabia is determined to see oil prices rise and is urging the OPEC+ alliance to be united in this. Most participants in the OPEC+ agreement agree with the Saudis, there are some opponents of reducing production, but the overall consensus has been found and the world's largest oil producers will continue to reduce production, which is favourable for oil price growth. According to the International Energy Agency, the deficit of oil and gas resources on the world market for the period from October to December will amount to about 1.6 million barrels per day, or 1.5% of global consumption. Looking at historical parallels, when the supply deficit exceeded 1%, global oil prices rose by 10-20%.

Trading recommendation: buy 85.85 and take profit 88.14.