R's Trading Station (0911 Friday)
- What to look for
- You can examine a strategy that assesses the KOSPI's failure to break above 7,000 and narrow market breadth at a direction-setting juncture ahead of the FOMC and BOJ meetings, and calls for confirming a shift to net buying by foreign investors.
- Why it matters
- This helps build a foundation in the history of money and central banks, and in interpreting government bonds when interest rates are rising, including the on-the-run and off-the-run structure and the counterproductive effects of buybacks.
AI summary
The video explains that the KOSPI and KOSDAQ are at an important juncture that will determine their direction ahead of next week's FOMC and BOJ meetings, and that maintaining cash allocations and entering after confirmation matter more than short-term predictions. It assesses that, despite its weekly gains, the KOSPI failed to break above 7,000, while thick resistance in the upper cloud on the KOSDAQ chart indicates a weak market with narrow breadth, with only selected stocks, including Hynix and stocks in nuclear power, construction, and finance, showing relative strength. It argues that rising global interest rates and commodity prices, together with weakening confidence in America's fiscal management and diplomacy, make it difficult for central banks to support equity markets. It proposes waiting to take aggressive long positions until foreign investors turn net buyers on a monthly basis. In the latter part, it explains the history of money, bonds, and central banks, as well as the on-the-run and off-the-run structure. It concludes that, when interest rates are rising, Treasury buybacks can instead trigger selling of benchmark issues and push up the 10-year yield, making it difficult to stabilize interest rates without fiscal tightening.