Morning Brew January 5 2022
Senior Relationship Manager
Summary: Rates and Civid weigh on Risk Sentiment
As I will be off tomorrow and Friday, the next update will be released Monday.
We see a certain nervousness in the market on mixes news. While the Dow Jones and the S&P made new all time highs, the Nasdaq felt the higher yields. Tesla fell 4.5% after the stellar rise on Monday. Yesterday Ford could gain 11% on the announcement to produce 150k of the electric F-150. Sony is also looking to enter the EV space. Over night there is a little risk off sentiment as the US reports almost 1 million new Covid cases in a single day. Index Futures are down 0.1%-0.6%.
US Yields broke higher initially only to revert to yesterday’s levels, the technical picture remains interesting going in to the FOMC meeting and the Non-Farm Payroll Friday.
10 Year US T-Note broke bearish out of its symmetrical triangle like pattern taking out support at around USD130 with ease. Trough low – and rebound - from November didn’t offer any support whatsoever with sellers continuing the pressure today. RSI is back below 40 i.e. confirming bearish trend.
Euro Bunds After breaking bearish out of its rising channel Euro Bund has continued its downwards move taking out the support at around EUR172.48 now trading below 55 SMA. RSI is below 40 supporting the bearish mood which could extend to EUR 169.92 support on the short term.
FX Was fairly quiet and looking for direction, EURUSD remains at 1.1300 while the Pound gains strength from rate hike expectations and GBPUSD could rise to 1.3530 again, against the EUR it rises to 2 month highs near 83.50.
Gold and Silver are slightly higher at 1815 and 22.90, a breakout higher yesterday failed. The Turkish Lira lost 4% yesterday and is currently trading at 13.40.
The EU longer Term Inflation expectation rose above 2% yesterday.
Riots broke out in Kazakhstan yesterday on rising energy prices, a state of emergency has been declared and a curfew issued.
Today we are expecting international PMIs with the EU and the EU most important at 10:00 and 15:45 CET. The FOMC will release the minutes of the last meeting at 20:00.
Tomorrow the German CPI at 14:00 and the US ISM at 16:00 will be in focus and Friday EU Retail sales at 11 and the Nonfarm Payroll at 14:30.