Market Quick Take - February 15, 2022 Market Quick Take - February 15, 2022 Market Quick Take - February 15, 2022

Market Quick Take - February 15, 2022

Macro 6 minutes to read
Saxo Strategy Team

Summary:  Markets are trying to find their feet again after the late Friday swoon as developments in Russia and Ukraine failed to fan fresh flames of concern yesterday. Yields rose again and stocks churned back and forth, while gold has charged higher still and is poking at the first key resistance as it tries to blast itself out of the long-standing range. In China, officials warned trading companies against speculating in iron ore, taking prices sharply south there.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - US equities dipped again yesterday, but managed to stabilize later in the session as the immediate source of concern that triggered Friday’s slide in equities, the uncertainty of whether Russia intends to invade Ukraine, failed to trigger new worries and even saw a modest cooling of the overall temperature (more below). The Nasdaq 100 dipped near the pivotal 14,000 area before stabilizing later in the session, while the S&P 500 is still some distance from its key downside pivot level near 4,300, trading closer to 4,400 this morning. If geopolitical concerns lift further, one of the original worries dogging the market – rising US treasury yields all along the yield curve – could quickly return as yields rose again yesterday and are not far from the recent cycle highs.

US dollar pairs – if the Fed fails to move in the coming few days to hike rates, the idea that the central bank will deliver the first inter-meeting rate hike since 1994 may fade quickly as the market assumes that the Fed will hike rates as is already priced and not continue to ratchet expectations for steeper rate increases this year. This could open the window for a new sell-off wave in the US dollar after it peaked and then rolled over sharply after the more hawkish than expected Jan 26 FOMC meeting. It’s a somewhat big “if”, given the risk to asset valuations if longer US treasury yields continue to rise for whatever reason and given the backdrop of extreme headline risk linked to Russia and Ukraine.

USDJPY and JPY crosses – the Japanese yen remains rather firm, given the rise in global yields yesterday as the Bank of Japan offered to buy unlimited 5-year and 10-year Japanese Government Bonds at fixed  rates under its yield-curve-control policy, but there were no sellers as yields stayed below the caps. Watching the 116.00+ cycle highs in USDJPY if US long treasury yields rise to new cycle highs, while watching levels like 130.00 in EURJPY and perhaps 80.50 in AUDJPY for signs of a break down there if a fresh wave of weak risk sentiment and safe haven seeking in bonds washes over markets.

Crude oil (OILUSMAR22 & OILUKAPR22) oil stayed generally bid yesterday before easing back only very slightly in late trading, as the major grades posted new cycle highs since 2014. Markets continue to hold their collective breath as we await further developments linked to Russia’s stance on Ukraine. Meanwhile, the scale of recent price increases is already weighing on real GDP growth, a factor that will like increasingly come into focus if the 100-dollar level trades (the last time oil traded at 100 dollars per barrel, the US dollar was some 15-20% weaker than at present).

Gold (XAUUSD) the precious metal seems to be going from strength to strength in recent sessions almost regardless of the backdrop, suggesting strong conviction and a sustained bid. The action this morning has taken the price in USD terms above the major late-2021 pivot high of 1,877. The next levels in focus are 1,900 and 1,950 as the range to the late 2020 highs extends all the way to 2,075.

US Treasuries (TLT, IEF). Markets are still monitoring developments between the west and Russia. A war in Ukraine might translate into sanctions against Russia, further increasing energy prices and adding worries to inflationary pressures. Consequently, the Federal Reserve might need to be more aggressive into hiking interest rates. Such a scenario would translate into an inevitable inversion on the yield curve as long-term yields will be compressed by war in Ukraine, and the front part of the yield curve will continue to rise to reflect rate hikes expectations. This week’s focus is on Wednesday’s FOMC minutes and Fed’s speakers, many of which are voting members this year. Today the US Treasury is selling 20-year bonds.

UK Gilts (IGLT). Jobs figures, inflation data and retail sales numbers are all released this week. The focus is whether they can increase the aggressiveness of the BOE. Currently the market is pricing less rate hikes in the UK than in the US this year. As markets adjust to more hawkish BOE policies, Gilts yields will resume their rise. The yield curve is likely to continue to bear-flatten, while shifting higher.

European sovereigns (VGEA). In front of the European Parliament Christine Lagarde didn’t walk back on her stance. The ECB did not exclude a rate hike this year but highlighted that any change in monetary policy will be gradual. In the meantime, the BTPS-Bund spread continues to widen adding worries that the ECB will not be able to stand hawkish for long. Today’s focus remains on Olaf Scholz meeting Putin in Moscow to avoid an escalation of geopolitical tensions.

What is going on?

Ukraine says specific Russia attack date mention was “sarcasm”, Russia tries to demonstrate diplomatic stance. With all eyes on the situation in Ukraine after shrill warnings from US sources of the potential for an imminent invasion as early as this week, advisors to Ukraine’s president Zelenskiy said that his comments on a specific Russian invasion date were a sarcastic comment based on other countries predicting a time frame for an invasion. Today, German Chancellor Scholz will meet with Russian President Putin in Moscow. Putin also said that talks with the US would continue, with Foreign Minister Lavrov calling some western proposals “constructive”. To show that no Russian invasion is imminent (after US warnings), Russian TV showed meetings with foreign ministry and defense officials that suggested no new escalation and a desire for diplomacy to continue.

China warns trading companies against speculating in iron ore. The broadside against the market took prices sharply lower, trading more than 10% below yesterday’s levels.

