Trading insight: USA at risk of losing its AAA rating

Market Talk

Ratings agency Fitch placed the USA on “Watch Negative”

• Increased political risk as politicians fight for a debt deal
• Fitch expects a deal but there’s increased risk that a debt deal will miss the June deadline
• If the June deadline is missed there is the risk that the US government could start defaulting on its payments

Safety in AI? The US100

The US100 Index is a stock market index that tracks the 100 latest non-financial stocks listed on the US100 exchange.

The huge demand for artificial intelligence (AI) services and hardware is helping the US100 outperform despite the increased risk that the USA would lose its AAA (highest credit rating) status as the issuer of the “safest” asset, US government debt instruments.

The above chart illustrates the year to date performance of the US 100 index

At the same time as the US100 is recording record gains, the US TNOTE (10Y) has been falling, see chart below:

The above chart illustrates the year to date performance of the US 10 year TNOTE.

The US TNOTE is a US government bond with a fixed interest rate and maturity date between 2 and 10 years.

Traders can buy and sell TNOTES all day long, and not have to hold them till maturity. TNOTES are considered the most liquid of assets next to cash.

The TNOTE is available for trading as a CFD through Skilling!

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Today’s economic calendar

Source: TradingView / J. Knobel May 25 2023 6:30 UTC

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Tactical trading point of view

What is tactical trading?

When a trader believes in short term market trends and actively positions trades to capture those trends rather than buying and holding.

Tactical ideas and commentary for speculative trading:

• USD/JPY breaks above the 139 (round number) eyes on the 140.50s? Current price 139.50. Bullish conditions remain, multi-month higher tops and higher bottoms (dow pattern uptrend), bullish moving average analysis with current price above its 9 and 18 day moving averages, traders with a very short term (5-13 days) objective could be seeking the 140.50s, while downside risk seen below the 137.8 support (see chart).

• The US100 bullish above $13,050 for possible $14,920 extension? Current price $13,820. The index is in an uptrend, this can be technically supported by the multi-month higher tops and higher bottoms on price, the fact that price is above its very short term, short term, minor intermediate term, intermediate term, and long term moving averages (see chart). Therefore, traders with a long term view (100 - 200 days) could be aiming for a higher price towards the $14,920 extension, while downside risk is seen below the $13,050 support area (see chart).