ETFs
Economic Fears Lift Bonds: TLT ETF Breaks 2024 Downtrend as September Rate Cut Hopes Rise Ahead of Jobs Data – PIMCO 25 Year Zero Coupon US Treasury Index Exchange-Traded Fund (ARCA :ZROZ), iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT)
27% profits every 20 days?
This is Nic Chahine’s average with his options purchases. Do not sell calls or covered spreads… BUY options. Most traders don’t even have a 27% winning percentage when buying options. He has a win rate of 83%. Here’s how he does it.
Long-term U.S. Treasuries are rallying, surpassing a key downtrend that began in late 2023, fueled by recent weak economic data, which led investors to revise higher expectations for Federal Reserve tapering. interest rate in September.
THE iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT), a popular gauge of long-term bond performance, climbed to $92 on Tuesday, heading for its fourth straight day of gains.
This recent spike took TLT above its 2024 downtrend channel and, importantly, above its 50-day moving average. These technical indicators suggest that a potential trend reversal is underway.
Other ETFs that track long-term zero-coupon Treasuries, such as Pimco 25-Year Zero Coupon U.S. Treasury ETF (NYSE:ZROZ), have seen even larger increases in recent sessions, reaching as much as 6% over the past four days.
Chart: TLT ETF recovers above 50-day average and ends 2024 downtrend
Weak economic data fuels bets on Fed rate cut in September
Recent economic data releases fell short of expectations, reigniting speculation that the Federal Reserve could begin cutting interest rates as soon as September.
Last week, the second estimate of U.S. first-quarter GDP growth was revised downward to 1.3% from 1.6%. Additionally, the Chicago PMI business activity index posted its worst value since May 2020.
On Monday, the May ISM manufacturing PMI extended the observed contraction trend in April, also missing expectations.
On Tuesday, it was learned that the number of job openings in April 2024 fell by 296,000 compared to the previous month, reaching the lowest level since February 2021 and below expectations of 8.34 million.
This disappointing data has led traders to significantly increase their bets on a Fed rate cut in September. According to CME Group’s FedWatch tool, the market now assigns a 65% probability to a rate cut, up from 46% just a week ago.
All eyes on this week’s jobs data
The coming days will witness crucial updates in the US labor market, with a series of data releases that will have a significant impact on financial markets.
On Wednesday, the ADP will release its private jobs report, followed on Friday by the highly anticipated official jobs report from the Bureau of Labor Statistics.
Economists’ consensus data compiled by Econoday forecast an increase in nonfarm payrolls from 175,000 in April to 195,000 in May. Estimates range from a low of 151,000 to a high of 225,000.
The unemployment rate is expected to remain unchanged at 3.9%. The average hourly wage is expected to show a slight monthly increase, from 0.2% to 0.3%. The annual growth rate is expected to remain at 3.9%.
| Non-agricultural payroll (M/M) | 175,000 | 195,000 | 151,000 to 225,000 |
| Unemployment rate | 3.9% | 3.9% | 3.8% to 3.9% |
| Average hourly wage (M/M) | 0.2% | 0.3% | 0.2% to 0.3% |
| Average hourly wage (year/year) | 3.9% | 3.9% | 3.8% to 3.9% |
Data: Econoday
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Photo: Shutterstock
27% profits every 20 days?
This is Nic Chahine’s average with his options purchases. Do not sell calls or covered spreads… BUY options. Most traders don’t even have a 27% winning percentage when buying options. He has a win rate of 83%. Here’s how he does it.
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