Morning Brew December 9 2022
Senior Relationship Manager
Summary: Risk on ahead PPI and University of Michigan.
On higher than expected continued jobless claims, US rates fell and caused risk sentiment to rise. The Dow gained 0.5%, the S&P500 0.75 and the Nasdaq 1.3, overnight they add app. 0.3% on top. Nvidia gained 6.5%, Apple +1.2%, Alphabet lost 1.3%.
US 10 year rates fell to below 3.5% an the spread between the 2 and the 10 Year yield is at the highest since the year 2000.
The USD Index remains below the 200d MA at 104.57, EURUSD is 1.0570 and GBPUSD 1.2265 - USDJPY is 136.10
Oil has lost app 13% from last Friday and interestingly, Gold and Silver chose to follow rates and not the old traders rule that Gold follows Oil and Silver follows Gold.
Chinas inflation fell on weaker demand.
Next week will be dominated by central bank decisions and today we are looking at the last inputs from the US, the PPI at 14:30 and the University of Michigan at 16:00 will be closely watched. The PPI is expected at 7.2%, down from 8% in November and the University of Michigan at 56.9%
As of now, the Fed is seen to hike by 0.5% with a probability, the ECB hike 0.5% with 75% probability, the BOE 0.5% with 95% probability and the Swiss also 0.5% with 66%.
Contemplate how much risk you want to carry into that crucial week and consider optionality.
Physically Settled Futures
Low Sulphur Gasoil - Dec 2022 will expire 09 Dec 2022 GMT
10-year Japanese Govt. Bond - Dec 2022 will expire 12 Dec 2022 GMT
GASOILUKDEC22 will expire 08 Dec 2022 GMT
Australian Dollar/US Dollar December 2022 will expire 14 Dec 2022 GMT
Euro/Japanese Yen December 2022 will expire 14 Dec 2022 GMT
Euro/US Dollar December 2022 will expire 14 Dec 2022 GMT
British Pound/US Dollar December 2022 will expire 14 Dec 2022 GMT
Germany Mid-Cap 50 December 2022 will expire 14 Dec 2022 GMT