Morning Brew September 6 2022
Senior Relationship Manager
Summary: Relief measures coming into focus
Equities were trading slowly yesterday on the US Holiday, FX was the main trading ground.
The USD Index gave up some ground and fell back below 110, EURUSD rose to 0.9960, GBPUSD gained to 1.1580 Gold is 1718 and Silver 18.30. Bitcoin remains low at below 20k. USDJPY rose to above 141 for the first time since the Asian currency crisis in 1998 sparking some fond memories among well aged FX traders.
Liz Truss will replace Boris Johnson as Britain's prime minister on Tuesday
Australia's central bank raised its rate 50 basis points to a seven-year high of 2.35%
US 10 Year Yields are at 3.24 and the EU one at 1.56.
The Energy situation remains the key focus in Europe and the struggle between Russia and the West is heating up. Russia demands that the sanctions are lifted before it supplies additional gas, Western Europe is planning massive bailouts for industry and the population in order to avoid large scale bankruptcies and unrest.
Today various PMI will be in focus with the EU at 9:30 and the US at 15:45 the most important, I believe that fiscal emergency measures may be more important.
It will be a very interesting ECB Meeting where the Central Bank is strongly expected to tighten while governments of the member states look to support the economy.
Remain nimble and consider optionality to avoid spikes in volatility – for trading as well as investing.
Tuesday: De Industrial Orders, EU and US PMI,
Wednesday: AU GDP, China Exports, DE Industrial Output, EU GDP, CA Care Decision,
Thursday; CH Unemployment Rate, ECB Rate decision, US Jobs data
Friday: CN PPI, CA Unemployment rate
Physically Settled Futures:
White Sugar - Oct 2022 (WV2) will expire 7th Sep at 9:00 GMT
Euro-BONO - Sep 2022 (FBONU2) will expire 7th Sep at 12:00 GMT
Euro-BTP - Sep 2022 (FBTPU2), Short-Term-Euro-BTP - Sep 2022 (FBTSU2), Euro-Bund - Sep 2022 (FGBLU2), Euro-BOBL - Sep 2022 (FGBMU2), Euro-Schatz - Sep 2022 (FGBSU2), Euro-BUXL - Sep 2022 (FGBXU2), Euro-OAT - Sep 2022 (FOATU2), will expire 7th Sep at 1500 GMT
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- 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.