Plans to tighten monetary conditions | 05 May 2022

05 May 2022, USD/JPY

USDJPY trading plan:

A jump in U.S. real yields back into positive territory is a sign that a hawkish Federal Reserve is succeeding in tightening some financial conditions. Plans to tighten monetary conditions have led to a selloff in U.S. bond markets this year and to rising yields on Treasury Inflation-Protected Securities, also known as real yields because they subtract projected inflation from the nominal yield on Treasury securities. Positive real yields are typically a sign of a good economic outlook. Rising real yields in recent weeks, however, have come with expected hikes from the Fed as the central bank embarks on an urgent need to contain inflation. Nominal yields for the benchmark 10-year U.S. Treasury notes also rose this week, but by a smaller extent, with the U.S. benchmark 10-year Treasury yield hitting 3% for the first time since December 2018.

Investment idea: buy 129.15 and take profit 129.89.

David Johnson
Analyst of «FreshForex» company
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