As per my weekend note titled Diary Week 68: Less Is More I would be very careful in the short-term being long USD and short FI as a further retracement in both looks a danger
FX
The picture on EURUSD definitely suggests that the move has overshot somewhat the level we would expect with the relative yield move and a further retracement looks likely, possibly even back towards 1.0600-1.0610.
Similarly, on the DXY index a move back towards 106.10 also looks a danger.
On USDJPY a move towards 152 cannot be ruled out while on GBPUSD 1.2700+ is also possible
None of this necessarily changes the big picture setup for the USD which still looks bullish, but it could be a painful short-term squeeze.
Rates
While we still have big levels at 4.40-4.41% on the 2-year yield and 4.47-4.48% on 10's (109 on TY1) we lack the catalysts right now to take us through those levels and the danger is that long-end yields might fall a bit further and the curve flatten more.
On the 2-year yield it is not inconceivable that that could mean a move towards 4.26% but only below 4.21% opens up a danger of an even deeper pullback. On the 10-year yield a close under 4.33% could open up a danger of an extension towards 4.21%
SFRH5 still has a 95.47-50 target but that likely needs a belief that we will see a December Fed pause
On the 2's 10's curve we are at a pivotal level at minus 1.25 bp's. This is the pivot off which we formed a 76.4% pullback. A break below if seen would suggest extended losses possibly towards minus 15 bp's
In addition, the US-German 10-year yield spread has backed up about 5 bp's from minus 216 to minus 211 which has contributed to today's USD weakness
Equities
Es1 still looks set for higher levels and is now above the 76.4% pullback level at 6,006. A move towards 6,200+ by Fed Day (18 December) still looks a reasonable target.
Commodities
Gold did not manage to overcome the 76.4% pullback level at $2,730 and could be in danger of a bearish outside day if it closes under $2,668 today. Surprisingly it has not benefited from lower yields and the lower USD.
NG1 (Natural gas) is bid again. The big resistance stands around $3.56-$3.63 and a break over there, if seen, opens up for a move towards $4.75
BITCOIN still looks like it may have a Thanksgiving $100k print