Tuesday 11 October 2022

US Dollar Cycle Peak Near - Update

Us dollar is extended, now its breaking the most important markets in the world.
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The US dollar is at a regular cycle peak, similar to 2015 rally.

It has rallied on the back of the FED fighting inflation harder and faster than the Europeans.

Going into the winter of 2022/23 Euro zone inflation is going to go complete nuts, the ECB is going to have to react, they are going to have to hike rates further than they want. This late reaction to the inflation fight will take the extreme peak out of the US dollar. 

Forecast: FED hikes 0.75% at the November FOMC, and it adjust hikes to either 0.25% or 0.50%. But all hikes are done once 4.5% is reached on the FED FUND rate. But the Europeans are just getting started with a long way to go.


USD




Another reason is the higher US dollar has forced Foreigners to sell US Treasuries to fund their own systems. Just like 2016 and 2020. All this while the FED is selling $90BN a month. Who is buying, Santa! A marginally lower US dollar will allow some buyers to come back into the market. After all 3% to 4% on the US 10 yr bond is better than most dividend stocks. 



Bonds




The US corporate debt market is $13T. It is now in stress. Corporation funding is entering crisis mode. Panic is the option. Corporate debt is higher than 2008, so BAA rates do not have to move that much to create a mess.  


Corp Bonds





A roll over of the US dollar cycle will benefit these bottoming cycles. Bitcoin, Stocks, Silver (and gold). Well just about everything




BTC





Stocks




Silver



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