 Okay, very good morning to you. It's Thursday the 17th of June. I hope you're doing well And thank you very much for everyone who joined me on the YouTube channel last night I hope that was a useful live session And all we need to do is go back and go on to the categories of amplifier live videos And you better see that recording if you want to go back and review the event as it unfolded But what I wanted to use today's briefing for really was a bit of a debrief of what exactly happened Looking at the main points of why the market had this hawkish reaction And as you would well know by now that being high yields pressing T notes lower Weighing on gold as the dollar spiked higher pushing major currency pairs lower in euro dollar and cable And stocks also coming under a bit of pressure at the close the cash markets Dow down about seven tenths of one percent s and p are half then as that was down about a third of one percent So percentage change not a massive move, but certainly there were some surprises in last night's announcement for sure Just quickly before we get into that An overview of sentiment this morning And as I said, I'm not going to go into the charts from a technical perspective I'll let tim and the amplifier live community on the the private discord feed go into that but We are keeping an eye at the moment on These dollar based pairs because we are retesting the low that held during the age of pack session at the moment in the lights of the euro And close proximity to that also in cable Gold is also top right just started to drift down a little bit and breaking through that a pack low We are approximately still A good 10 bucks away from the initial spike low that we saw in the aftermath of the Fed But certainly Definitely from a technical point of view There is some scope for for move low moves lower And beyond that point the 1800 dollar handle has acted as a significant point on the daily chart of technical support If we were to trade heavy throughout the session from the equity indices Definitely yeah a negative reaction Perhaps a little bit more controlled Definitely a more pronounced move as we'll look at in the us 10 year and the currency markets and that of equities In terms of the actual size of movement But what I wanted to do is just have a look on the the daily chart for both the s&p and nasdaq The nasdaq basically is a reflection of this same kind of setup, which is For me, we're trading at around 4200 in the s&p There's been such a good level of support at 40 180 and a half Which has been that previous top four majority of maids flipped to support through late late of that month and then early june so for me I think there's there's definitely room for downside given the hawkish surprise for for the fed but In actuality, I mean if actually look where equities are and and actually what's developed I mean, we're still very elevated. So, you know, if we did move lower, I don't think that particularly is necessarily time to call it quits on on equity markets just yet but Definitely, I think from a technical perspective. There's there's a little bit room perhaps for a bit more downside to materialize before finding a bit of Footing and perhaps we'll see that materialize as we go into the us session Later on today the nasdaq as I said, it's fairly similar in to that degree Just looking here Kind of similar in the sense of 13 737 is that same kind of made june area that inflection point for price And so you can see here There is there's plenty of room on the downside until we get back down to that kind of zone of what I see is kind of more Thurma support in that regard in the intraday space Targeting obviously on the downside the initial lows that we're seeing both in the aftermath and in the asia pack session Of the fmc announcement and then near term below the s1 to down the daily pivots that horizontal support level seen around the 13800 mark as well as as more near term Levels to watch the u.s 10 year perhaps was the most telling of a narrative If that makes sense and what I mean by that is on the left hand side here Was the spike higher that we saw on the release of the last non-farm payrolls report Which came out in excess of 500 000 jobs, but obviously in combination with the Payroll report prior to that being a large disappointment The fact that jobs have just not kept pace and the fact that even inflation was high people still looking through it in terms of the price pressures being somewhat transitory and Last week was really and and really since june. We've seen a pretty Consistent decline us yields which has led the 10 year all the way up north of the 133 handle And then basically there was a little bit of kind of profit taking on that bit of position squaring going into the fed event because we knew it was going to be Particularly important one and then obviously they came out and as we'll discuss shop the market With the dot plots for 2023 anticipating two rate hikes and prices immediately moved Sharply lower and as we'll go through some of the main comments comments on inflation as well bumped us lower again But the point being is interesting where we are trading right now, which is 131 18 and of course that is Absolutely flat to where we were prior to that move so I think a little bit context is quite key because What tends to happen in a situation like this is that you can kind of let your Let your mind run away with yourself to all of a sudden the Fed are going to start hiking rates That's that's certainly not what they said Is just as a function of market positioning Certainly the the t-note move was was pretty pronounced in that respect But as I said, let's use this as a bit of a debrief session So what was the main thing and the main thing of definitely was that initial snap comment If you go back on the recording you'll probably hear me getting a little bit excited Because it was quite an obvious thing to see straight off If you're looking at the kind of major news wires And it was the fact of course that they anticipate two interest rate increases by the end of 2023 Now to put that in context I would say on the balance in terms of the banks on the street Probably the expectation was for one rate hike. So that would be a movement. Let me just Put this into a graphical form for you So this is the june dot plot for rates on the top and the march projections down at the bottom So what we were looking at really is the the composition of dots moving from point a here Up here to point b an actuality that then resulted in a move Of interest rates seen at the end of 2023 on a median basis at point six percent Which would constitute two interest rate hikes and where we're at at the moment in the federal funds rate And as I said most rarely looking for one But the rest of them weren't looking for two. They were looking for none So this definitely was a big surprise for markets and hence the reason why there was an immediate And the most aggressive move was seen on that first flash of that that headline This was certainly much more hawkish to bump that up to the point of where they'd see two rate hikes Important though to to also cover the drone power did go on to say and obviously there's a press conference that followed the initial statement And all the projections that discussing liftoff now would be highly premature And the dots are not a great forecaster of future rate moves. He definitely is right the dots Have been questioned many times in the recent past about their validity because you know the market assigns so much priority to the composition of these dots And that trajectory of the green line and the median dot plot But in reality very rarely are they accurate because what you're trying to ask the central bankers to do Basically is forecast where interest rates are going to be At a period quite far in the future two years and beyond so The fact that them being accurate is pretty much impossible to that degree But obviously we know this is kind of a channel of forward focus But for me it's kind of that's a bit of Management on the behalf of pal there. So he knows for sure that a two rate hike 2023 change is going to spook the market He would have known that before even the market moved And so coming out and saying look Discussing liftoff is totally premature and it definitely is premature You know, we're talking about Rates rising twice In two years time So I think that warrants a bit of Of control and that respect and then also him highlighting the fact that the dots are not a great forecast. It's almost kind of Cutting off his own nose despite his face a little bit because it's his tool But he's trying to use it to water down then the hawkish impact of what he's trying to convey So things are improving it constitutes rates a little higher in the future That isn't going to change the near term And so he's just trying to assure the market with what otherwise is a more hawkish change I think in the in the dot plot in that respect The other things he said that I thought were very important were Well, I'm going to leave it on this shot for now He the comment on inflation. So there was really two legs to the move Yesterday and they were both in the same direction in a hawkish manner. So the two rate one um indicative of 2023 was one the second one was pal said bottleneck effects putting upward pressure on inflation Have been larger than anticipated and inflation Could turn out to be more persistent than they expect That was when we got another push in the same direction As the press conference got underway. And so this is that kind of admission that yeah inflation Perhaps we misjudged it. It's a little bit more punchy than we thought It's going to be a little bit more sticky than we thought And the market again took that as another signal to carry on some of those initial moves Those two parts were definitely the standout in my mind to take away The other thing then is the actual Summary of economic projections and we were anticipating movement here, particularly in GDP But the PC inflation number was also going to be key Now for GDP they upgraded that from 6.5 to 7 percent The rest remains largely unaltered But a little bit higher perhaps in 2023 and again somewhat then Constituting the rationale behind wide oc rates higher At that point But the PC inflation one was was quite meaningful They obviously have seen a significant upgrade here of a four percentage point from 2.4 to 3.4 But what I did think was interesting at the time Was that to me it's Still kind of saying that inflation is transitory My personal take here is that they have Admitted to the fact that inflation is a little bit more Stronger than what they thought and it might stay around for a little bit longer a few more months than they anticipated But if you actually look at these forecasts for PC inflation in 2022, this is the end of 2022 It's basically unaltered. Okay. It's 0.1 up from march to june, but that's that's minimal So they've seen a big increase to the near-term inflationary pressures But they still see it pretty much easing off as they previously did do so it's still to me Is it is a buy-in to the idea of of transitory inflation in that respect? Obviously that was the big figure down here at the bottom So in reality for anyone not used to kind of monitoring this stuff in real time That would be one of the main first headlines that you would see on the bloomberg or the Reuters kind of ticker tape That would stick there as a main highlighted headline The point six is definitely a large jump from where we were obviously at point one The other things then to be aware of was this Conversation piece around tapering that was obviously the other kind of sweet spot. We were looking for and He said literally we are talking about talking about tapering So as much as that was kind of coined as a bit of a joke that that's kind of the phrasing That actually was the phrase that he used when asked about tapering Have made progress but still a ways to go. He said It will be appropriate to consider a plan for tapering at the coming meetings if progress continues We will give advanced notice before taper announcement and provide as much clarity as we can So that latter part is very important That's that kind of notice and that's that general timing the market Consensuses at the moment is the notice will come at Jackson Hole in 10 11 weeks time at the end of August That will then be formalized in September Which then gives the market three or four months perhaps longer to readjust then To then see tapering actually physically commencing in the reduction of bond buying into q1. Let's say of 2022 So on the tapering side, there definitely wasn't any hawker shock there That's pretty much what we're anticipating and and so again in summary It was really the two interest rate hike in 2023 and the comments particularly on inflation That were most most meaningful When I do look at the charts though this morning and I'm really looking forward to The podcast that we put out every every Friday the market watch podcast Just check it out if you haven't already done so on apple or spotify But it's when I have a pretty informal conversation But of a chin wag with the head of trading peers really keen to get his take on on what we've had here Because to me in the near term I'm not sure if I personally see this as too destabilizing for markets After what we had yesterday and my my general rationale there really is that They're rate rates rising A little bit more than what we previously thought because we did think they were going to go up at least once in 2023 Generally now it's two that doesn't really change the near term picture on the timing of tapering Which