China’s central bank left rates unchanged, pumps more cash via medium-term lending facility. The move came after a rate cut at the prior meeting and was seen as offering further support for China’s economy, which has slowed on the domestic front, in part on a sluggish services sector on the country’s zero-tolerance policy toward covid, but also on official moves against operators in the property sector.

Arista Networks (ANET:xnas) shares jump nearly 9% in extended trading on strong results. The company beat on Q4 earnings and forecast stronger revenue growth for the coming quarter, with higher estimated operating margins than analysts estimated. Topline revenue grew 27.1% from the year-ago quarter.

BHP Billiton announces earnings and record dividend. The company reported an underlying USD 9.71 billion underlying profit for the last six months, not far from a record in 2011, and declared a USD 1.50 per share dividend versus expectations of 1.25, returning a huge UDS 7.6 billion to shareholders.

The German finance minister’s new chief economic advisor is a hawk. Lars Feld is in favor of more fiscal consolidation and structural reforms in eurozone countries (especially France and Italy), and he is against a change to the EU fiscal rules considering they are « flexible enough ». Feld will have power to influence Germany’s stance on most EU fiscal and economic matters. This does not bode well for the rest of the eurozone. Once we are free of pandemic impacts – hopefully this is now a matter of months – expect that the debate about fiscal consolidation will kick off at the EU level.

French presidential election update – The latest poll from IFOP published on 13 February shows that Emmanuel Macron is still ahead of the crowd (25 %). The battle for the second position opposes the far-right leader Marine Le Pen (16.5 %), center right Les Républicains Valérie Pécresse (15,5 %) and the xenophobic former TV pundit Eric Zemmour (14,5 %). With the exception of the third man of the 2017 presidential election, Jean-Luc Mélenchon, all the left candidates are below 5 %. Getting closer to the election day in April, it is likely that Macron’s voting intentions will go down a bit. But we still expect he will easily make it to the second round and be re-elected for a new five-year term.

The Reserve Bank of Australia (RBA) meeting minutes released today, from the February 1 policy meeting affirmed that rates won’t rise for now as the RBA needs to exercise patience. The Australian central bank said it could be a while before it needs to rise rates as it could be some time before wages growth gathers momentum and before inflation is sustainably within its 2-3% target band. The market is pricing is rates will rise as soon as May, while Australia’s biggest bank, CBA forecasts rates to rise by June.

US earnings season is almost over, with 72% of the S&P500 companies reporting quarterly results and most beating expectations. Earnings normalised back to 2019 levels. Energy and Industrials (airlines) reported the strongest sales and earnings growth. As for what the futures holds, we think the most upside for 2022 is likely to be in commodities and energy, based on what oil and commodity companies are guiding for, not to mention there is a lack of supply and mounting commodity demand. In the US energy sector, only 12 out of the 23 companies (in oil, gas, and or coal) reported results so far, and generated the strongest average sales growth of 89%, versus the S&P500’s companies 16% average sales growth for the quarter.

What are we watching next?

Russia-Ukraine headlines. These have calmed for the moment, but can flare up again at any time, requiring that traders respect headline risk from this issue until a thorough de-escalation has hopefully taken place. The spin on German Chancellor Scholz’ visit with Russian President Putin today will like prove one of the next key headlines.

Global inflation benchmark, the Chinese January PPI released tonight. This is often followed, together with oil prices, as an important leading indicator of inflation.

Watching next signals from the Fed – as indicated above in the US dollar comments, the window may only be open for another few days for the Fed to attempt to “get ahead of the curve” with the first inter-meeting rate hike since 1994 and possibly an early end to QE (currently set to end in mid-March), followed possibly by another hike at the March FOMC meeting – this would slightly out-do current market pricing of just over 40 basis points of hikes through that meeting. The January PCE inflation data point is not out until next Friday. This is the Fed’s preferred inflation measure and is released with considerable delay relative to the BLS’ official CPI measure, with the new cycle-high January CPI released last Thursday. But tomorrow sees the release of the FOMC minutes, which could contain clues on what new measures or guidance, if any, the Fed may have discussed at the January meeting.

Earnings Watch. Earnings season rolls on this week, with a number of interesting names on the docket for the week ahead, including commodities trading giant Glencore later today, two big semi-conductor names Applied Materials and NVidia tomorrow, US retail giant Walmart Thursday, which may offer interesting comments on the state of the US consumer, and US agricultural machinery specialist Deere at the end of the week.

  • Today: BHP Group, TC Energy, Glencore, Alcon, Airbnb, Zoetis, Marriott International, Roblox
  • Wednesday: CSL, Fortescue Metals, Shopify, Nutrien, Barrick Gold, Genmab, Air Liquide, Heineken, Nvidia, Alibaba, Cisco, Applied Materials, AIG, Hilton Worldwide, Trade Desk, DoorDash, Albemarle
  • Thursday: Wesfarmers, Telstra, Airbus, Schneider Electric, Kering, Eni, Reckitt Benckiser, Repsol, Nestle, Walmart, Southern, Baidu, Palantir Technologies, Roku
  • Friday: Hermes International, EDF, Allianz, Sika, Deere

Economic calendar highlights for today (times GMT)

  • 0900 – Poland Jan. CPI
  • 0900 – Poland Q4 GDP estimate
  • 1000 – Germany Feb. ZEW Survey
  • 1000 – Euro zone Q4 GDP estimate
  • 1315 – Canada Jan. Housing Starts
  • 1330 – US Jan. PPI
  • 1330 – US Feb. Empire Manufacturing
  • 1400 – Canada Jan. Existing Home Sales
  • 1530 – Sweden Riksbank Governor Ingves to speak
  • 1730 – ECB's Villeroy to speak
  • 0130 – China Jan. 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.