Senior Relationship Manager
Good Morning,
Equities gained on Friday on hopes inflation may have peaked and technically that the S&P managed to recover 50% of it`s losses at the 4231 level. This was seen as a positive signal. The Dow gained 1.3% an d3% for the week, the S&P 500 1.7% and 3.25% for the week and the Nasdaq 2.1% and 3.8% for the week.
Tesla and Nvidia both gained more than 4% on Friday, Tesla is trading at the 900 level again and Nvidia 187
The USD Index rose to 105.80, the next resistance is in the 105.90/106 area, GBPUSD is trading at 1.2110 and EURUSD at 1.0245. EURCHF fell below 0.97 and is trading at levels not seen since the SNB dropped the peg on Jan 15 2015 and caused massive jumps. The Japanese Yen is at 133.15.
Gold and Silver broke higher on Friday but fell over the weekend, Gold reached 1803 Friday and dropped to 1791 and Silver hit 20.85 to fall to 20.60 now.
Bitcoin is nearing 25k.again,
Overall Risk sentiment seems to flourish on the lack of new negative news and seems fragile. Contrarian traders will be tempted to short the rise but it may be safer to join the party while it lasts. Consider optionality to make the most of an unclear situation.
There is no significant US Inflation data this week, the focus will be on news, the FOMC Minutes and the Retail Sales on Friday.
The Chinese central bank cut rates over night to stir demand and boost the economy. Both the key data points, Retail Sales and Industrial Production disappointed.
Germany will decide an additional Gas Charge today that will likely weigh on sentiment, as it would reduce household spending power significantly. A 4 person household could loose up to €1000.
Kim Cramer sees higher rates possible givent eh technical setup in Bund Futures and 10 Year US Yields: https://www.home.saxo/content/articles/bonds/ta-us10eu10-12082022
Peter Garnry writes:
The easing inflation narrative has been building strength for six weeks now and the short-term vindication in the US CPI release on Wednesday has bolstered the bulls.
Economic Data:
Today: Japan GDP, China Retail Sales
Tuesday: UK Employment, EU Trade Balance, German ZEW, US Housing starts and Industrial Production, Canada CPI
Wednesday: Japan Trade, UK CPI, EU GDP, US Retail Sales, FOMC MInutes
Thursday: EU HICP, Turkey rate decision, US Jobless claims, Philly Fed
Friday: UK Retail Sales, Canada Retail Sales.
Earnings:
Expiries
Physically Settled Futures:
Cocoa (CCU2) will expire 17th Aug at 15:00 GMT.
Expiring CFDs:
COCOANYSEP22 will expire 16th Aug at 15:00 GMT.
OILUSSEP22 will expire 18th Aug at 15:00 GMT.
Futures can be rolled online via the Futures Spread Trade Ticket. Any open positions will be closed after the mentioned times.
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