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The Bank of Japan could cut its Japanese government bond tapering pace by 50% in 2026
The Bank of Japan (BoJ) is thinking about reducing its bond tapering from ¥400 billion to ¥200 billion per month starting in April 2026. Currently, the monthly bond buying is decreasing by ¥400 billion each quarter.
Recently, the USD/JPY exchange rate increased by 0.19%, reaching 144.38. The BoJ is Japan’s central bank, which sets policies to keep prices stable, aiming for an inflation rate of around 2%.
Another missile attack from Iran targeting Israel detected, leading to widespread alerts and interceptions
Israel has detected a new wave of ballistic missiles launched from Iran. The missiles were fired from Isfahan and other locations, triggering early warning alerts throughout Israel.
Red alerts went off in both Northern and Southern Israel. The Israeli military reports that air defense systems are intercepting the missiles, with successful interceptions noted near Haifa and Northern Israel.
Several impacts have been reported in the Tel Aviv area. More information will be shared as the situation unfolds.
Defensive Measures Underway
After spotting the ballistic missile launches from several Iranian areas, including Isfahan, the focus quickly shifted to tracking the missiles and assessing the effectiveness of interception efforts. Red alert systems were activated across large parts of Israeli territory and worked as intended, especially in northern areas and near Haifa. Defensive systems were quickly deployed and have confirmed several successful intercepts. Reports of impacts near Tel Aviv are being confirmed. Our monitoring shows that these impacts were not widespread but still indicate a significant escalation in missile capability. The early success of interception systems suggests that Israel’s defense infrastructure is functioning well under pressure. However, the scale of the missile launches and the readiness of the launch sites in multiple Iranian provinces raise concerns about ongoing threats.Financial Market Implications
The impact of this situation extends beyond immediate tactical results. The pattern of missile launches, especially after periods of relative quiet, usually carries an underlying message – both externally and internally. When missiles are launched in clusters from different locations, it tests and showcases logistical coordination. This level of organization may affect volatility across various markets. Derivative positions linked to defense industries, regional energy supplies, or foreign exchange rates in the Middle East have started to reflect this tension. Instruments like near-dated contracts and short-term options have already seen increased volatility. Pricing models that did not account for geopolitical uncertainties have had to adjust quickly, especially overnight. Given the fast pace of information flow, the market response is swift and leaves little room for extensive narrative interpretation. We are observing tight feedback loops between confirmed strikes and market movements. Ignoring these signals is not an option, and hedging strategies must stay aware of the potential scale of further retaliation or defensive actions. What’s crucial now is understanding how both physical and financial trajectories may shift in the next 48 hours. Liquidity in critical derivative instruments is thinning during off-hours, indicating cautious behavior and limited willingness to take risks. This could lead to more drastic price swings during unscheduled updates, especially considering time-zone differences and low-latency factors. Attention should be focused on areas near the reported launch sites, not just for further missile launches, but also for signs of restraint or increased tensions. Historically, activity often decreases after initial displays, but if it does not, the subsequent effects can spread more rapidly. Create your live VT Markets account and start trading now.The Semiconductor Index aims for 5700, currently trading around 5180 after fluctuations.
The Semiconductor Index (SOX) is performing well, following predictions from the Elliott Wave Principle. It hit a high of $5303 after reaching $4647 on May 23rd and is currently around $5180. This aligns with the expected wave extensions, though forecasting these beforehand can be tough. We’ve set up a warning system using colored levels to signal possible reversals, helping protect positions as prices increase.
In the short term, we see an ending diagonal pattern forming a “3-3-3-3-3” wave structure. The target for this final wave is about $5420, but a recent dip brings $4925 into consideration as an alternative target. To change the outlook, we need to see a break below current levels. We expect the index to continue its rally since April, reaching new highs before it finishes.
