Morning Brew July 27 2021
Senior Relationship Manager
Summary: Market Overly complacent
Equities continue to grind higher despite hawkish tones from various fed speakers, James Bullard believes the Fed needs to be more aggressive, Mester sees rates at 2.5% by year end, Mary Daly also sees higher rates as necessary. The Dow gained 0.7%, the S&P 500 1.1%, and the Nasdaq closed up 2%
President Zelenskiy is cautiously optimistic on negotiations: "It's very difficult, sometimes confrontational," he said. "But step by step we are moving forward." (Reuters) and further sanctions on Russia and Russian individuals are expected in the week when Joe Biden visits Europe.
The Vix Index is declining and the cost for put options has fallen significantly. The cost of an option that insures a 10% or more drop in the S&P 500 is 30% cheaper than just one week ago so it might be a good opportunity to stock up on protection. A 4050 put until June is trading at 65 per Index. According to Reuters the need for protection has declined as large investors have moved to the sidelines.
The Market seems overly complacent at the moment.
The GER40 is trading just above the resistance mentioned yesterday at 14515.
US 10 Year rose as bonds sold off and hit 2.4% up from 2.20 yesterday, the German rose to 0.5%.
FX in unimpressed and trading calmly, the USD index at 98.50, EURUSD back above 1.10 at 1.1025 and GBPUSD 1.3260. Gold and Silver recede to 1918 and 24.80 USDJPY is 121.
Oil prices turned higher again after U.S. crude stocks fell last week, underlining how tight global supplies amid sanctions.
ZTE Corp completed five years of probation in the United States and shares soar as much as 60% in Hong Kong
The First Tesla was finished in the new Berlin Gigafactory.
The UK CPI was just released 0.3% higher than expected,
At 15:00 CET we are expecting the US New Home Sales and at 16:00 CET the EU Consumer Confidence
Physically Settled Futures:
PLJ2 will expire 23rd March at 15:00 GMT.
NGJ2 will expire 28th March at 7:30 GMT.
NATGASUSAPR22 will expire on 25 March at 15:00 GMT.
GASOLINEUSAPR22 and GOLDAPR22 will expire on 29 March 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.
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.