Morning Brew March 15 2022
Senior Relationship Manager
Summary: Heading towards the FOMC, rate fears rise.
Stocks seem to be driven by a focus on tomorrows FOMC, oil and commodities give up some ground on ceasefire talks in Ukraine and fears that shutdowns in China might halt demand.
WTI fell below USD100 for the first time in March, Gold dropped to 1930 and Silver 24.70. Fears of a 50bps hike by the Fed tomorrow added weight to the precious metals.
In Equities, the Dow remained unchanged and the more rate sensitive S&P and Nasdaq lost 0.7% and 2%. This morning we are little changed in US and European Indexes vs the Futures close.
The Hang Seng remains under severe pressure, giving up 4.4% today, the Index in trading at a discount of 25% to before the Ukraine invasion while the Dax is down 10%.
The 10year yield rose to 2.14 as QE has been halted in the US for the first tine since Ben Bernanke was heading the Federal Reserve.
India may buy crude oil and other commodities from Russia at a discount
The United States warned China against providing military or financial help to Moscow
China released better than expected economic data during the night, Retail sales at 6.7% vs 3% Industrial Output +7.5% vs 3.9% and Fixed Asset Investment 12.2% vs 5%. Markets seem to be focused on the rising Corona Cases rather than the good news.
Barclays announced to suspend sales of two ETNs affected are called iPath Pure Beta Crude Oil ETN and iPath Series B S&P 500 VIX Short-Term Futures ETN .
Althea published a Fixed Income Outlook in a week where rates may be the thing:
Last week ECB's meeting changed the rule of the game: monetary policies will now focus on inflation while fiscal policies will have to take care of growth. That is even more true for the Federal Reserve, which is well behind the curve in tightening monetary policy while inflation expectations continue to soar. That's why the market is positioning for a hawkish FOMC meeting this Wednesday, which might combine a rate hike with an announcement concerning the runoff of the Fed’s balance sheet or an aggressive dot plot. Investors will also look at the BOE and BOJ for signs of hawkishness. In the meantime, interest payments of Russian eurodollar bonds are approaching, and the market is wondering whether the country could default.
Mads Wrote on Cryptos:
Since Bitcoin launched in 2009, Bitcoin and almost every cryptocurrency launched since has been inflationary and external miners received the fees provided for validating the transactions - including freshly minted crypto. By summer, however, Ethereum might turn into the first large deflationary cryptocurrency which furthermore compensates holders with newly minted cryptos instead of miners. This will likely make Ethereum more appealing for holders. https://www.home.saxo/content/articles/cryptocurrencies/ethereum-becoming-more-attractive-for-holders-09032022
Bitcoin is little changes this morning at 38750.
Today we are expecting UK Employment data at 8:00 CET, German ZEW at 11 along with the EU Industrial Production and the US OOI at 13:30.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.