Market Opportunities
Pullbacks are seen as chances for short-term trades, while long positions remain strong from the bullish trend that started in April. Our market analysis is based on what we believe are accurate data, but we can’t guarantee this. Ultimately, market decisions are up to each individual, emphasizing a careful approach to trading and investing. This information is not a specific recommendation and should be viewed in light of your financial goals and risk tolerance. Currently, we see signs of an ending diagonal in progress, which usually signals the end of a larger upward trend. This “3-3-3-3-3” formation suggests a narrowing price range, with smaller upward moves indicating that momentum might be slowing down. We noticed a strong reaction near the anticipated $5300 level, just below the $5420 target. This movement raises concerns about short-term stability. If prices fall below $5100, we’ll pay attention to $4925—a level we thought was less likely but is now more credible as an option. This potential depends on ongoing weakness, especially if trading volume doesn’t support a rise above the recent highs. From a tactical view, the pullback isn’t necessarily a cause for panic. As long as prices stay above $4925, any decline might just be a brief pause before the uptrend continues. Similar dips have happened since April, many of which quickly restored bullish momentum. How prices behave around $5180 in the coming sessions could reveal if we’re facing a minor correction or a broader change.Tactical Considerations
Therefore, our strategy involves looking at each pullback from multiple angles—potential gaps for short-term positioning while keeping a long-term bias that has been successful since spring. Flexibility is key. A new high above $5303 without a drop in momentum would boost our confidence that the last leg of the diagonal is approaching $5420. On the other hand, a sudden, strong drop below $5000 with increased volume would suggest the structure is complete and shift our focus to potential downsides. We are cautious because diagonals often end with volatility and sharp reversals. It’s not only about hitting targets; it’s crucial to recognize when complacency builds as we near wave completion. Protecting gains from earlier trades becomes the priority if we spot warning signs from both price and market breadth. While the Elliott Wave structure gives us a broader view, we also use additional tools—internal divergences, breadth indicators, and key support breaks—to confirm or dismiss scenarios. Our color-coded alert system is active, working alongside trend aggression and volume readings, providing a multi-dimensional perspective rather than just a one-sided approach. For anyone trading options or futures in tech-heavy sectors, these insights help with timing and selection. The key message is not to blindly chase targets based on charts but to assess if conditions are right for those targets to be realized. Patience allows the market to unfold based on technical factors rather than emotional impulses. We continue to favor strategic entries on weakness, as long as support levels hold firm. Create your live VT Markets account and start trading now.The Bank of Japan may halve JGB tapering starting in 2026, and discussions are ongoing.
The Bank of Japan is planning to cut its purchases of Japanese government bonds by half. Starting in April 2026, quarterly purchases may drop to 200 billion yen, or about $1.4 billion.
This plan will be reviewed at the central bank’s policy meeting, and most board members are expected to support it.
The Bank of Japan plans to keep its benchmark interest rate at 0.5%. A survey indicates that interest rates will likely stay the same until the end of the year.
The Bank aims to maintain interest rates while reducing the pace of bond buying because of market pressures.
The Bank of Japan is taking a careful approach. They want to reduce their involvement in the government bond market while keeping short-term interest rates stable. This means they will start to scale back their support, but they are not completely withdrawing from the market just yet. They want to avoid upsetting traders and investors who are closely watching for any mistakes that could lead to significant price changes. This strategy seems designed to exit extraordinary policy tools without causing trouble in the local debt market.
Kuroda’s successors are slowly moving towards a slightly tighter approach. The plan to keep the benchmark rate at 0.5% suggests that inflation and domestic demand do not require further tightening, especially as global markets remain cautious. A complete withdrawal of support might not be possible in the short term. Bond buying will continue, but in smaller amounts than in the past decade.
From our view, the planned reduction to about ¥200 billion per quarter marks an important shift. While it’s not a complete policy change, it shows a gradual move in that direction. Halving the purchase volume indicates growing confidence among board members in the market’s resilience—or at least a desire to test it. The crucial detail is the timeline. The change starting in April 2026 gives traders enough notice, reducing immediate volatility risks but making it essential to price long-term contracts and spreads accurately.
