Morning BrewAugust 3 2022
Senior Relationship Manager
Markets are a bit torn as the news environment is rather mixed. On the one had we have mostly strong earnings - with the occasional disappointing outlier such as Caterpillar yesterday – on the other there is a large degree of political uncertainty.
As Nancy Pelosy arrived in Taiwan, China is conducting military exercises around the island.
Maybe most important for financial markets were fed speakers yesterday who were more hawkish than expected and caused a strong move in the shorter end of the US yield curve. 2 years rose from 2.85 yesterday morning to above 3%
Nancy Pelosy called Taiwan one of the freest societies in the world while China's foreign ministry said Pelosi's visit seriously damages peace and stability in the Taiwan Strait, "has a severe impact on the political foundation of China-U.S. relations, and seriously infringes upon China's sovereignty and territorial integrity."(Reuters)
US Indexes closed lower yesterday and are little changed over night, with the S&P Future is trading at 4104, the Dow at 32472 and the Nasdaq100 at 12950, in reach of the important 13k. Caterpillar disappointed with its outlook as Chinese demand for excavators fell in the real estate crisis.
Once again the FX market is more interesting than others, the hawkish talks by dovish Fed speakers caused rates to rise and the Dollar to gain across the board. The USD Index is 1.20 off Mondays lows at 106.30. EURUSD fell to 1.0170, GBPUSd to 1.2170 and USDJPY 133.30. Gold and Silver 1768 and 19.95, Bitcoin remained stable at 23k. The implied Vol remains elevated at just over 10%.
Our Strats team remains very bullish on commodities, as direct exposure is not technically easy, there are a number of mutual funds giving exposure to the overall market. You can use our screening tool to look for Mutual funds on commodities.
Overall the market seems a little too complacent over a Chinese reaction and it might be interesting to be long options to gain from possible bursts of volatility.
Key Economic Data this week:
Today: International PMI, China: 03:45, France 09:45, Germany 09:50, EU 10:00 UK 10:30 US 15:45
Thursday DE Industrial Orders, Bank of England Rate Decision, US Jobs data,
Friday: DE Industrial Output, US Nonfarm Payroll
Wednesday: Nutrien, Maersk, AXA, Societe Generale, Siemens Healthineers, BMW, Infineon Technologies, Vonovia, Nintendo, JDE Peet’s, CVS Health, Booking, Moderna, Regeneron Pharmaceuticals, Fortinet, Albemarle, eBay, MercadoLibre
Thursday: Novo Nordisk, Credit Agricole, Merck, Bayer, Adidas, Beiersdorf, Toyota, SoftBank, Glencore, ING Groep, Eli Lilly, Alibaba, Amgen, ConocoPhillips, EOG Resources, Air Products and Chemicals, Block, DoorDash, Twilio
Friday: Canadian Natural Resources, Suncor Energy, Allianz, Deutsche Post, Naturgy Energy Group
Physically Settled Futures:
Live Cattle - Aug 2022 will expire 5th Aug at 15:00 GMT
LIVECATTLEAUG22 will expire 4th Aug at 15:00 GMT.
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