Financial Markets Today: Quick Take – December 8, 2022 Financial Markets Today: Quick Take – December 8, 2022 Financial Markets Today: Quick Take – December 8, 2022

Financial Markets Today: Quick Take – December 8, 2022

Macro 6 minutes to read
Saxo Strategy Team

Summary:  Risk sentiment steadied in the US yesterday as US treasury yields fell further, with the market seemingly increasingly convinced that inflation is set to roll over quickly next year, allowing the Fed to begin cutting rates in the second half of the year and beyond. The 10-year treasury yield fell below the important 3.50% level while gold rose. Sentiment in Europe is a bit more downbeat as frigid weather spikes energy prices.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)

S&P 500 futures closed right on the 100-day moving average yesterday to the lowest close since 10 November washing away most of the gains delivered post the surprise inflation report back in November. The equity market is finding itself in limbo for the rest of the year with no clear narrative to build a direction on. Downside risks are related to the war in Ukraine and higher interest rates if the market begins to doubt itself on the Fed pivot. Upside risks are mostly related to momentum building in Chinese equities and the government seems to strengthen the policy trajectory of reopening society. The 3,900 level in S&P 500 futures is still the key level to watch on the downside.

Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg)

Hang Seng Index rallied strongly, up 2.8% and recovering most of the loss from yesterday. The 10 additional fine-tuning measures to ease pandemic containment may be underwhelming relative to the high expectations. However, when reading together with the readout of the Politburo, an overall direction of a gradual and now seemingly determined loosening of restrictions seems to have taken hold. Omitting the language of “housing is for living in, not for speculation” and pledging to “be vigilant of large economic and financial risks and strive to prevent systemic risks” point to conditional support to the property sector when socioeconomic and financial stability are at stake. Technology names led the advance. Hang Seng TECH Index surged 5.6% with Bilibili being the top gainer within the index. Alibaba, Meituan, and Tencent climbed 5%-6%. Shares of China online healthcare platforms, China education services providers, China consumption, and Macao casino operators were other top performers.

USD slightly lower again on steady risk sentiment and decline in treasury yields

The USD softened yesterday as risk sentiment trade sideways and, more importantly, as US treasury yields fell all along the curve, taking the 10-year Treasury benchmark yield below the important 3.50% chart point. The USD will likely struggle unless the market begins to reprice its rising conviction that inflation will allow a significantly lower Fed Funds rate in 2024 and beyond and/or risk sentiment rolls over badly as the market prices an incoming recession and not a soft landing. The key event risks for the balance of this calendar year are next Tuesday’s US November CPI print and the FOMC meeting the following day. Somewhat surprisingly, the new lows in US yields have yet to drive USDJPY to new lows: that pair recently traded below 134.00 but trades this morning well clear of 136.00.

Gold (XAUUSD) bounces with focus on recession and PBoC buying

Gold traded higher on Wednesday as the dollar weakened and US Treasury yields slumped (see below) and the yield curve inversion reached a new extreme on rising recession fears, and after China joined the lengthy list of other countries who have been strong buyers of bullion. The PBoC added 32 tons to its holdings in November, the first increase in more than three years. This brings its total gold reserves to 1980 tons. This is also potentially a step towards our outrageous prediction on a new reserve asset, as speculations mount that China, Russia and several other countries could be looking to move away from USD reserves. Friday’s US producer price report may provide the next round of price volatility. Key resistance at $1808 with support below $1765 and $1735.

Crude oil (CLF3 & LCOG3) pressured by demand concerns

Oil posted its fourth straight day of losses on Wednesday, erasing all the gains of this year, before bouncing overnight as China edges toward reopening. While demand concerns are rising with the aggressive global tightening seen this year, the supply side has remained equally volatile. US crude inventories fell by a less-than-expected last week as exports slowed and production reached 12.2m b/d. In addition, distillate stocks rose by more than 6 million barrels as demand on a four-week rolling basis slumped to the lowest level since 2015. Short-term technical traders are in control as the overall level of participation continues to fall ahead of yearend.

US 10-year treasury benchmark plunges through 3.50% (TLT:xnas, IEF:xnas, SHY:xnas)

US treasury yields dropped at the long end of the yield curve, with the 10-year benchmark dipping well below 3.50%, a key chart- and psychological point. The yield curve inverted to a new extreme for the cycle as the market is pricing that inflationary risks are easing and for the Fed to begin cutting interest rates by late next year.

What is going on?

New deep coal mine in UK the first to be approved in 30-years

The new coking coal mine in Cumbria was approved by levelling-up secretary Michael Gove and will employ approximately 500 people and will cost £165 million to develop. Coking coal is used in steel-making, unlike thermal coal used for power stations.