Ueda’s team is trying to balance several goals: reduce liquidity, keep borrowing costs steady, and prevent confusion in the domestic markets. Moving too quickly could cause shock, while moving too slowly might undermine credibility. We expect this gradual change will lead to adjustments in bond yield expectations without causing immediate swings. As market liquidity tightens over time, the cost of hedging against interest rate exposure may rise. This is a situation we need to prepare for.
We believe communication will become clearer in the coming months. This will make forward-guided strategies more effective again. The yield curve should stay relatively stable for now. Short-term rates are already priced for stability, while long-term rates still reflect uncertainty about the bank’s next steps. Using this trend, value strategies can continue to discover opportunities that are neutral in duration.
In summary, traders should see the slow reduction in bond purchases as a sign of slight tightening pressure that won’t happen all at once. It’s all about understanding the timeline against the volume and aligning it with volatility factors. Focusing on instruments that benefit from less intervention—while managing expectations around policy stability—could lead to better results. Watch how demand changes in the swap market, as that’s often where pricing certainty develops first.
New Zealand’s Business NZ PSI drops to 44 from 48.5
The New Zealand Business Performance Index (PSI) has fallen from 48.5 to 44 in May, indicating a decline in the services sector. When the PSI is below 50, it means there is less activity compared to the previous month.
This drop in the PSI could impact economic growth and business confidence in New Zealand. Analysts will closely monitor this data to determine its potential effects on monetary policy and future economic predictions.
Trend Influence
This decrease is part of a larger trend affecting New Zealand’s economy, influenced by factors such as inflation, interest rates, and international trade. Businesses may need to change their strategies to better handle the current economic situation. As things develop, more data will help us understand the future of New Zealand’s economy and its sectors. The PSI’s decline from 48.5 to 44 does more than just show a number; it clearly indicates that activity in New Zealand’s service sector is slowing down more rapidly than before. In practical terms, fewer businesses are reporting growth this month compared to last. For an economy that relies on services, this decline is significant. We are seeing a distinct contraction that is more than a temporary blip. This adds support to the trend observed in broader performance metrics. Wilkins from BNZ has pointed out that the services sector often signals wider economic weakness. By looking at May’s figures, we can see a more urgent message.Economic Signals
This suggests that confidence among service-based businesses is waning, which could already be affecting hiring, investment plans, and pricing strategies. Historically, when the PSI stays below 50, orders decline, companies reduce spending, and wage growth slows down. These trends typically extend into future quarters, and we are beginning to see that now. From a trading perspective, ongoing contraction in domestic service output, especially under expectations, might alter short-term interest rate expectations. RBNZ officials, including Conway, have noted that while inflation remains crucial, softening economic data pressures the approach to maintaining high rates. If inflation cools in the next quarter, we might see interest rate forecasts adjust less steeply than before. Some market watchers will focus not only on New Zealand’s derivatives but also on cross-currency flows and potential interest rate differences. Given the relative stability of the US and Australian service sectors, this contrast may appear in swap spreads and options focusing on downside protection for NZD-related instruments, suggesting the need for adjustments in hedging strategies. In a broader context, the services downturn is compounded by global supply challenges and ongoing high costs in logistics and materials. For businesses planning for the future, timing becomes critical, and reactions from central banks will be significant. Harker and Bailey have both reminded markets that central banks consider job numbers, prices, and real output. Although equity market volatility remains low, there is potential for changes in rates and volatility-linked products tied to New Zealand’s outlook, especially if next month’s PSI does not rise above 50. We should monitor forward indicators like new orders and supplier delivery times to see if this contraction deepens or stabilizes. Keeping an eye on these sub-components can provide more valuable timing insights than just looking at broad figures alone. In previous cycles, such as late 2018 and Q2 2022, PSI sub-indices have often signaled policy discussions ahead of time. Market participants should carefully watch for any revisions in the next release. Small statistical changes can have a big impact, especially in low liquidity situations. Combining this with data from other sectors, such as PMI from manufacturing or consumer sentiment indexes, provides a clearer overall picture. Discussions around fiscal intervention are not surfacing just yet, but comments from Luxon’s cabinet imply growing awareness. For now, we are observing how local companies deal with stricter credit conditions, especially in tourism, real estate, and IT support, all of which have relied heavily on post-COVID growth. Until we see a reversal or stabilization in trend data, it is wise to manage trading exposure with protective measures in place for the short term. This includes maintaining delta-adjusted positions and considering longer-term strategies, particularly around Q3 and Q4 deadlines. Create your live VT Markets account and start trading now.New Zealand economists expect better economic growth and consumer spending from lower interest rates
The New Zealand Institute of Economic Research (NZIER) has conducted a survey of economists, presenting important forecasts for the country.
