Senior Relationship Manager
Summary: Markets are on edge
Good Morning,
Yesterday was an interesting day, US Equities closed somewhat friendly with the Dow down 0.42%, the S&P 500 up 0.16% and the Nasdaq up 1.75%. Key movers were the USD which gained substantially and Metals which came under severe pressure on growth fears. Copper is down almost 30% since late May, Gold and Silver are trading 1763 and 18.95. The US Yield Curve inverted, as two-year Treasuries rose above the 10-year. 2 years are at 2.806 and 10 at 2.79.
EURUSD fell to 1.0239 low , currently 1.0250 and GBPUSD at 1.1930. The Pound is further stressed by pressure on BoJo as two ministers resign and express their lack of confidence in him, in various news outlets his resignation is not unlikely. The 1 month Implied Vol of an EURUSD ATM Option is 11%, GBP 12. From a technical view, EURUSD has room for parity. The USD Index is trading at 106.63
German Industrial orders were released stronger than feared at +0.1% vs -0.6% expected,.
Voyager Digital has filed for bankruptcy, , a week after suspending withdrawals. Acc to Reuters, Voyager estimates that it had more than 100,000 creditors holding somewhere between $1 billion and $10 billion in crypto assets.
EU Retail Sales at 11:00 and the US PMI will be in focus. In the evening, the Fed minutes will be closely watched.
Besides the economic data, any news on Gas deliveries to Europe will be closely watched and comments out of central banks and from politicians to adress the current turmoil as well.
Trade carefully.
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach