Risk-On Sentiment Makes Comeback Amid Falling Rates, US Dollar – But for How Long?
2024.11.19 01:57
Rates dipped slightly yesterday, with the falling by about two basis points and the declining by 40 basis points, providing some relief to risk assets. Given the significant movements in rates and the recently, a pause to consolidate these gains seems natural.
The dollar index remains well above the 10-day exponential moving average. If the trend is to continue upward, this moving average should act as a support region.
The narrative is similar for the 10-year rate. At this juncture, it appears that the 10-year is closer to a significant breakout than the dollar index. A move above 4.5% for the year could signal that a rise to 5% on the 10-year rate may be imminent.
Despite lower rates and a weaker dollar, the ProShares Inflation Expectations ETF (NYSE:) rose today. As the chart below illustrates, the ETF is nearing a critical breakout above a significant level of resistance.
This ETF closely tracks the 10-year Treasury, so a breakout in RINF likely indicates rising 10-year rates. The market may be poised to see who will be appointed as the next Treasury Secretary, which could influence future movements.
increased today, reaching approximately $2,615, but this rise appears to be a retest of a previous breakdown. The outlook might change if gold can surpass the lower trend line. However, any upward movement in gold is likely to be short-lived as long as the dollar and interest rates continue to rise.
The is currently hovering at a critical support level. This is a pivotal point, but if interest rates begin to climb and the dollar strengthens, it could spell trouble for the index. The prevailing pattern is a rising wedge marked by a throw-over. We are now awaiting confirmation of a potential break.
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