How to Trade Binary Options

How to Trade Binary Options

General Risk Warning:

The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.
  1. Binary options – the world’s financial instrument. They allow traders to  from price movements across all the world’s markets.
  2. There are only 2 types of transactions you can make with binary options: CALL and PUT.

The IQ Option platform allows our traders to make investments starting from just $1.



  1. Call – Option for rising prices. If you believe the price is about to go up, choose this option.

PUT – Option for falling prices. Buy this option when you expect the price to decrease.

If you see on the chart that the price isn’t rising or falling, that means that right now there’s a “neutral trend.” In this case, it’s best to hold off on buying this option. Consider choosing a different asset to invest in.

Trend examples:

2 3


  1. Never invest more than 2% of your capital in a single option. This is the golden rule for any investor. This way you can manage your investing without losing your head…or your money
  2. In order to improve the quality of your results, use technical & fundamental market analysis.
  3. Try different asset classes. If you’re not getting results with currency pairs, try stock indices. On IQ Option you can  find over 500 types of assets, including Amazon, Facebook, and Google.
  4. Sign up for IQ Option’s, where you’ll find out how to analyze trends, choose a trading pattern, and personally answer any questions you may have.

How to register & trade on IQ Option

General Risk Warning:

The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.

General Risk Warning:

The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.

Indian Central Bank Makes a Case Before Supreme Court Against Allowing Crypto Use

Indian Central Bank Makes a Case Before Supreme Court Against Allowing Crypto Use

India’s central bank told the country’s supreme court on Friday that “allowing dealings in cryptocurrencies like bitcoin would encourage illegal transactions.” Other crypto petitions being heard include one asking the government to “take emergency steps to restrain the sale and purchase of illegal cryptocurrencies.”

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

RBI’s Argument

The Reserve Bank of India (RBI), the country’s central bank, appeared before the supreme court Friday to defend its position regarding cryptocurrencies. RBI issued a circular on April 6 banning financial institutions under its control from providing services to crypto companies.

According to the Economic Times, the central bank told the court:

Allowing dealings in cryptocurrencies like bitcoins would encourage illegal transactions and it has already issued a circular prohibiting use of these virtual currencies.

Indian Central Bank Makes a Case Before Supreme Court Against Allowing Crypto UseRBI explained that crypto is “a stateless digital currency” that operates independently of a central bank such as itself, thereby “rendering it immune from government interference,” the news outlet noted.

The Financial Express elaborated that the central bank believes “it is necessary to regulate the bitcoin and other cryptocurrencies to check illegal transactions which will impact the international flow of funds.” Senior counsel Shyam Divan, appearing for RBI, reiterated that the central bank has a particular stance and other departments may have other positions.

Petitions Being Heard

Petitions against the RBI crypto banking ban are not the only ones that the supreme court is hearing. The Economic Times described:

Some petitions challenged the use of virtual currencies and alleged that they posed grave dangers to the traditional economy and they also sought framing of guidelines to regulate them … They also sought a direction for the Centre to take emergency steps to restrain the sale and purchase of illegal cryptocurrencies.

Indian Central Bank Makes a Case Before Supreme Court Against Allowing Crypto UseThe Hindu pointed to one particular petition, filed by father and son Siddharth Dalmia and Vijay Pal Dalmia. “Mr. Dalmia, in his plea, has sought a direction to the Centre to take steps to restrain sale and purchase of illegal cryptocurrencies like bitcoins, which were being traded openly for ‘illegal activities’ like funding terrorism and insurgency,” the publication wrote.

The supreme court already heard the duo’s initial petition in November last year and subsequently issued notices to various government departments including RBI. The central bank responded at the time that it had warned people against the usage and risks associated with crypto. However, the Dalmias were not happy with RBI’s reply and filed a new petition, pointing out the inadequate action by the central bank.

At the hearing on Friday, the supreme court gave the government until September 11 to respond to all petitions.

What do you think of RBI’s view and action? Let us know in the comments section below.

