Making Sense

"Volatility is an opportunity in disguise." US yields continue to move lower as markets price in 81 bps of rate cuts beginning July 2023 and by end of Dec 2023 to 4.02%. Market pricing is in significant departure from the Fed interest rate guidance of Fed Fund Rate at 5.10% through 2023. Data released yesterday showed Initial jobless claims for the w/e March 18 decreased by 1,000 to 191,000 and continuing jobless claims w/e March 11 increased by 14,000 to 1.694 million. Initial Jobless claims under 200K still denotes a healthy market and shows no signs of strain post the SVB Collapse. Sales of new single‐family houses in February 2023 were at a seasonally adjusted annual rate of 640,000, 1.1% above the revised January rate of 633,000, but is 19.0% below the February 2022 estimate of 790,000.  In yesterday's price action,  US Yields 2Y High low range 25 bps to close the session at 3.81% near lows of 3.76% US Yields 10Y High low range 15 bps to closed the session at 3.40% n...

"The goal of a successful trader is to make the best trades. Money is secondary." Quick wrap on the market moves at the start of Asian Session: USDINR is in a strong momentum lower and part of the position was squared off  . Follow the momentum !! 81.75 is an important support but the move could very well stretch to 81.50 or 81.02. We need to look for price action to confirm a reversal trade. Patience !! Patience !! Domestic equity markets are trading in the green with Nifty at 17788, up 1.1% after failing to break the 200 DMA at 17414. FPI flows have been stable with Friday number seen at $ 30 mn inflow. The Services PMI released on friday showed services activity at a 12 year high and robust GST collection of Inr 1.50 trn in the month of February. India Money market operations (figures in bracket show prev day closing numbers) LAF absorption                     -61,000 crores (-82,000 crs) O/S Repo      ...

Meditate. Visualize !! Yet another strong US economic release -  Initial jobless claims for the week ending February 25 came in at 190,000 (Prior 192K) with 4w moving average at 193K.  Initial claims for unemployment insurance is a leading economic indicator because it is an indication of emerging labor market conditions in the country.  Weekly Continuing Claims came in at 1.655 mln; Prior was revised to 1.660 mln from 1.654 mln. While continued claims are not a leading indicator, they provide confirming evidence of the direction of the U.S. economy. Low levels of Initial claims show tightness in the labor market and therefore sticky wage-based inflation pressures. Unit labor costs in the nonfarm business sector increased 3.2% in the fourth quarter of 2022, reflecting a 4.9% increase in hourly compensation and a 1.7% increase in productivity. Unit labor costs increased 6.3% over the last four quarters. Q4 productivity increased 1.7%, a 130 bps revision below the prelimina...