If Jerome Powell Can't Stop The Bull - Can Moody's?
Rating Agency In "Sneaking Bad News Out On A Friday Night" Shocker!
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Animal Spirits vs. Moody's
Friday was quite the day. In staff personal accounts we started the day fully hedged the indices, having applied the short hedges late Thursday in the light of the Powell speech hitting the market. The short hedges were sold (we use the 3x short index ETFs for hedging) for a modest but worthwhile gains early Friday, than we sat back whilst the market ripped upwards and didn't look back. It's not every day one gets both the short and the long side right on all four indices (!) in the same day - so when it happens, time to celebrate, or at least be amused. Right after the close, along comes Moody's with a US debt downgrade, and it remains to be seen how this impacts markets today. Futures have barely reacted overnight - NQ futures are down barely a third of a percent - but New York equity trading hours will tell us the full story.
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To prepare for what comes next, let's turn to our usual charts.
Note - to open full-page versions of these charts, just click on the chart headings, which are hyperlinks.
US 10-Year Yield
We may see the 10-yr move up to 4.8% or so, the top of that blue channel we show at the hard right edge of the chart below. The debt downgrade by Moody's you would expect to have had more of an impact on the yield at this point - again let's see how the day plays out.