Images courtesy of Shutterstock and RBI.

Need to calculate your bitcoin holdings? Check our tools section.

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“This Is Market Shock #1”, Or Why The Fed Suddenly Has A Very Big Problem

Like most other banks, Deutsche Bank remains sanguine on the future: it expects the S&P to keep merrily rising toward 3,000, and its house view is that the Fed will stick to its indicated tightening path, raising rates twice more in 2018 and another 4 times in 2019 (although Trump may have a nervous breakdown long before that happens and "resigns" Jerome Powell), while 10-year yields will eventually resume rising toward 3.5% as the curve ultimately resteepens removing concerns about an imminent recession.  To be sure, the latest earnings season provides fuel for optimism as a whopping 90% of the companies that have reported so far have beaten on earnings, with earnings that are 4.5% above the estimates.

Still, as Deutsche Bank admits, it is getting increasingly nervous about the prospects for both the economy and the market, and as a result its forecast is not sanguine about the risks to the forecasts, particularly given the uncertainty around trade tensions, coupled with building inflation risks given the strength in the labor market.

As a result, the bank has proposed some "distinct alternative scenarios that we think markets should consider either as hedges to the current market consensus or to the House view."

We think these potential “shocks” are very much still lurking in the wings. There are plenty of arguments for why they may not materialize, but to appreciate them early will allow investors an opportunity for efficient hedging strategies.

To address these "potential shocks", DB's credit strategist Dominic Konstam is launching a series of 5 pieces, and overnight published the first part in which the bank focuses on market shock #1: a sharp weakening of the Renminbi as part of the reaction to the ongoing trade tensions.

In other words, currency war (something which Goldman already tacitly admitted has begun).

In light of recent developments, including a series of sharp "back and forths" between President Trump and Beijing which has resulted in some fairly dramatic moves in the yuan and the dollar...

... the bank thinks this is a very real threat because:

  1. trade tensions are hard to resolve when the goal is to rebalance economic power, and
  2. it is a reasonable response for China to maintain market share but at the expense of reserve accumulation.

Of course, a  weaker yuan should be seen in the context of general EM weakness and a tightening of US financial conditions via the stronger US dollar, unless somehow Trump manages to talk down the greenback.

So why is the biggest German lender so nervous? Because, as Konstam writes, "this is as much to do with the uncertainty of the outcome as it does with the nature of the dispute." Or, as he clarified, "that uncertainty is a necessity of the unknown reaction function of both parties."

And while one can simply chalk that down to "Trump is unpredictable", Konstam warns that it is a mistake to assume that the Administration simply wants concessions in various areas of trade with different trading partners, and instead believes that "there is a strong desire to rebalance economic power globally, in particular away from China and towards the United States."

China is seen more as an economic competitor to the US than simply an “unfair” trading partner.

Indeed, unlike America's other trading partners, "China is unique", and the following excerpt offers perhaps the best explanation of Trump's - and Peter Navarro's - thinking in relation to China (which many expect will surpass the US as both an economic powerhouse and military power in the next 2-3 decades).

There is no other country that has transformed its global economic power on such a scale. It can therefore be treated separately. While less free trade with any country is undoubtedly a loss for global welfare, it is a matter for normative economics to judge the extent to which “free” trade is sufficiently “fair” trade. And that is why trade tensions with China are about the economic competition and not trade practices per se. Which is why these tensions will likely define markets going forward and are not easily resolvable. 

If one assumes the validity of this premise, then there can not possibly be a "happy ending" in which either the US or China concede, as the end game for trade tensions, particularly for those related to China, is likely to be increasingly worse tensions with the aim of rebalancing global growth, DB predicts. This ultimately might show up in some combination of less relative growth in China versus the US especially as well as the rest of the world and less reserve accumulation (via a deterioration in the term of trade ).

