The inverting the yield curve | 08 April 2022

#SP500:

U.S. job growth continued at a brisk clip in March, with the unemployment rate falling to a new two-year low of 3.6% and wages re-accelerating, positioning the Federal Reserve to raise interest rates by a hefty 50 basis points in May. Data for February was revised higher to show 750,000 jobs added instead of the previously reported 678,000. The unemployment rate dropped to 3.6%, the lowest since February 2020, from 3.8% in February. The yield on the benchmark 10-year note rose to 2.4152%; Two-year Treasury yields rose to 2.4239%, slightly inverting the yield curve. Right now, the catalyst is wages not keeping pace with inflation but inflation also forcing the Fed to continue to have to tighten policy aggressively.

Trading recommendation: sell 4610 and take profit 4480.

XAUUSD:

Positive macroeconomic statistics from the United States will have a negative impact on the value of gold. The U.S. jobless rate improved to 3.6% in March from 3.8% in February despite jobs growth for the month coming in at 431,000. “Gold seems like it could still trade between the $1,900 and $1,950 range, but the risks of bearish momentum winning out are growing. The monthly growth or decline in jobs is being closely watched by the Fed to decide on the rate hikes that will be needed to contain inflation expanding faster than an economy growing at its quickest pace in four decades.

Trading recommendation: range 1895 -1974.

#WTI:

The International Energy Agency agreed to join in the largest-ever U.S. oil reserves release. Biden announced a release of 1 million barrels per day of crude oil for six months from May, which at 180 million barrels is the largest release ever from the U.S. Strategic Petroleum Reserve. The announcement comes as part of a broad effort by Biden to tackle raging inflation that has hurt U.S. consumers and threatens Biden's fellow Democrats as they seek to maintain control of Congress in the November elections. It will more than cover oil exports to the United States from Russia, which Biden banned this month. Russia typically produces about 10% of the world's crude, but only accounts for 8% of U.S. liquid fuel imports. This is a negative signal for oil prices.

Trading recommendation: sell 102.50 and take profit 99.44