Senior Relationship Manager
Summary: Stocks Gain and USD falls after Powell - CPI looms
Good Morning
Jerome Powel appeased equity traders and talks the USD lower
The Dow Jones Industrial Average gained 183.15 points to 36,252.02, the S&P 500 42.78 points to 4,713.07 and the 210.62 points, to 15,153.45, the Dax is back above 16000 at 16050. UBS stated a target of 5100 at year end but expects fluctuation in value.
The USD fell after Jerome Powell testified. He basically confirmed the hawkish stance but indicated the overall policy could be adjusted if needed and that it can take several meetings to reach decisions aimed at the speed of tapering. In his view, the economy should be able to withstand the the COVID-19 surge with only "short-lived" impacts and was ready for tighter monetary policy. 10 Year Yields fall by 5 Basis points. The USD Index fell to the lowest since November at 95.54, EURUSD rose to 1.1372 and GBPUSD to 1.3640.
Gold rose above the initial resistance at 1810 to 1820 and could test the 1835. That is the level that needs to be broken for real upside potential. Silver follows and is at 22.80.
Bitcoin is basically unchanged at 42600 and the USDTRY is unchanged.
The WHO said more research was required on if existing COVID-19 vaccines provide adequate protection against the Omicron variant, Moderna lost 5% and Biontech 6.
Germany reports the highest number of Corona infections ever at above 80.000.
The Japanese Tankan Survey lost against December with input cost and Omicron being cited as the reason.
A request to dismiss an FTC against Facebook aimed at Instagram and Whatsall failed.
The EU Industrial Production at 11 CET and the US CPI at 14:30 are the key events today, with a clear focus on the CPI. The Expectation is for 7% and 5.4% core on an annual basis.
Expiries
OILUSFEB22 will expire 18th January 2022 at 16:00 GMT.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.