Meanwhile, now that it is conventional wisdom that trade wars have morphed into currency wars, Konstam also warns that the worse the trade tensions, the more likely the RMB is to weaken, which also explains Friday's sharp devaluation of the CNY by the PBOC which dropped the yuan by over 600 pips, sending the offshore Yuan "dropping like a rock" in the words of the US president, as markets realized that Beijing is ready and willing to engage the US in both trade and currency war.

Politics and optics aside, there is another very real reason why China may pick devaluation:

If China were to maintain the value of the Renminbi, any tariff will effectively curb its exports and force real growth loss as a first order effect or a cut in RMB export pricing (the terms of trade deteriorate). For the same level of RMB, there is  consequently less reserve accumulation as the trade surplus deteriorates; a cut in RMB pricing, however, also reduces reserves. US growth would be weaker and inflation higher.

Alternatively, China can - and already has started to - devalue to absorb the whole tariff impact. This implies a more complete deterioration in the terms of trade but export volumes would be supported. And this is where the shock part comes in:  China’s reserves would deteriorate as unchanged RMB earnings buy fewer dollars; in fact if the yuan devaluation is sharp and fast enough, it would launch another all-out capital flight out of China, something we already saw in June, when in June China suffered a net FX outflow of $16.6BN ($9.9BN from onshore FX settlement, and another $6.7BN from cross-border RMB flows), reversing the inflows of the past two months. Escalated sufficient, and a full-blown reserve liquidation in which the PBOC is eventually forced to defend the Yuan as residents bypass all FX firewalls to park their liquidated assets offshore  - a repeat of late 2015 and 2016 - would be inevitable.

As a result of the devaluation, which would lead to a deflationary wave across the world as was observed in 2015/2016, there will be a loss in global growth due to the distortionary impact of tariffs. The lack of growth will encourage competitive devaluations among competitor countries and would be the catalyst for EM weakness to the extent that the global growth was smaller. Think 2009, when every central banks scrambled to slash rates and launch QE in an attempt to beggar its numerous money printing neighbors.

The bigger risk for financial markets is an accelerated Chinese devaluation "that emphasizes at least a short run desire to maintain export volumes and the RMB surplus albeit at the expense of reserve accumulation." Meanwhile, as noted above, a key issue is whether a weakening RMB drives capital out and the extent to which the PBOC might defend the currency.

Which brings us to the core dilemma facing China:  

The nature of the shock is therefore if the PBOC wants to protect reserves it would tolerate more currency volatility and potentially a deeper correction. The lesson from 2015 was that in managing the currency there were extensive reserve losses. This time might be different in the context of trade tensions.

Of course, since a Chinese devaluation would not occur in a vacuum, especially with Trump officially raging against a stronger dollar and a Fed that is "unnecessarily" hiking rates, DB also analyzes the RMB devaluation in terms of financial conditions and the impact on the Fed stance. As was the case in 2015 and has held true of late, a quickly depreciating CNY would inevitably be accompanied by similar scale weakness in other EM Asia FX – as was the case in 2015 and has been the case for the bulk of this year.

Ultimately - and this is important - Deutsche Bank believes that since tighter US financial conditions are consistent with underperformance of EM equities, a full blown trade and currency war imply that the Fed would be justified in a softer stance than otherwise:

In the first instance, this would translate into a lower risk neutral rate and on balance a steeper curve with a bullish bias. The extent to which risk assets can weather the storm is a function of term premium. Lower risk neutral is clearly negative for risk assets but if inflation term premium rises and real term premium is stable or lower, risk assets will be insulated to some extent.

This is shown in the table below, where a move to USDCNY of 8.00 in 3 months’ time would imply more than half a standard deviation tightening in US financial conditions (which have historically been well correlated with weakness in EM equities, shown in the chart on the right)

Finally, from this one can also extrapolate the Fed's reaction function, or rather the implied change in the Fed stance – defined as the 12-month change in spread between the real funds rate and r-star – which moves along with financial conditions, with Fed stance getting tighter as conditions get easier, and vice versa. As a result, Konstam estimates the equivalent Fed easing that would typically be associated with the various shocks to financial conditions under the different CNY scenarios.

