Coming up on Wednesday US time are much awaited:
- Federal Open Market Committee (FOMC) policy decision
- Details of Treasury’s coming auction sizes
Then on Friday:
- NFP jobs report for January
TD Securities says the results of all of the above don’t matter for the algos, analysts at TD are expecting automated trading strategies are likely to buy stock indexes, bonds and gold “in nearly every scenario” for the rest of the week and into part of next week, citing:
- investment managers are re-leveraging at a time of greater calm in the financial market, as seen in the Cboe VIX Index VIX, which measures expected volatility in the U.S. stock market, and the ICE BofAML MOVE Index that reflects interest-rate volatility in the Treasury market.
Info comes via a Dow Jones report.
More:
- TD used simulations of future price paths in equity futures, U.S. government debt and gold to map out various scenarios, and breaks down performance paths into three categories it refers to as “downtape,” “flat tape,” or “uptape.” In almost every situation but one commodity trading advisers, or CTAs – a type of professional investment manager that uses futures and options contracts to profit from moves in global markets – are set up to buy everything.
- The only exception would be an extreme surprise that hits the Treasury market.
Is it just me or is it a worry when the only button available says ‘buy’?