World on the Edge and the Interest Rates
As expected, the FED raised rates by 75 bps and projected 4.4% on the dot plot before they are done into 2023. We had been looking for the Dec. T-note futures contract to hit 112.16 and it got within 5 ticks from there today in a key time window. Markets do not go straight down so a recovery on Dec. T-notes to 114.16 or 115.20 is likely and if we are wrong 111.02 will hold.
The ETF for lower rates is TLT and it hit its long-term target of 105 but at the worst, it might get to 103.10. A bounce there to 113.61 or max 119.01 is in order but we do not see the trend for higher rates done although many see the FED capitulating and worrying about recession or if Europe goes to War with Russia, money will flee into US treasuries. We took profits today on TBT for higher rates.
There is a reason to be in a small long Note position for at least2-3 weeks in case something bigger happens but it’s hard for us to see the end of higher rates. These market change daily.
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