What he finds is that if the PBOC were to launch a currency war nuke, and send the USDCNY higher by 1,200 pips to 8.00 or so, the Fed would need to cut by 55bps, or just over 2 rate cuts, in the span of 3 months.

And here a big problem for the Fed emerges.

While Jerome Powell would be perfectly justified to cut rates in response to China's nuclear currency weapons - as Deutsche Bank's analysts suggests - it would also be seen as doing the bidding of Donald Trump, who has made it clear he want the Fed to hike at most 2 more times then stop the tightening cycle, and ideally, to start cutting rates (if not launch QE tomorrow).

As such, the moment the Fed does cut rates in reaction to China's devaluation, the US central bank would immediately be accused of folding to the president and abdicating its independence, an event which while hardly new (read about the "independence" then-Fed chair McChesney Martin had under LBJ here), would result in a shock the system, and lead to a plunge in the value of the dollar and a surge in bond yields and, adding insult to injury, would result in even more Chinese devaluation, at which point the final race to the currency bottom will have begun.

Meanwhile, if the Fed refuses to cut rates in response to the dramatic collapse in financial conditions that a sharp yuan devaluation would entail, if only to demonstrate just how independent it is, then China wins as the US stock market will finally tank, forcing Trump to wave a white flag of surrender, conceding the trade - and currency - wars to China.

(We will not discuss how Trump successfully managed to trap himself, launching a dollar spike thanks to his late cycle fiscal stimulus coupled with his trade and FX war with China while also jawboning the Fed into a corner where rate cuts are virtually impossible unless the market and economy both tank, as it should be rather obvious by now).

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Bitcoin will Outperform Altcoins while Institution Effect to Actualize by 2019: Blockchain CEO – Coingape

CoingapeBitcoin will Outperform Altcoins while Institution Effect to Actualize by 2019: Blockchain CEOCoingapeBitcoin almost touched $7,600 mark today before sliding to $7,350. According to Blockchain CEO Peter Smith, a positive consolidation is ahead as regulatory clarity and institutional interest increases. He points out Bitcoin is the preferable choice of ...and more »

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CIA ‘Mouthpiece’: “The Foundations Of American National Security Are Under Assault”

Authored by Tom Luongo,

The First U.S. Civil War is here. The real Civil War.

The one between 'We the People' and the Government itself.

The U.S. Civil War fought by Lincoln is badly mis-named.  Rightly considered it was a war to prevent independence of the South from the united States (not a mistake in capitalization).  The South seceded.

Just like the Donbass today fights to fend off a Ukrainian army from eradication of ethnic Russians.  Just like the colonists did against King George III.

Argue the legality of secession all you want, ultimately people have the sovereign right to determine the course of their own destiny. Ultimately, they can simply just say, “No.”

That they choose to abide by some of the legal fictions created around them by their oppressors is irrelevant.

When push comes to that proverbial shove you always have the right to tell some bully to shove it.

A true civil war is one where two factions fight for control of the existing government.  It inherently assumes the current geographical arrangement is acceptable.

The two factions disagree about the leadership.  And this disagreement in the U.S. is worth trillions to both sides.

Since Donald Trump held his press conference in Helsinki next to Russian President Vladimir Putin the cries of “treason” have been escalating.  With each article written and each cable news segment aired, the position of our leaders in government became clear.

“We decide what the function of this government is, not you.”

All Statist arguments boil down to the State saves the savage rabble from themselves.  Thus forms the ideological core of this conflict between The People and The Government, but really this is about power.

And The People want theirs back.

The intelligence agencies condemn Trump’s performance at Helsinki because they know this was his moment to strike back.  He’d absorbed or deflected most of their outrageous slings and arrows and Helsinki was him pressing his advantage to work for peace with Russia after his initial success with North Korea.

In response the Intelligence Agencies officially declared open war against us and our agent, Donald Trump.

Don’t believe me?

