Financial Markets Today: Quick Take – September 14, 2022 Financial Markets Today: Quick Take – September 14, 2022 Financial Markets Today: Quick Take – September 14, 2022

Financial Markets Today: Quick Take – September 14, 2022

Macro 6 minutes to read
Saxo Be Invested
Saxo Strategy Team

Summary:  Equity markets were slammed for their worst losses in more than two years yesterday on a shocking August US CPI print, which showed core inflation rising at twice the anticipated pace for the month. This was a rude shock after a recent strong rally in equities, and US treasury yields jumped, and the US dollar soared as the market rushed to price in the risk that the Fed might hike 100 basis points next week.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)

US equities erased most of the gains since 6 September as the market’s positioning ahead of the US August CPI report was completely wrong. Not only did the headline inflation figures not fall m/m, but the core figure is up 0.6% m/m and has been fluctuating around 0.5% m/m for a year suggesting that inflation is getting entrenched at a level suggesting 5-6% annualised inflation in the US. The Fed Funds futures curve immediately shifted downwards lifting peak Fed funds rate at close to 4.5% from around 4% the day before the inflation report. S&P 500 futures tumbled 5.4% from its intraday peak and Nasdaq 100 futures plunged 6.7% from its intraday high. The 3,900 and 12,000 levels are the key levels to watch on the downside in S&P 500 futures and Nasdaq 100 futures respectively.

Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg)

Shares traded in Hong Kong, Shanghai, and Shenzhen declined on the back of the worst day in more than two years last night in US equities, with Hang Seng Index at -2.6% and CSI 300 -1.2%. Among the top losers, Techtronic Industries (00669:xhkg) plunged 10.6%, Hua Hong Semiconductor (01347:xhkg), Bilibili (09626:xhkg) and Baidu (09888:xhkg) dropped more than 5%, JD.COM (09618:xhkg) and Alibaba (09988:xhkg) slid about 4%. Tencent (000700:xhkg), -1.4%, had an educational game being approved under a company controlled by Tencent’s executives including co-founder Pony Ma. This is the first time Tencent got a game approval this year though being an educational game, it will unlikely be a significant money-making title. CNOOC (00883:xhkg) and COSCO Shipping Energy outperformed, rising 2%-3%. A typhoon is approaching Shanghai and Ningbo causing major container ports in Shanghai and Ningbo to suspend operations.

USD rips back higher – suddenly threatening cycle top after CPI data

After the shocking August CPI number from the US yesterday, the US dollar soared higher, taking EURUSD all the way back below parity after nearly trading 1.0200 earlier this week. Elsewhere, the USD was universally higher, with a pair like AUDUSD slamming all the way to the low 0.6700's and therefore not far from the cycle low, while NZDUSD actually posted a cycle low, and GBPUSD trading south of 1.1500 after trading north of 1.1700. Moves by the Bank of Japan and verbal intervention from the Japanese Ministry of Finance helped temper the USD move this morning (more below). Now the focus shifts to next week's FOMC meeting, where the market is now pricing the rising risk that the FOMC could hike 100 basis points.

JPY takes a stab at resilience on the anticipation of intervention

The Bank of Japan carried out a “rate check” in the FX market, which is widely seen as a precursor for actual market intervention. This tamed the USDJPY move higher from sub-142.00 levels to nearly 145, as the gains were pared back to 144.00, with the JPY also firmer broadly. Finance Minister Suzuki said nothing could be ruled out in response to the weakening JPY and that if the current trend persisted, stepping into markets is an option. But as past experience has shown, intervention often only creates temporary volatility if the underlying issue is not addressed - in this case, the Bank of Japan's insistence on maintaining very low rates and controlling yields out to 10 years. If yields continue to rise globally, Japanese officialdom will have an enormous and likely unwinnable fight on its hands if the Bank of Japan fails to change its policy.

Gold (XAUUSD), Silver (XAGUSD) and copper (COPPERUSDEC22)

... all tumbled following the stronger than expected US CPI print, thereby reversing some of the recent weak dollar-led gains. Prior to the release copper had been on a tear reaching $3.7/lb as the LME market continued to signal the tightest market conditions since November on increased demand from China. Gold trades near $1700 and close to the current floor around $1680 after the CPI print strengthened the view the FOMC will have to remain hawkish and continue to aggressively hike rates. However, the risk to economic growth while inflation remains stubbornly high may bring back worries about stagflation, a development that may lend support to investment metals. Continued focus on the dollar and the markets pricing of future inflation expectations.

Crude oil (CLV2 & LCOX2)

Crude oil traded higher on Tuesday before the hotter-than-expected US CPI print helped send most commodity prices, including oil, lower on fears aggressive rate hikes could curb demand. Earlier the market traded up after OPEC maintained their 2023 outlook for a 2.7 million barrel per day increase in global demand. The EIA delivered the same message last week and the IEA is likely to do the same today when their monthly oil market report is released. Developments that highlight the current discrepancy between the (lower) price action and what these major forecasters are seeing. A recovery later in the day was supported by the Biden admin saying it will consider starting refilling strategic reserves when WTI falls below $80. Ahead of today’s EIA stock report, the API reported a 6m bbl crude stock build, a 3.2m bbl drop in gasoline and 1.8m bbl build in distillates.

US Treasuries (TLT, IEF)

Treasury yields jumped yesterday on the shocking August US CPI data, with the yield curve flattening aggressively as the hot data point saw the market rushing to price in the risk of more aggressive moves to counter inflation at coming meetings. The 10-year yield was taken back toward the cycle top from mid-June at 3.50%. A further rise above this yield level will continue to drive the risk of weaker sentiment and USD strength.

