My picks: Long USD and JPY. Short EUR, AUD, NZD and CAD.
Expertise: Global Macro
Average Time Frame of Trades: 1 week
Yesterday’s Ben Bernanke's semi-annual testimony to the congress did not surprise investors. However, futures on US Treasury 10-year notes rallied above the 200 day SMA after Bernanke said inflation pressures are limited and benchmark rates are likely to stay low for some time despite a clear improvement in the outlook for the US economy. Indeed, it’s true that we have seen a broad recovery in stocks and commodities triggered by a sequence of better-than-expected earnings reports. However, I don’t’ share the same level of optimism of the Fed Chairman. In my opinion, the US Treasury is monetizing the government deficit by printing out money to purchase Treasury bonds. Eventually, inflation will spike higher and start eating into the saving accounts of many Americans. Moreover, the current rally on riskier assets cannot last forever and we are poised to see a reversal in stocks and commodities as trader’s book profits and economists start questioning a model of economic growth purely driven by stimulus plans paid by tax-payers money.