This Reuters piece by CIA mouthpiece Tim Weiner spells it out in the first paragraph.

The foundations of American national security are under assault. The battle lines are drawn. On one side stand the Federal Bureau of Investigation, the Central Intelligence Agency, the National Security Agency. On the other: the commander-in-chief of the United States.

It has that “When in the course of human events…” ring to it, does it not?

Donald Trump’s appalling performance in Helsinki was a subversive act. He rejected the conclusion of American intelligence that his election was aided by a hydra-headed act of political warfare controlled by the Kremlin…

… The display of fealty to Moscow was indelible. 

Translation: “Trump is a traitor to the U.S. ”

… But they [the IC] have the power to strike back. For two years now, high-ranking veterans of American intelligence have sounded the alarm about Trump in the starkest language possible.

Translation:  “We are the Gatekeepers of Truth. The first line of defense who tried to warn you, the savage rabble.”

Weiner then peddles the pure fiction that the Deep State died with Nixon. And Trump’s “fulminating” about this is proof of both his cowardice and his growing insanity,. He does this while extolling the countless virtues of the thoroughly corrupt and partisan Mueller investigation.

Next step is isolation.  Ruth Marcus writing for the CIA-operated WaPo demanded everyone who works for Trump to quit to “save your souls.”

Republicans and Democrats were in full braying mode about how Trump genuflected to a foreign leader. The cable news only stopped long enough to air commercials no one is watching.

Marcus’ piece is pure agitprop to further paralyze Trump’s ability to function as an executive by his staff virtue signaling their fealty to a government a majority of Americans, right, left or libertarian, believe is simply out of control.

When did it become patriotic to genuflect to the CIA?

The ground is being prepared for a 25th Amendment challenge to Trump’s competency or an impeachment hearing after the mid-term elections.  And with the stakes this high and the country now in a state of civil war, the ballot boxes will be battlegrounds.


Because Trump is winning this war against the Deep State.  For all of his many faults he is winning more Americans to his side of the ledger.  He gathers thousands of troops to rallies across the country while his poll numbers continue to rise, despite the increasingly ineffective barrage of media bombshells thrown his way.

He Tweets rhetorical bombs for the cost of 30 seconds while they spend billions trying to stop him from doing so.

So, the only way to create a “Blue Wave” is to manufacture one.  The incentives are there.  The radicalized poll workers and Supervisors of Elections are in place.  Fully 25% of this country believes these accusations about Trump who believe they are saving themselves from the savage and stupid ‘deplorables’ who elected Trump.

Trump was elected to end the corruption we see around us every day.  That corruption infects both the Democrats and their co-conspirators in the GOP.  Most of America, in one fashion or another, knows there is something terribly wrong in D.C.

And many are still patriotic enough to see what is happening.  Americans love an underdog and Trump is certainly that guy right now.

The response by the unelected gatekeepers of the status quo, the very Deep State that Tim Weiner denies exists, has been to declare open war on them since to the Presser Heard Round the World.

And that is fundamentally un-American.

They are committing the same treason, conspiring with foreign governments to undermine the sitting President, they accuse him of.  This is open insurrection that is only tolerated because Trump is still mostly a captured King in his own palace.

D.C. is a lawless land where power for me and not for thee is the rule.

This is a fight to the death between these two factions seeking control over America’s future.  The Intelligence Agencies are the vanguard forces of the real power threatened by Trump and Putin colluding to end needless aggravation of U.S./Russian relations.

The media are their shock troops.

Both have been exposed like much of the U.S. military’s weaponry in the past few years to be oriented towards fighting the wrong war.

They perfected the last type of information war but for all of their skill the Overton Window has shifted too far, leaving them exposed.

They fear Trump’s near preternatural understanding of the U.S. media cycle complementing Putin’s logistical and diplomatic superiority forming a bulwark which rebuffs all of their attacks.

But, the real fight begins now.  Chuck Schumer warned Trump about going against the CIA.  It was obvious then that Schumer outed himself as compromised.  His fear of exposure was written all over his face.