Musk may pledge more Tesla shares to avoid debt spiral

Elon Musk and his advisors are considering another margin loan with Tesla shares as collateral to swap with more expensive debt carrying high interest rates ($3bn at 11.75% interest rate) issued during the Twitter takeover. These considerations underscore the increased risk in Elon Musk’s investments, including Tesla.

EZ Q3 GDP grew more than initially forecasted

The final estimate of the EZ Q3 GDP shows an increase to 0.3 % versus prior 0.2 %. Growth fixed capital formation was the biggest contributor to growth (0.8 percentage point) behind household spending (0.4 percentage point). The contribution from government expenditure was negligible during the period. This shows that households and companies are rather resilient despite the negative economic environment and inflation across the board. Based on the latest PMI for November (the last estimate was published on Monday), we expect a small GDP contraction in the eurozone in Q4. This would be marginal (probably minus 0.1 %).

Putin’s nuclear threat sours risk sentiment

Following drone attacks on three Russian air bases that Moscow blamed on Kyiv, Putin has now warned that the Ukraine conflict could go on for a long time and nuclear tensions have also risen because of it. He also did not clearly stay away from pledging that Russia will not be the first to use nuclear weapons, and rather said that Russia will defend itself and its allies “with all the means we have if necessary. The irresponsible talk on nuclear weapons is a sign that Putin is getting desperate with Ukraine gaining military grounds, and his actions will be key to watch. Risk sentiment likely to be on the back foot today, and food prices as well Uranium will be in focus.

MondoDB shares rally 23% on earnings

The database provider delivered Q3 earnings that surprised the market with revenue at $334mn vs est. $303mn and adjusted EPS of $0.23 vs est. $0.17, but more importantly MongoDB raised its fiscal guidance on revenue to $1.26bn vs est. $1.20bn.

Japan Q3 GDP continues to show contraction

The final print of Japan’s Q3 GDP was released this morning and it was slightly better than the flash estimate of -1.2%, but still showed a contraction of -0.8% annualized seasonally adjusted q/q. Stronger than expected growth in exports and a build of inventories led to the upward revision, private consumption was slower than previously expected at just 0.1% q/q. Lower oil prices and the return of inbound tourists may further aid the Japanese economy, but slowdown in global demand will continue to underpin a weakness in exports.

Bank of Canada hiked 50bps and signaled the next move will be data dependent

Bank of Canada hiked policy rate by 50bps to 4.25%, in line with market expectations but higher than the market pricing of 25bps. The central bank signaled the next move will be data dependent by saying that the “Governing Council will be considering whether the policy needs to rise further to bring supply and demand back into balance and return inflation to target.” Still, there was some “hawkish optionality” as the Bank said that the BoC will consider if future rate hikes are necessary to bring supply and demand back into balance and return inflation to target, which means there is potential for more rate hikes after a temporary pause. Canadian two-year rates were a basis point or two lower after considerable intraday volatility and near the lows for the cycle.

US consumer food giants’ Campbell Soup and General Mills shares surge

Campbell Soup shares popped 6% higher on Wednesday, gapping up to $56.18 after the company reported stronger quarterly earnings than expected. Its shares are now 15% off their record high that it hit in 2016. Campbell Soup shares are up 45% from last November. Another stock that did well overnight was General Mills, rising 2% to an all-time high of 87.50 after the wheat price jumped 3% on supply concerns returning. Despite the wheat price falling 19% from September, General Mills has been able to grow its quarterly profit and free cash flows.

What are we watching next?

What is the playbook for the pricing of the coming “landing”?

There are several different paths from here, the one the market is least prepared for is one that shows resilient US economic growth and higher than expected inflation in coming months. But even if data does continue to prove the market’s strong conviction that inflation is headed lower and that growth will soften, will markets price some version of a soft landing or will fears of a “standard” recession cycle begin to weigh on risk sentiment as credit spreads widen and asset prices drop on fears of rising unemployment and falling profits? Until this week, financial conditions have been easing sharply and credit markets look complacent, so there is little fear priced in. After a wild year of volatility, large macro players may be unwilling to place large bets on the direction for markets until we have rolled into the New Year.

Earnings to watch

Today’s US earnings focus is Broadcom, Costco, and Lululemon. With a market value of $200bn, Broadcom is the most important earnings release for market sentiment and analysts remain bullish with a revenue growth expected at 20% y/y for the quarter that ended in October.

  • Today:  Broadcom, Costco, Lululemon, Chewy
  • Friday: Oracle Corp, Li Auto

Economic calendar highlights for today (times GMT)

  • 0800 – Hungary Nov. CPI
  • 1200 – ECB President Lagarde to speak
  • 1200 – Mexico Nov. CPI
  • 1330 – US Weekly Initial Jobless Claims
  • 1400 – Poland National Bank Governor Glapinski press conference
  • 1430 – EIA's Weekly Natural Gas Storage Change Report
  • 0130 – China Nov. PPI/CPI

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.