Morning Brew January 18 2022
Senior Relationship Manager
Summary: Yields and Oil rise
Ax expected, yesterday was not the most volatile of days given the US Holiday.
The Bank of Japan left rates upgraded its inflation forecasts on Tuesday, the JPY tested the 115 and the 200hMA level and failed to break higher so far.
Equities are under pressure this morning as rising oil prices dampen the mood and fuel inflation fears. A drone attack in the UAE and receding worries on Omicron let prices rise. Brent has broken above the double top 2018 and Q4 2021.
US Indexes are trading app. 0.5% lower with the US30 at 35853 the US 500 at 4640 and the US Tech 100 at 15443. The GER30 trades at 15890.
US yields rose to 1.84 and the German 10 Year is approaching 0, currently at -0.022 and a new high since Q2 2019
EURUSD is trading at 1.1400, GBPUSD 1.3640 and the USD Index 95.30
Gold hovers at 1816 and Silver just below the 22.95. So far the old rule that Gold follows oil higher is not the case.
Bitcoin remains stable to 42300 with a study by Genesis Trading showing that the investor base into bitcoin is becoming more stable. The amount of bitcoin held in digital wallets with no outflows for more than five months has been steadily increasing and The number of bitcoins that haven't been traded in 12 months moved in over a year has been rising steadily in the last 6 months.
UBS has reached levels not seen since early 2018, in view of 18 CHF again, while the resignation of Horta-Osorio, the stock fell to 9.3 as the focus was more on the fact that there was a further issue and not on the fact that that there had been a solution.
Airline executives in the US warned of an aviation crisis if 5G is rolled out as currently planned because airlines failed to get their planes ready in time. The US could be looking at more than 1,100 flights daily could be cancelled.
Rio Tinto expects slightly weaker iron ore shipments in 2022
German UK Labor Data at 8:00 the German ZEW at 11:00 ,the Canada CPI 14:30
Key earnings today earnings Goldman Sachs, Interactive Broker and Charles Schwab
Physically Settled Futures:
CLG2 will expire 20th January 2022 at 16:00 GMT.
ECOG2 will expire 23th January 2022 at 10:00 GMT.
NGG2G2 will expire 27th January 2022 at 10:00 GMT.
GCG2, MGCG2 will expire 28th January 2022 at 16:00 GMT.
OILUSFEB22 will expire 18th January 2022 at 16:00 GMT.
NATGASUSFEB22 will expire 25th January 2022 at 16:00 GMT.
INDIA50JAN22 & TAIWAN95JAN22 will expire 27th January 2022 at 02:00 GMT.
GASOLINEUSFEB22, GOLDFEB22 & HEATINGOILFEB22 will expire 27th January 2022 at 16:00 GMT.
CHINA50JAN22, HK50JAN22 & SINGAPOREJAN22 will expire 28th January 2022 at 02:00 GMT.
Futures can be rolled online via the Futures Spread Trade Ticket. Any open positions will be closed after the mentioned times.
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.