Yields dropping and French headlines making a mess of the Euro

[Owen Sterling 65]

Morning everyone. Been watching the screen this morning and seeing U.S. treasury yields drift down near these one-month lows got me thinking about how quickly macro sentiment shifts on us. Meanwhile, you've got French political unrest widening those Euro spreads, and honestly, it is reminding me of some messy sessions from past years. Back when the Eurozone starts wobbling over political headlines, currency traders tend to get trapped trying to catch falling knives or chasing breakout shorts too late. I learned the hard way a while back during a similar French political flare-up that trying to scalp volatile EUR crosses without giving the market room to breathe is just a fast track to getting stopped out. My biggest rule now when macro noise hits like this is to dial down the leverage and wait for the initial liquidity flush to settle before putting on any size. If you are trading the bond market or currencies today, make sure your stops are wider than usual because the intraday whipsaws can get nasty fast. Anyone else playing these yield drops today, or are you sitting on your hands waiting for the dust to settle?

 

[Noah Vance BR]

Classic macro noise. I ran a quick backtest on headline-driven EUR sell-offs over the last decade, and trying to catch a falling knife right off French political headlines usually gives a terrible R:R.

Until the US-German yield differential stabilizes, momentum is clearly skewed short. Waiting for the volatility spike to settle before looking for any mean-reversion setups.