Morning Brew November 4 2022
Senior Relationship Manager
Summary: Nonfarm Payroll to decide tug of war
US Indexes had the fourth negative day in a row as yields rose and the Dow lost 0.46%, the S&P 500 1.06% and the Nasdaq 1.73%.
Hopes of a slowing labor market helped yields fall back to 4.1 from 4.2 in the US 10 year and let the USD give up some of it`s earlier stronger gains.
The BoE delivered the expected 75 BPS hike but sounded more dovish than Mr Powell causing the expected rate differential between the USD and the GBP at peak rates to widen and this drove the exchange rate between the two lower by app 2%.
The USD Index rose to above 112, EURUSD is trading at 0.9780, the yen at 147.80, GBPUSD at 1.1230.
Gold and Silver lost strongly yesterday but could recover the losses and are now at 1648 and 19.70.
The Nonfarm Payroll will be the most important data point today at 13:30, expected at a moderate 200k, the lowest in two years. The unemployment rate is seen 0.1% higher at 3.6% and salary increases at a moderate 0.3%.
Before that, German Industrial Orders, French, Italian German EU and UK PMI data will be released.
This morning the market is trying to defy negative implusles, let us see if that holds.
- Hopes that China may ease Covid restrictions spark optimism in Asia
- German Chancellor Scholz visits China,
- Twitter is expected to communicate staff cuts
- G7 agree on fixed price for Russian oil
Friday; EU PMI, US Nonfarm Payrolls
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.