Facts:
- TNOTE rebounded from the shorter, 30-day exponential moving average, testing the upper boundary of the March consolidation.
- Markets have raised their expectations for interest rate cuts in the U.S. (from 2 to 3 cuts in 2025) following Friday’s PCE inflation data and the University of Michigan consumer sentiment report (Bloomberg, OIS model).
Recommendation:
- Trade: Long position (BUY) on TNOTE at market price.
- Target price (Take Profit; TP): 112.85 (TP1), 113.85 (TP2)
- Stop Loss (SL): 110.25
Source: xStation5
Opinion:
The U.S. economic data released on Friday intensified stagflation concerns. The core PCE index, the Fed’s preferred inflation measure, rose above expectations (+2.8% YoY, +0.4% MoM), while consumer sentiment, according to the University of Michigan (US Michigan Consumer Sentiment), fell for the third consecutive month to levels seen during the COVID-19 pandemic and the 2007-2008 financial crisis (from 64.7 to 57). Such uncertainty among consumers could lead to a significant drop in consumption, discourage businesses from investing, and burden the U.S. economic growth outlook. Additionally, based on the forecasted effects of Trump’s “Tariffs 2.0,” the OECD lowered its U.S. growth forecast to 2.2% in 2025 and 1.6% in 2026.
This environment supports an escalation of market expectations regarding the resumption of the rate-cut cycle in the U.S., which should also translate into a decline in government bond yields/rise in nominal value. According to the OIS model (Bloomberg), money markets shifted their expectations for three full rate cuts by the Fed from March 2026 to December 2025. A potential risk factor is the upcoming labor market data and any concessions from Donald Trump regarding protectionism. If ADP and NFP continue to indicate a fully healthy labor market and/or tariffs turn out to be lighter than the market expects, expectations for further rate cuts could cool down, and the Fed may shift focus to sticky inflation.
Methodology:
The recommendation was made based on fundamental analysis of U.S. monetary policy and macroeconomic variables, along with technical analysis of the TNOTE chart. The direction of the recommendation was determined based on moving averages (EMA30 above EMA100), price action in March (multiple tests of support at the 38.2% Fibonacci retracement level), and expectations regarding U.S. interest rates. TP1 aligns with the nearest peak (late September and October), TP2 corresponds to the 78.6% Fibonacci retracement level, while SL is set at the curr
