The early month of October began with a myriad of experiences when the equity market went leaching in the red after a break from the long bull run since February. The DJI shed more than 600 points in a single session as risk-on mode eroded unconventionally as investors sought catalysts that precipitated the downfall. The sneeze that began in the US gave a cold to the entire world and for 2 respective days multi assets globally were on a downside spiral. What lingers in many traders minds is how comes that move was not anticipated? and what lessons do we juice out from this new norm of flash crashes? The US02Y has formed technical structures that unravel this conundrum. The FED rapid rate hikes which positively correlate with the US02Y are about to come into a halt as the wedge structural breakout is likely to consolidate after an impressive 5 year bull run as the tightening phase of the business cycle comes to an end. On the other hand, more inflows on equities will pour down as investors urge for risk grows due to the change in monetary policy . Nevertheless, a recession cant be ruled out of the table as the US-China trade war simmers there in derailing the health of the global economy and induce fear across assets all over the world if a resolution wont be met.
The early month of October began with a myriad of experiences when the equity market went leaching in the red after a break from the long bull run since February. The DJI shed more than 600 points in a single session as risk-on mode eroded unconventionally as investors sought catalysts that precipitated the downfall. The sneeze that began in the US gave a cold to the entire world and for 2 respective days multi assets globally were on a downside spiral. What lingers in many traders minds is how comes that move was not anticipated? and what lessons do we juice out from this new norm of flash crashes? The US02Y has formed technical structures that unravel this conundrum. The FED rapid rate hikes which positively correlate with the US02Y are about to come into a halt as the wedge structural breakout is likely to consolidate after an impressive 5 year bull run as the tightening phase of the business cycle comes to an end. On the other hand, more inflows on equities will pour down as investors urge for risk grows due to the change in monetary policy . Nevertheless, a recession cant be ruled out of the table as the US-China trade war simmers there in derailing the health of the global economy and induce fear across assets all over the world if a resolution wont be met.