The annual GDP growth is expected to drop by 1.1 percent by March 2025, before bouncing back to 1.9 percent the next year.
Economic Growth Boost
Lower interest rates are likely to help the economy grow. Although the job market is weak, leading families to be cautious, many will benefit from lower mortgage payments. This financial relief could result in increased spending on non-essential items in the coming years. Inflation is anticipated to stabilize around the Reserve Bank of New Zealand’s target of 2 percent.Monetary Policy Implications
In simple terms, after a short decline, we expect modest growth in the next 12 to 18 months. The predicted 1.1 percent drop in annual GDP by March 2025 shows the effects of tight monetary conditions and lower demand at home. It indicates overall less economic activity: fewer goods produced, reduced spending, and less investment. However, forecasts hint at a positive change. A 1.9 percent growth the following year may not be outstanding, but it signals a turnaround. This growth largely depends on lower borrowing costs, which should occur if interest rates decrease as expected. We’re entering a phase where reduced official rates may lower banks’ lending rates. If this happens, households will have more disposable income, primarily through lower mortgage payments. This typically boosts confidence, leading to increased spending on non-essentials. The halt in tightening measures also benefits small businesses relying on short-term loans. However, caution remains. The cooling job market, characterized by fewer openings and stagnant wages, makes people more careful about spending. If workers are worried about job security, they may not spend freely, meaning any increase in spending from lower rates could be gradual. Looking at inflation, it’s projected to stabilize around 2 percent, aligning with official targets. This suggests a steady decline toward a more stable level, without sudden drops or erratic changes. For those monitoring derivatives markets, this points to decreased price volatility, especially in medium-term rate trades. Given these forecasts, reactions in longer-term rate products might become clearer than in recent months, particularly as short-term rates approach their turning point. We will closely consider expectations moving forward, not just in the broader economy but also in guidance shifts and timing indicators. Those involved in options trading should also monitor implied volatility levels as rate expectations stabilize. It is highly likely we will see a drop in risk premiums for near-term contracts. Low inflation combined with expected rate cuts typically lowers those premiums. The NZIER outlook is based on current data and a measured timeline. There are no immediate signals suggesting a change in monetary policy before the year’s end. However, the implications for trades sensitive to delayed recoveries or changes in consumer confidence are significant. Create your live VT Markets account and start trading now.Canadian dollar climbs to eight-month high as US dollar remains stable and crude oil prices rise
The Canadian Dollar has reached new eight-month highs as the US Dollar holds steady and Crude Oil prices rise. Tensions have increased after Israel attacked Iranian nuclear sites, impacting market risk. In the US, consumer sentiment improved last month, affecting market trends.
Over the next few weeks, there will be few Canadian economic data releases. Traders will stay cautious until Canadian inflation figures come out at the end of the month. The Canadian Dollar gains strength from rising Crude Oil prices, with the USD/CAD pair falling below the 1.3600 level, hitting eight-month lows.