I think is quite key really for the short term or short to medium term And so it doesn't alter the fact that the august set kind of q1 2022 timeline remains somewhat intact And for me then that is a supporting hand in combination with the fact that the fed to me From the from data on the doplots quite clearly see inflation still being transitory albeit Around for a little bit longer than perhaps they previously thought But we'll get his take on friday a couple of banks have commented and Goldman Sachs basically said they continue to forecast broad dollar weakness driven by the currency's high valuation and the broadening global economic recovery, but More hawkish Fed expectations and the ongoing tapering debate look likely to be a headwind to the dollar shorts over the near term Um, Deutsche bank kind of adding Similar types of views. There's now a greater scope for front-end real rate repricing in the u.s yield curve And also room for higher volatility both factors are bullish for the dollar He said, uh, they're they're economists that support for the fed was providing euro dollar upside is no longer there um, so You know take it as you will what I what I would say Is what I generally do or try to do is a day after an event like that You know, if you go on to bloomberg reuters zero hedge all these types of things Just try and read what other banks are saying You know, you don't have to be this This kind of market wizard trying to calculate and work out, you know, your own unique view What's quite a healthy exercise? I always find is um, you know, construct your own thoughts But also read what others are saying and just get a general vibe for what the consensus estimate or the consensus view is on this situation Um, and the kind of rationale behind how they've drawn those conclusions And generally I find that a pretty healthy exercise then for giving me a fairly balanced view without Imparting too much of my own Kind of preference because I do feel from a from a fed perspective I do have the self-awareness at least to understand that I definitely sit on the more dovish side if I was a essential banker And I kind of base that on the fact that the fed have always been relatively cautious. And so that's why um, the market reacted like it did yesterday I think most people kind of see it like that in terms of the yelling power approach and so Yesterday was quite a surprise. But yeah, I'm What I'm saying is have those views But try to then kind of broaden out your your thinking and obviously Stress test it by understanding what other large financial institutions are looking at. All right Um quick whip through of some other news The Aussie has seen a little bit of a bid overnight, but it's really in honesty It's failed to sustain that recovery amid comments of the ongoing dollar strength at the moment But Australia's unemployment rate Tumbled overnight. In fact, this is a quick look at the Australian unemployment rate As you can see here, it's back to pre-pandemic levels already So comparative to say the u.s. And other places the Australian jobs market is right back into play again And so their unemployment rate overnight came in at 5.1 percent expectations were for 5.5 percent In fact, Australian jobless rate has fallen for seven consecutive months. And so the rba Kind of expectations have increased now that the rba the central bank will not extend the time on Timeline on the bank's yield control measures next month, which is one of their own unique Ways in order to control the yield curve to support and stimulate the economy through the last 15 months or so So as I said a little bit of Aussie appreciation at the point of release But it's failed to really sustain that as all these currencies are trying to tackle the kind of Galvanized u.s. Dollar at the moment The other thing I wanted to mention It's not really so much for a talking point at the moment, but warrants putting on your literally on your radar because There is a Disturbance being highlighted as a weather pattern That's in close proximity to the Gulf of Mexico And in fact the national hurricane center have said the Gulf of Mexico has a 90 chance of a tropical Cyclone formation over the next five days with a tropical depression likely by late thursday or friday when the low moves across the western part of the Gulf of Mexico So obviously very strategically important here for oil well gas refinery operations In the Gulf of Mexico So it does it's worth keeping an eye on but in all honesty I think we're not seeing any real reaction in energy prices at the moment I wouldn't anticipate we would not unless This weather pattern starts to intensify Beyond what is being calculated at the moment It needs to get up there into category hurricane status To really start influencing things at the moment. It doesn't look like that's the case But there's still some time to run at this point. It is going to strengthen So it's worth keeping an eye on on the national hurricane center site All right terms of the day. What have we got? You've got the smb rate decision at 8 30 the weijan rates at 9 I'm going to go into too much of that because I know a lot of you don't trade those those particular currencies So you've got the final hicp number at 10 from the eurozone again final reading So I'm not looking for any real market move on the back of that So this morning really is about digestion of what's happened yesterday And and I think the market's going to take a better time to really draw its own conclusion at this point So I wouldn't get too aggressive Not unless you start to see kind of technical breakouts And then this afternoon jobless claims Anticipated to continue the positive trend of late. So decreasing to 359 000 from 166 Um, and you've got Philly Fed also both figures coming out at 130 speaker wise You've got the chief economist of the ucb at 130 You've also got Janet Yellen the treasury secretary. She is speaking as well today. We just remind myself on my notes um, I believe she's giving a testimony to The house panel on the federal budget today wouldn't be again expecting much in the way any market move on the back of that But you know just so you're aware she has been making quite a lot of comments of late about china specifically But also on the coattails of the fed, you know, perhaps just keeping on your radar that she is speaking today She could say something Supply wise Coming out five six billion coming out of spain nine to ten billion out of france Really fixed income traders a two five seven note and a two-year Floating rate note auction announcement of sizes at four p.m With a 16 billion five-year tip auction at six p.m. And that is it gonna leave it there. Excuse me feel free to Drop me a comment if there's any questions and i'll see the rest of community online on amplify live All right, take care. Have a good day