Today that warning is real and Trump is surrounded by bears, angry at having disturbed its dreams of global control.

*  *  *

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Altcoins Are Dying

Altcoins Are Dying

Anyone unacquainted with the cryptocurrency market might assume, casually reading the price of bitcoin in their morning paper, that the past seven days have been good for investors. BTC is up 18% in a week and is now hovering around the $7,400 mark. By any reckoning, that’s good going. But bitcoin’s recent show of strength belies turmoil within the crypto markets. Many altcoins aren’t just down in BTC terms: they’re dying a slow death by 1,000 red wicks.

Also read: Big-Name Insurers Stepping Up Their Crypto Game

Alts Are Submerged in a Bloodbath

Altcoins Are DyingIt’s been a mixed week for cryptocurrency investors. While BTC has been on fire, altcoins have been withering and dying, with lower lows, lower trade volume, and little by way of hope for their increasingly desperate bagholders. Telegram trading groups have been filled with pink wojaks and rekt memes as traditional support levels have fallen and price floors have been shattered. The weekly charts, in which gains and losses can be easily distorted by singular events, do not prevent a true picture of the state of altcoins right now. Zooming out to a monthly view provides a clearer picture. In addition to BTC, stellar and cardano – two assets shortlisted for inclusion on Coinbase – are in the green. Virtually every other asset has been subjected to deep, double-digit cuts.

Bitcoin’s dominance now stands at around 45%, the highest it has been since April. Part of its resurgence can be attributed to anticipation of impending SEC approval for an ETF, against a backdrop of increased institutional adoption. It figures that when bitcoin rallies, the rest of the market will suffer. While this fact can account for some of the slippage of the past few days, it does not explain the decline that virtually all crypto assets have suffered since the start of the year. BTC is down 63% from its all-time high, a figure which seems relatively benign when compared to the losses of other major cryptocurrencies.

Altcoins Are Dying
Most altcoins have posted major losses over the past month.

Smart Money is Rejecting Dumb Coins

Ripple and tron are down 88% from their ATH, cardano down 87%, and dash down 85%. The mania of January, when the entire market was convinced that their anointed altcoin was heading to the moon and staying there, has long since subsided. At the time, it was suggested by certain publications including this one that many of those investing in high supply coins may not fully understand concepts such as digital scarcity. Investors were fixated on the price per coin, rather than the value of the coin when adjusted for total circulating supply.

Altcoins Are Dying
The fate of dentacoin, a cryptocurrency for the dental industry, encapsulates the madness of January and subsequent decline that has characterized the altcoin market.

The subsequent downfall of altcoins that were mainstream media darlings at the start of the year, ripple, iota, and tron among them, can be attributed, in part, to novice investors getting scared off once the bear market kicked in with a vengeance. The resurgence of bitcoin in recent weeks, and the inability of altcoins to rally with it, owes something to rookie investors who got burned staying away, while smart money that was previously watching from the sidelines has begun to enter. These entities weren’t about to buy BTC when it was trading at an all-time high, but they’ll take a look now, having missed the boat the first time around. None of them, it seems, are interested in altcoins however, despite the fact that many are trading at a 5x discount. Institutional investors may be cautious, but they’re not foolish.

Do you think altcoins such as ripple and iota will ever surpass their ATH when the crypto market recovers? Let us know in the comments section below.

Images courtesy of Shutterstock, Coincodex, and Pixabay.

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It’s Still “Too Quiet Out There” – VIX Shorts Resurgent Despite Spiking Crash Risk

"It's quiet out there...Too quiet..." So goes the old movie line, usually spoken by a laconic hero, surveying the landscape and wondering when the enemy will arrive.

And, as DataTrek Research's Nicholas Colas notes, US equity markets feel much the same way at the moment. A few weeks ago, the mood seemed outright bearish, or at least extremely cautious. Now, with the S&P and Russell sneaking up on their all time highs (and the NASDAQ through it) all is sunshine and light once again. “Too quiet” indeed.