US Consumer Sentiment Index
The University of Michigan’s US Consumer Sentiment Index for May exceeded expectations. Meanwhile, the Federal Reserve is expected to keep interest rates steady. The market is speculating a possible rate cut in September, which has stirred some criticism. The Canadian Dollar’s strength largely comes from external factors like Oil prices rather than domestic economic indicators. The Bank of Canada (BoC) affects the CAD through interest rate policy, while high Oil prices impact Canada’s economy because it’s a major exporter. Other influences include the economic health of Canada, inflation, and trade balances. As Crude Oil prices continue to rise and global demand remains strong, the Canadian Dollar’s gains are extending beyond what domestic data would suggest. The stability of WTI and Brent has helped push the USD/CAD pair to levels not seen since last October. Although Canadian data is limited this month, the sentiment linked to oil continues to dominate. Even with little fresh data from Ottawa, the upcoming CPI release at the month’s end is significant. Inflation will be crucial for the BoC’s next move. The market isn’t expecting changes in rates yet, but any shift in inflation data could cause volatility. This quiet period often leads to heightened reactions when new figures are finally released.Fed Pressure and Geopolitical Tensions
The Fed and Powell are facing pressure. While University of Michigan’s sentiment index surprised positively, broader consumer expectations are mixed. Markets are betting on a possible rate cut by September, despite the Fed not signaling a need for immediate action. This creates a disconnect between the Fed’s policy language and market pricing. This dynamic is limiting the US Dollar’s rise. Although it is not collapsing, it lacks the strong momentum seen earlier this year. For now, this situation benefits the Canadian Dollar. The recent conflict between Iran and Israel has increased volatility but mostly through energy markets and safe-haven flows, rather than direct impacts on North American currencies. However, global risk perceptions have shifted slightly as traders consider how escalating tensions may affect commodities and currencies like the CAD. Interest rate differences are narrowing gradually. The BoC remains aligned with the Fed, but any changes in guidance, whether easing or tightening, could affect interest rate expectations and yield spreads, influencing forex markets. We need to be adaptable. Current CAD positions are slowly rebuilding, but there is a risk of overextension as data releases approach. Two key triggers to watch in the coming weeks are the US crude oil inventory data and any OPEC+ comments that may impact futures prices, as well as remarks from the BoC on inflation persistence or labor market weakness. Both of these could create volatility in CAD pairs. At these levels, small sentiment changes or supply shifts could add extra momentum. However, without support from rising inflation or tighter monetary policy, the Canadian Dollar may struggle to maintain its pace. The price trend is more influenced by external factors rather than national strength alone, making it sensitive to global shifts. From a trading perspective, we’re stepping into an environment focused on reactive strategies, where event-based volatility may overshadow trend-following methods. Short-term derivatives pricing should consider potential sharp reversals. Delta hedging around US inflation data and the BoC’s comments is increasingly important, especially for options expiring in June or July. This calls for more active use of spreads and gamma positioning rather than simply holding long volatility. As summer approaches, wider bid-ask spreads may emerge in forward-dated contracts. We need to be quick on options near the 1.3600 mark, as they could attract attention without new catalysts. Lastly, the upcoming Fed meeting in September has piqued interest and could lead to mispricing if rate expectations change suddenly. We should monitor short-dated volatility skews for USD/CAD, especially during important announcements. The risk of short gamma spikes increases if positioning becomes crowded or one-sided. In conclusion, while the Canadian Dollar shows strength, it remains delicate, balanced between oil demand, interest rate stability, and geopolitical tensions. Create your live VT Markets account and start trading now.The PBOC plans to set the USD/CNY midpoint rate at 7.1854, according to Reuters estimates.
The People’s Bank of China (PBOC) determines the daily midpoint for the yuan, or renminbi. This is part of a managed floating exchange rate system, allowing the yuan’s value to shift within a range of +/- 2% around this central reference rate.
