The May 23 Federal Open Market Committee outing was widely received as dovish, with the Federal Reserve signalling that it remains prepared to permit an overshoot of inflation beyond the central bank's 2% target.
The Fed's statement also indicated the potential for a shift in forward guidance, perhaps pointing to a willingness to reconsider the now priced-in hawkish 2018 trajectory.
"We are seeing relief in emerging markets today, both on the Fed and on Turkey's rate hike," reports Saxo Bank head of forex strategy John Hardy in the wake of the Turkish central bank's move to rein in its rapidly depreciating currency.
"US 10-year yields are lower and the curve is steeper," reports Saxo equities head Peter Garnry, pointing to bullish sentiment in stocks surrounding the potential re-emergence of the 'Goldilocks trade' seen in 2017.
Meanwhile, in single shares, Garnry states that Saxo's model remains negative Deutsche Bank despite the bank's move to sharply scale back its US and global equities presence – Deutsche is laying off 25% of its global equities division – in a cost-cutting effort.
Deutsche shares fell 2% on the news.
Finally, Saxo head of commodity strategy Ole Hansen reports that yesterday's surprise surge in US inventories appears to have capped the crude oil rally while gold, he notes, is "consolidating but in need of a spark".
"We see support at $1,286/oz and resistance at $1,299/oz and $1,304/oz, with the latter being key for hedge funds looking to re-establish XAUUSD positions," Hansen says.
US 10-year yields (via Bloomberg):
Q4 Outlook 2022: Winter is coming
- 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.