2 Trades to Combat Rising Interest Rates

by | Aug 27, 2021 | Uncategorized

My theme for this week has centered mainly around inflation… And after a week’s worth of analysis, I found two trades for rising interest rates that every investor should have in their portfolio.

But before I dive into them, let’s recap some important things I talked about at the start of the week…

On Monday, I mentioned the chart for crude oil was bearish due to the reinflation trade taking over. I pinpointed a place on the chart where I expected oil to bounce, and it did — I’ll go over that chart in more detail later in the video below.

I also discussed the gross domestic product number, which came out Thursday, earlier this week. I went over scenarios of what would happen to volatility in the market if the number was strong or weak…

And neither of those situations happened!

The number ended up being almost exactly as analysts had estimated. GDP rose to a revised 6.6% annualized pace in the second quarter — the original estimate was for 6.7%.

The data doesn’t get more plain vanilla than that, but I noticed something interesting going on beneath the hood…

2 Trades for Rising Interest Rates

When we take a look at the 10-Year Treasury, you’ll see it’s in the process of making a new move higher.

I expect yields to break above moving averages, catching a lot of traders off-guard…

Many people are still spooked by this new delta variant — which is a problem — but I have a hunch yields will go higher despite it. So this is definitely a trade to be in the lookout for.

This is especially important to the traders out there following the government’s lead of going long on bonds — they’ll end up regretting that decision in the coming weeks.

Another trade to keep in mind as interest rates rise — which I gave to you in Thursday’s Investors Edge watchlist — is crude oil. 

I’ve been bullish on oil of late, and rightfully so. This is another trade that seems to be catching investors offside since everyone thinks they need to be betting on oil falling.

And while oil bounced exactly where I predicted it would, I have a new trade that should bring in more profit than we originally expected… which is always great!

Check out my short video to learn more about my two trades for rising interest rates.

And as always, send any trading questions to jeff@joyofthetrade.com and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel.

WRITTEN BY<br>Jeff Zananiri

WRITTEN BY
Jeff Zananiri

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