Senior Relationship Manager
Summary: Will Crypto Spill over? Will the CPI Save the day?
Good Morning,
The failure of crypto exchange FTX and the news that Binance would not step in to acquire the rival caused massive ripples in crypto. Bitcoin fell to a low at 15600 and can recover to 16700 just now.
The woes of crypto spilled to overall risk sentiment and boosted the US Dollar as safe haven. The USD Index rose back to above 110 to trade at 110.23 despite falling yields (confirming it is a safety move as opposed to the normal yield seeking one)
There continue to be worries of larger spillover effects and calls for Bitcoin to drop to 10 or even 5k.
US Indexes lost sharply with the S&P 500 -2.08%, the Nasdaq -2.48% and the Dow -1.95%, the GER40 was relatively stable at 13600.
EURUSD is trading just above parity at 1.0033. GBPUSD trades at 1.14 and USDJPY at 146.14.
The US Midterms so far do not provide a very clear impulse for the markets. Most interesting seems to be a loomig showdown between Donald Trump and Ron DeSantis for the next presidential ticket.
Today, all eyes will be possible spillovers of FTX and then the US CPI at 14:30 CET. Traders and investors hoping for a year end rally will be expecting a number below 8 and a higher one would raise fears of a hawkish Fed for the December 15 Rate decision. Right now, the odds are even for 75 and 50 basis points.
Make sure to have your risk management under control, as always when everybody is maiting for a single moment, moves can be sharp.
Economic data:
Thursday: US CPI and Labor Data
Friday; DE HICP, UK GDP, Uni of Michigan sentiment
Earnings:
Thursday: Deutsche Telekom, Allianz, Merck, Tokyo Electron, Engie, Becton Dickinson, AstraZeneca, Brookfield Asset Management, National Grid, TransDigm
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach