Strategic trade
Trade view / 04 September 2017 at 5:58 GMT

Macro Monday Strategic: Short Jan 19 Fed Fund Futures — #SaxoStrats

Global Macro Strategist / Saxo Bank Group - Singapore Hub
Instrument: ZQF9
Price target: 98.28
Market price: 98.575

The thesis is that the current January 2019 Federal Fund futures are pricing in less than one hike, not just from today until the end of 2017, but from today to the end of 2017 and all of 2018.

This is for the non-consensus believers, the contrarians, the few remaining CPI bulls and those who believed risks to US rates is to the upside camp. We are but a few, in a market that seems heavily skewed towards having a deflationary portfolio - long duration, bearish on global growth, Trump, the US, China and Europe; and forget the fact that global PMIs have pretty much been on a solid upwsing for over 12 months.

Who cares if its the first time in over a decade where every OECD country is in expansion, that Eurozone growth is the best in over a decade, that the US just printed +3.0% actual versus 2.7% expected (remember the cries for sub 2% growth after the release of Q1 GDP). Inflation will feed through eventually, yet given the tight labour market and assuming a calm BS unwind for the Fed, then Janet Yellen and team will hike rates in December.

One-year chart

Five-year chart

Management and risk description


Entry: 98.575.

Stop: 98.84.

Target: 50% at 98.42; 50% at 98.28

Time horizon:

Strategic, yet should play out before the end of the year.

Risks again are conflict in the Korean Peninsular, US CPI falling off a cliff, Fed BS unwind leading to a selloff in the bond marekts. 

— Edited by Robert Ryan

Non-independent investment research disclaimer applies. Read more
A compiled overview of Trade Views provided on is found here
lahla lahla
"Fed BS unwind leading to a selloff in the bond marekts. " This is a risk for the trade or the opposite.? thank You


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