This might be the most important chart in the market right now: The euro is on the verge of breaking out from a 17-year resistance level. We are likely at a turning point for the US dollar — where weakening the USD is starting to look less like a policy objective and more like a policy requirement, in my view. https://x.com/TaviCosta/status/1910341742097838437
A weakening dollar provides a further impetus for foreign investors to rid of their US assets.
Do you know that Stephen Miran (economic advisor to Trump) has the cheek of an idea to charge foreigners for holding US Treasuries? Like our withholding tax on foreigners here.
Truly incredible: The 10Y Note Yield and S&P 500 are trading almost perfectly in-line with each other since April 8th. Key takeaway? The market's only hope to pressure Trump to end the trade war is higher rates. In a way, higher rates are now bullish for stocks. https://x.com/KobeissiLetter/status/1910455992673878241
@rcs1359 Stocks Are Down, And May Be Heading Even Lower.
April 10, 2025
At this point, I’m just about ready to retire because I am seeing things I have no memory of or have never seen before.
The USDCHF fell by more than 3.8%, a monumental move. It was either a newfound flight to safety or a flight out of US assets altogether. But whatever it was, money quickly left the US today and returned to Switzerland.
But that wasn’t all because the EURUSD strengthened by more than 2%, while the USDJPY also strengthened by more than 2%. It would seem that every currency is now seen as either safer than US dollars or, more importantly, is seeing a massive flight of money out of US assets that is heading back home.
This is probably why Treasury yield continued to surge, with the 30-year closing around 4.87, its highest close since mid-January. Given the market dynamics, the 30-year could not only be heading back to 5% but to a new high of over 5.1%.
More interestingly, the recent rate rise has much to do with the increase in the term premium again. The 10-year term premium is back to its cycle high. This is investors’ way of saying they demand higher rates in return for the risk.
I will say that I was surprised to see that the S&P 500 was down only 3.5%, given some of the flows in FX and Bonds, I would have expected it to be down more. It was down more at one point, which amounted to about 6% around lunchtime, before returning in the day’s final half. When looking at the S&P 500 futures, it appears to have a big bearish rising megaphone pattern, and at least based on that pattern, it would suggest that all the post-tariff relief celebrations are probably gone by tomorrow.
