Morning Brew May 4 2022
Senior Relationship Manager
Summary: The Day Traders have been waiting for
Today will be a key day for the USD and Equities.
At 20:00 CET the FOMC will announce the Fed Fund Rate and a hike of 50 bps is expected with a 91% likelihood and 9% for 75 BPS. The difference between Inflation and the Fed fund rate has never been this large – the Fed is clearly behind the curve . The Decision and the following press conference will be the key events of the day.
This will likely make or break the markets as we are at decisive levels in the USD, Precious Metals and also Equities are looking for direction. God and Silver stabilized at low levels – 1864 and 22.55, the USD Index remains near 20 Year highs. For a more detailed technical update for gold and silver from Kim Cramer, our technical analyst, please click here
Equities move little yesterday and with all 3 US Indexes closing within 1% and the dax remains trapped around the 14000.
Oil moved a little higher over on news the EU is looking to stop importing Russian Oil in 6-9 months
The Bund Future lost a full point over night to trade at 152.60 and the US 10 Year remains at 3%.
Peter wrote a great article on Nutiren and it`s competitors:
Nutrien earnings in focus as food prices could destroy confidence: Food prices are up 34% y/y in March and potash (one of the ingredients in modern fertilizers) prices in North America are up 330% from the lows in 2020. Combined with high natural gas prices and various exports restrictions on phosphate the price on fertilizer is going through the roof causing lower crop yields and less profitability for farmers creating an ugly dynamic for food prices this year and potentially next year. We take a look at the underlying factors driving fertilizer prices and highlights the different companies within this theme.
Besides the FOMC we are expecting:
- International PMIs: Germany 9:55, EU 10:00, US 15:45
- EU Retail Sales 11:00
- US and Canadian trade Data at 14:30.
Consider your risk and exposure going into the FOMC, it will be a high risk event with the potential for sharp moves during the release as well as in the press conference.
Physically Settled Futures:
CK2 will expire on 6th May at 09:00 GMT.
FPK2 will expire on 11th May at 15:00 GMT.
GASOILUKMAY22 will expire on 10th May at 15:00 GMT.
OILUSJUN22 will expire on 18th 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.