And nowhere is that more evident than the decoupling of VIX from 'risk'...

Trade war, meh!

Policy uncertainty, paah...

And amid all of this 'treason', trade wars, and tightening, speculators are piling back into VIX shorts as if the January/February debacle never happened!!!

But, as Colas asks, where are the war drums beginning to sound? 

We went looking through our list of early warning sensors, summarized here, with a few links for lesser-followed measures in case you want to see more.

#1. Dollar strength as stock market challengeThe greenback is at one-year highs using the DXY Index, up 5.6% from its March lows. The dollar is also +4.6% on the Chinese yuan for the year and 8.0% from the March lows.

Takeaway: over the short term dollar strength is typically a headwind for US stocks. At the same time, we’re still 7.4% away from long-term (5 year) highs on the DXY. Given the differences in US/rest-of-developed-world economic growth and central bank policy, further dollar strength is likely. And therefore not enough of a surprise to roil US equity markets, as long as it happens slowly.

#2. US 10-year Treasuries: “Too, too quiet?” Actual volatility in long-term Treasuries has plummeted in the last 30 days, down to levels last seen in October/November 2017. This, in conjunction with a sub 3.0% yield, has certainly helped US stocks find their footing.

[ZH: And yuan is not helping]

[ZH: And this is with a record speculative short position across the Treasury Complex]

Takeaway: the current low volatility regime in Treasuries can’t last forever. A slow melt-up in yields is the best-case scenario for stocks, consistent with a market reset to higher growth and inflation expectations. A gap up (from an inflation scare) – or down (from an exogenous shock, most likely) are the downside cases.

#3. Italian sovereign debt as Eurozone risk monitor. Italian bonds haven’t been the same since the election-inspired volatility back in May. Two-year debt there still yields +0.59% versus -0.65% for German debt and -0.54% for French bonds. Ten-year debt yields 2.51% versus 0.33% for German Bunds and 0.62% for French long term paper.

Takeaway: sovereign debt investors remain wary of Italian paper, even over a short enough horizon to make any “Italexit” irrelevant. US equities don’t seem to mind, but it is a space worth watching.

#4. TED Spreads as indicator of global dollar shortage. Earlier in 2018 there was plenty of chatter about how Fed rate hikes were sucking dollars back to the US and away from emerging markets and the offshore Eurodollar market. Treasury-Eurodollar spreads almost tripled from 22 basis points in mid-February to 64 bp in mid-April. TED spreads are now 41 bp, well off those highs.

Takeaway: like Italian debt spreads, this is one market concern that has gone to ground in the last 30-60 days. But also like the prior point, levels are not where they were at the start of the year. That indicates a residual market concern, but for the moment it seems contained to emerging market debt and equity.

#5. US Corporate Bond Spreads as indicator of risk appetite in credit markets. It has been a tale of two markets this year in terms of corporate debt:

  • Investment grade spreads have widened from 1.28% at the start of 2018 to 1.54% today. The YTD peak was earlier this month at 1.63%, so at least things are moving in a more market-friendly direction now.
  • High yield spreads are actually slightly tighter since the start of the year, at 3.56% now versus 3.63% on January 1st. In between then and now they have meandered between 3.2% and 3.8%.

Takeaway: tight high yield spreads are the unsung heroes of the continued rally in US stocks, signaling steadfast “Risk on” sentiment even as stocks occasionally lost their nerve. That market continues to show confidence, even today.

There's just one thing (well more than one), that perhaps upsets that utopian complacency:

Equity market crash risk is heavily bid...

And commodity markets aren't buying this reflation, growth meme...

And, in case you were wondering, the machines just ran out of ammunition as short interest is squeezed out of the market...


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Daily Market Report for July 21 2018

July 21 2018 
 $99.5M traded across all markets today
 Crypto, EUR, USD, JPY, CAD, GBP 

Visit the About section on our blog for more information about the Kraken Daily Market Report here.

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