Morning Brew May 6 2022
Senior Relationship Manager
Summary: That did not age well
Despite the Feds strong indication that a June hike of 75BPS was off the table, the market feels differently. The probability of a hike by 75 BPS is priced in at 79% after the high increase of labor costs.
This sparked a huge waive of risk aversion. Indexes fall massively, with the Dow -3.12%, S&P -3.56%, and the Nasdaq -4.99%. Big tech lost heavily and the Nasdaq lost the most since June 2020, the 10 day realized Vol in the S%P500 is at the highest since early 2020 near 40%.
The MSCI Asia gave up 2.5%.
GBP Lost heavily to 1.2360 and EURUSD to 1.0526, the USD Index is at the highest level since 2003 at 103.62.
Gold and Silver gave up the FOMC gains and are currently trading at 22.50 and 1875 and Bitcoin confirms it is not traded as a save haven but a risky asset, giving up 10%.
US 10 years yields rose to 3.1% high and now gave up 0.05%.
The SEC names over 80 firms to a list of entities facing possible delisting from American exchanges
Oil rises on fears of a European Embargo against Russia and reports that US intelligence agencies are supporting Ukraine in identifying high value targets may fuel further aggression.
Today, US Labor data including the non-farm payrolls and the average earnings at 14:30 will be the key event, at 15:15, 17:00 and 21.20 Fed-speakers will be speaking at different events and will be in focus for hints on the stance of the Fed.
Remain cautious and expect sharp moves at any time.
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.
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.