{"id":51187,"date":"2024-04-16T17:09:42","date_gmt":"2024-04-16T17:09:42","guid":{"rendered":"https:\/\/thepatientinvestor.com\/?p=51187"},"modified":"2024-04-17T08:33:19","modified_gmt":"2024-04-17T08:33:19","slug":"markets-move-to-risk-off","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2024\/04\/16\/markets-move-to-risk-off\/","title":{"rendered":"Markets move to Risk-Off"},"content":{"rendered":"

Bitcoin broke support at $64K, warning that financial markets are moving to risk-off <\/em>. Traders and investors reduce their exposure to risk and focus on protecting their capital. Follow-through below $62K would confirm, warning of a sharp fall (in BTC) and a stock market correction.<\/p>\n

\"Bitcoin\"<\/p>\n

The 10-Year Treasury yield has climbed to 4.67%, confirming our target of 5.0%.<\/p>\n

\"10-Year<\/p>\n

The Japanese Yen fell to 154 against the Dollar, increasing pressure on the Bank of Japan to loosen the cap on long-term JGB yields — to protect the Yen. The result of such a move would be an outflow of Japanese investors from the US Treasury market, increasing upward pressure on UST yields and downward pressure on the Dollar.<\/p>\n

\"USDJPY\"
\n<\/a><\/p>\n

Fed Monetary Policy<\/h2>\n

From CNN<\/a>:<\/p>\n

The US economy\u2019s enduring strength and a \u201clack of progress\u201d on inflation means the central bank likely won\u2019t cut interest rates at its upcoming policy meeting just two weeks away, Federal Reserve Chair Jerome Powell said Tuesday.<\/p>\n

\u201cThe recent data have clearly not given us greater confidence\u201d that inflation is headed toward the central bank\u2019s 2% goal, Powell said during a moderated discussion hosted by the Wilson Center. Instead, he said, there are indications \u201cthat it is likely to take longer than expected to achieve that confidence.\u201d<\/p><\/blockquote>\n

Stocks<\/h2>\n

The S&P 500 broke support at 5100, warning of a correction. Lower Trend Index peaks reflect selling pressure. Our target is 4950.<\/p>\n

\"S&P<\/p>\n

The Equal-Weighted Index ($IQX) continued its downward path after breaking support at 6650, presenting a target of 6250.<\/p>\n

\"S&P<\/p>\n

US Consumers<\/h2>\n

Real retail sales ticked up in March to remain on trend.<\/p>\n

\"Real<\/p>\n

Light vehicle sales also remain reasonably strong, at 15.5 million units (annualized) in March.<\/p>\n

\"Light<\/p>\n

Gold & the Dollar<\/h2>\n

The Dollar Index climbed above 106, strengthened by safe haven demand and the appeal of higher long-term yields. Our target is the October 2023 high at 107.<\/p>\n

\"Dollar<\/p>\n

Gold is again testing resistance at our target of $2400 per ounce, currently at $2383. The Shanghai Gold Exchange continues to display a premium on its international gold contract (iAu99.99) at 558.3 Yuan which translates to $2399 per Troy ounce (31.10348 grams). The domestic contract trades at an even higher price of 569 per gram but is subject to capital controls. The price premium should ensure a constant inflow of physical gold from other exchanges to China for as long it is maintained.<\/p>\n

\"Spot<\/p>\n

Silver retraced from resistance at $29 per ounce and is testing support at $28. The lower Trend Index peak warns of selling pressure. Breach of $28 would warn of a correction to $26. Breakout above $29 is less likely in the short-term but would signal a fresh advance, with a medium-term target of $34.<\/p>\n

\"Spot<\/p>\n

Crude & Commodities<\/h2>\n

Brent crude is in a narrow consolidation (pennant) at $90 per barrel. Continuation is likely and would test resistance at $96 per barrel.
\n\"Brent<\/p>\n

Nymex crude has retraced to test short-term support at $85 per barrel. Respect is likely and would indicate an advance to our target at $90.
\n\"WTI<\/p>\n

Conclusion<\/h2>\n

Geopolitical risk dominates, with an Israeli retaliatory attack on Iran expected before the end of the month.<\/p>\n

Rising crude oil prices are likely to increase inflationary pressure and the yield on long-term Treasuries, with the 10-year yield expected to test 5.0%.<\/p>\n

Safe haven demand from investors is concentrated on Gold, with bond prices falling and stocks warning of a correction. We expect a short retracement to test support levels but respect is likely and would signal another advance.<\/p>\n

Bitcoin is diverging from Gold as investors grow more risk averse. Breach of support at $62K would confirm a correction, with support expected at $52K.<\/p>\n

Acknowledgements<\/h4>\n