The yield curve inversion | 14 Julio 2023

#SP500:

The U.S. added the fewest jobs in 2-1/2 years in June, although persistently strong wage growth pointed to still-tight labor market conditions, U.S. government data showed. Investors are more cautious going into a very important week with the beginning of earnings season and a very important inflation reading mid-week. The Fed is still widely expected to raise rates at its meeting later this month after pausing in June, as job growth remains above the pace in the decade before the pandemic. Economic resiliency and a tight labor market have kept Federal Reserve rate hikes on the table, along with hopes for a soft-landing scenario.

Trading recommendation: sell 4406 and take profit 4315.

XAUUSD:

Expectations of another rate hike by the Federal Reserve to tame stubbornly high inflation helped push a closely watched part of the U.S. Treasury yield curve to its deepest inversion since 1981, once again putting a spotlight on what many investors consider a time-honored recession signal. The U.S. central bank has hiked interest rates aggressively over the last year to fight inflation that hit around 40-year highs and remains above its 2% target rate. Rate futures markets reflect a greater than 80% chance of a quarter-point hike later this month but much less conviction the Fed will proceed beyond that, even though Fed officials said in June a second quarter-point increase was likely by year end. This is a negative signal for precious metals.

Trading recommendation: sell 1929 and take profit 1902.

#WTI:

Oil prices climbed about 3% to a nine-week high as supply concerns and technical buying outweighed fears that further interest rate hikes could slow economic growth and reduce demand for oil. After two months of price consolidation between roughly $63-73, WTI moved into technically overbought territory for the first time since mid-April. Top oil exporters Saudi Arabia and Russia announced fresh output cuts last week bringing total reductions by OPEC+, the Organization of the Petroleum Exporting Countries and its allies, to around 5 million barrels per day, or about 5% of global oil demand. OPEC+ production cuts are expected to tighten the market, driving supply deficits in the second half of 2023, supporting higher oil prices.

Trading recommendation: buy 72.10 and take profit 75.05.