Morning Brew July 27 2021
Senior Relationship Manager
Happy Friday the 13th, let us hope it does not fulfil its reputation.
On Monday I am traveling and will send the next report on Tuesday, trade safely and remember that risk management is key in these markets.
Despite ongoing worries about inflation, rate hikes and tighten of financial conditions, Equities found some buyers on hopes of a rebound.
Japan 225 is up 2.6%, the GER 40 gains 1.3% to 13900, the US 500 3970 and the USTech 100 gains 2% to trade at 12120.
The USD remains strong with the USD index near 105 and EURUSD below 1.04, GBPUSD is trading at 1.2225 and Gold and Silver remain under pressure at 1825 and 20.83. Silver is now oversold acc. to the RSI, Gold very nearly so. USDJPY fell to 128.80.
Cryptros were extremely volatile with bitcoin falling to 25k before recovering to 30500. Terra/ USD (USDT) broke its 1:1 peg to the dollar this week, as its mechanism for remaining stable . It last traded below 10 cents.
Jerome Powell was confirmed for a second term yesterday and stated that price stability was the "bedrock" of the economy and that in order to achieve lower inflation there would be some pain, he continues to look at two 50 bps hikes the next two meetings but said he was willing to do more. Powell said he believes the country can avoid a serious downturn The Fed released a report that liquidity had deteriorated further than what might be expected at current levels of volatility.
Moscow is restricting gas deliveries to Europe, Germany is expected to lose 10 mcm/day of gas supply Dutch gas prices close 12% higher
Pressure on Europe to secure alternative gas supplies increased on Thursday as Moscow imposed sanctions on European subsidiaries of state-owned Gazprom a day after Ukraine stopped a major gas transit route.
Gas prices surge Germany to lose 10 million cubic meters/day of gas supply Dutch gas prices close 12% higher
In terms of economic data we are expecting CPIs from France, and Spain and the EU industrial production, the US is very quiet with the industrial production at 14:30 and the Uni of Michigan at 16:00. Monday Chinese Data is the most important at 04:00.
Physically Settled Futures:
CLM2 will expire on 20th May 2022 at 15:00 GMT.
PAM2 will expire on 23rd May 2022 at 15:00 GMT.
OILUSJUN22 will expire on 18th May at 15:00 GMT.
NATGASUSJUN22 will expire on 24th May at 15:00 GMT.
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.