What is going on?

US August CPI shocks with high core inflation reading

The headline US CPI data came in slightly above expectations, with a year-on-year reading of 8.3% vs. 8.1% expected and a month-on-month reading of +0.1% vs. -0.1% expected, a real surprise given sharp drops of late in gasoline prices. But the real shock was the core Ex Food and Energy inflation reading of +0.6% month-on-month, twice what was expected. This triggered an enormous slide in risk sentiment as the market rushed to price the risk that the FOMC might hike as much as 100 basis points next week. As of this morning, about 85 basis points is priced for the meeting.

The grains sector maintained a bid on Tuesday

... while most other commodities took a tumble after the US CPI print once again raised concerns about aggressive growth and demand killing rate hikes. With demand being relatively constant the grains sector held up well as the sector continued to focus on supply risks and dwindling inventories. The US Department of Agriculture this week slashed its estimates for soybean supplies from the US, the second-largest producer after Brazil where a lingering “triple-dip” La Nina repeat could bring dry conditions in the coming months. In addition, wheat exports have been cut because of the war in Ukraine, and there’s uncertainty over Ukraine’s grain export corridor after criticism from Putin.

Inditex 1H revenue beats estimate

The Spanish fashion retailer delivered first-half revenue of €14.9bn vs est. €14.6bn on top of delivering EBITDA margin of 27.1% vs est. 26.8%. Inditex reiterates guidance of online sales exceeding 30% of revenue by 2024.

New lockdowns in China

Two cities around Beijing announced lockdowns due to Covid risks. Shijiazhuang (over 2.3 million inhabitants) asked all residents of Yuhua district to work from home for a period of three days (expected to end on Friday morning). Sanhe (around 440,000 inhabitants) implemented a full lockdown of its entire population at least until Saturday morning. This underscores the supply chain risks during the winter period in the event China experiences a bigger Covid outbreak.

UK August CPI comes in slightly above expectations at core

UK inflation came in at 9.9% on the headline versus a slightly higher print expected, but the core inflation level rose to a new cycle high of 6.3%, just above the 6.2% expected. Price pressures are likely to remain elevated this month as well, despite some softening in fuel prices, as food and services costs continue to rise. Further gains in inflation can be expected in October, but the capping of household energy bills may help to soothe inflationary pressures thereafter.

Cheniere was the one shining light on Wall Street overnight

Cheniere, the US’ biggest LNG exporter, saw its shares rise 3.1% yesterday while markets saw a sea of red when US inflation data came out higher than expected. The highlights the fact that energy companies can and have been able to outperform the market. The largest US exporter of liquefied natural gas boosted its full-year 2022 profit forecast beyond analysts’ expectations as shipments are already set to depart their dock sooner than anticipated.

What are we watching next?

Shanghai Cooperation Organization meeting on 15-16 September

This the first time since 2019 that Asian leaders are meeting in person in a bigger strategic forum. Xi Jinping and Vladimir Putin are officially joining the summit and India’s Modi is expected to join as well. Given the recent military success in Ukraine, the pressures are mounting on Russia and Putin

Ethereum merger will draw attention

The Ethereum blockchain’s much-anticipated software upgrade, the so-called Merge, is expected to take place tomorrow morning, according to its core developers. The new system, known as "proof-of-stake", will slash the Ethereum blockchain's energy consumption by 99.9%, developers say. Most blockchains, including Bitcoin's, devour large amounts of energy, sparking criticism from some investors and environmentalists. The merge could make Ethereum more favourable to pension funds and other institutional investors that are under the scanner for environmental concerns, but there is also come skepticism on how scalable Ethereum could become and if it becomes more susceptible to attacks by hackers.

France is expected to enter a recession next year

Barclays is the first major international bank to forecast a recession in France next year (2023 GDP growth at minus 0.7 %). This is highly likely, in our view. But it is certainly too early to assess the depth of the recession at this stage. It will depend on the evolution of the energy crisis and the risk of energy rationing. Forecasting is always a complicated task. This is even more complicated now due to the elevated level of uncertainty regarding the short-term economic path. Expect other European countries to enter a recession next year (the United Kingdom, Germany, Hungary etc.).

Earnings to watch

Inditex has already reported before the European equity market opens (read earnings review above), so the next earnings release in focus is Adobe tomorrow. Analysts expect revenue growth of 12.6% y/y with operating margin jumping back again following cost reduction exercises. The key risks for Adobe are the strong USD, falling technology spending, and lower advertising growth lowering demand for content creation.

  • Today: Inditex
  • Thursday: Polestar Automotive, Adobe

Economic calendar highlights for today (times GMT)

  • 0800 – IEA's monthly Oil Market Report
  • 0900 - Eurozone Jul. Industrial Production
  • 1230 - US Aug. PPI
  • 1230 - Canada Jul. Manufacturing Sales
  • 1430 - US DoE Weekly Crude Oil and Product Inventories
  • 1430 - ECB's Villeroy to speak
  • 2245 - New Zealand Q2 GDP
  • 2350 - Japan Aug. Trade Balance
  • 0120 - China Rate Announcement
  • 0130 - Australia Aug. Employment Data 

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher

Latest Market Insights

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • 350x200 peter

    Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • 350x200 althea

    Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • 350x200 peter

    Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • 350x200 charu (1)

    FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • 350x200 ole

    Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.