Every morning, the PBOC sets this midpoint using a basket of currencies, mainly considering the US dollar. The bank looks at market supply and demand, economic data, and changes in the international currency market. This midpoint acts as the starting point for trading that day.
The PBOC allows the yuan to vary within a +/- 2% range around the midpoint. This range can change depending on economic conditions and policy goals.
If the yuan gets close to the edge of this trading range or experiences too much volatility, the PBOC may intervene. The bank can either buy or sell the currency in the foreign exchange market to stabilize its value. These actions aim to manage and gradually adjust the currency’s value over time.
In summary, the Chinese central bank carefully manages the daily movements of the yuan. It doesn’t let it float freely, nor does it fix its value. Instead, there’s a new midpoint set each morning that guides the day’s price range, influenced by various global currency changes.
Although the currency basket aims to reflect wider market trends, it heavily favors the dollar. This means that the PBOC’s strategy is still very much affected by US economic events, like changes in Federal Reserve policy or US Treasury yields. Because of this dependency, fluctuations in the dollar can introduce volatility into the otherwise stable decisions from Beijing.
Recently, these mechanisms have gained importance as liquidity pressures have increased both onshore and offshore. In offshore yuan markets, tightening signals that authorities are subtly discouraging speculative selling without being obvious. Meanwhile, the midpoint fixings have been stronger than expected, indicating a strategy to prevent the yuan from dropping too sharply, even when fundamentals suggest otherwise.
As trading progresses, it’s crucial to monitor the daily midpoint level and how it compares to consensus models. Regularly overestimating or underestimating can open arbitrage opportunities, which can be risky if positions aren’t adjusted quickly. If you notice the fixing managed in one direction for several days, it often hints at upcoming administrative actions—whether through liquidity tools or direct market involvement by state banks.
With external pressures from the dollar and global liquidity, the gap between onshore and offshore yuan can widen unexpectedly, especially during volatile overnight sessions. This gap serves as a subtle signal when intervention isn’t clear. For instance, if the offshore yuan weakens while the central bank sets a stronger-than-expected midpoint, it’s typically a message rather than mere oversight.
Interest rate differences are still important, but factors like earnings season and trade data also influence the models the PBOC uses. A larger-than-expected trade surplus tends to support stronger midpoint settings. However, if the offshore market ignores that and continues to trade weak, we may see widening forward curves and renewed tensions.
From a trading perspective, being patient is often wise, but exposure to currency-sensitive derivatives should consider underlying policy motivations that may not appear on the economic calendar. We’ve observed increased intraday volatility when foreign policy cycles diverge from local guidance. For example, sharp changes in US Treasury yields can lead to quick adjustments in CNH forwards, even if Beijing’s official stance remains steady.
Going forward, it’s vital to analyze onshore volume data alongside daily fixings. Previously, one could rely heavily on either, but now, decisions are becoming more aligned and less predictable in advance.
Those using volatility strategies in the options market, especially delta-neutral ones, may see lower realized volatility unless there’s a specific trigger. Be ready for exaggerated reactions on low volume days, as state-owned banks often create sudden changes in bid-ask spreads in offshore markets. Keeping an eye on these shifts can provide insight into future bandwidth tightening.
We’re also closely monitoring overnight repo rates in Hong Kong. If they rise while the onshore yuan remains stable, it usually indicates limited carry opportunities. In this environment, rolling short-dated structures may not offer the flexibility they did a few weeks ago.
So, in the short term, what matters most is not where the yuan is currently trading, but where gaps might appear between policy signals and market reactions. Traders who can understand this gap are more likely to avoid getting caught off guard.
Dow Jones Industrial Average drops over 1,000 points amid rising Middle East tensions
The Dow Jones Industrial Average fell over 1,000 points after Israel’s surprise attacks on Iran. Although positive consumer sentiment data helped cushion the drop, the Dow reversed its week’s gains, ending a four-day winning streak.
The University of Michigan’s Consumer Sentiment Index for June rose to 60.5, beating expectations of 53.5. Inflation predictions also improved, with the 1-year figure dropping from 6.6% to 5.1% and the 5-year figure falling from 4.2% to 4.1%.
Federal Reserve Rate Decision
The Federal Reserve is expected to keep its interest rates unchanged in its upcoming decision. With encouraging inflation data, there is about a 70% chance of a rate cut in September, and another cut could follow by December. Despite recent challenges, the Dow remains above the 200-day Exponential Moving Average at 41,800. The 50-day EMA is close to crossing over, suggesting a possible upward trend if supported by technical levels around 42,000. The University of Michigan’s monthly survey assesses consumer financial and economic sentiment. This survey is a good predictor of future U.S. economic activity, showing how willing consumers are to spend. A strong forecast generally boosts the U.S. Dollar. The unexpected military actions in the Middle East caused a significant drop in major U.S. indices, particularly the Dow, which experienced one of its steepest declines in weeks. While the sell-off was linked to geopolitical tensions, traders also noticed encouraging economic indicators. The University of Michigan’s sentiment reading exceeded expectations and showed improved medium-term inflation predictions, which policymakers closely monitor. This rise in consumer sentiment indicates that confidence is increasing, which may support steady spending through the summer. Lower price expectations give the Federal Reserve room to ease policies without igniting inflation fears. The markets have priced in about a 70% chance of a rate cut in September, with another possible before the year ends. Short-term swaps and implied volatilities for rate-sensitive instruments are starting to reflect this outlook more clearly. From a technical viewpoint, although the Dow fell below short-term support during the session, it stayed above the 200-day EMA, softening the drop’s impact. This long-term average is a key indicator of trend stability, and staying above it indicates that bullish patterns are still present, despite short-term swings. There’s also a narrowing gap between the 50-day and 200-day EMAs; if this crossover occurs with high volume, it could spark increased buying interest among short- to medium-term participants.Consumer Side Resilience
We see the consumer sentiment report as a sign that consumer spending may stay strong, even with external shocks disrupting broader sentiment. Historically, positive surprises in this survey have supported the dollar and increased risk-taking among investors. However, appetite for risk can quickly change when geopolitical risks rise, which is what happened. In terms of market positioning, hedging activity increased significantly after the weekend news, with spikes in options implied volatility and more short-dated put buying. This indicates uncertainty rather than a clear market direction. For those trading indices or rates, it’s essential to monitor the timing of data releases and any Fed comments before September. Long-term yields remained stable, suggesting some confidence in controlling inflation. Under normal circumstances, this would help boost stocks. However, geopolitical risks complicate this assumption. Hedging against extreme risk or taking low-delta positions is becoming more appealing, especially in sector ETFs and emerging market-sensitive rates. We’re watching for market movement around the 42,000 level. If this level stabilizes on good volume and the overall situation remains stable, it may be time to reevaluate short-term bearish strategies. However, any rally towards previous highs will likely require the Fed’s confirmation, especially regarding September rate expectations. It’s also worth noting the differences in how defensive and discretionary sectors are performing compared to the broader market. Markets are responding in layers—first reacting to headline news, then recalibrating based on macro data. Next, we’ll focus on employment and housing figures, as they significantly influence consumer behavior and Fed projections. While noise will remain high, data ultimately determines the validity of guidance going forward. Create your live VT Markets account and start trading now.Trump suggests potential US role in Israel-Iran conflict while stressing current non-involvement
On Sunday morning, Trump talked about the ongoing conflict between Israel and Iran. He said that the US is not involved right now but pointed out that future involvement is possible. He confirmed there is currently no engagement from the US.
Later that day, Trump stressed the US’s continued support for Israel. His remarks indicate that the US stance might change based on how the situation evolves.
