Saxo Bank
Markets are off the extremes looking for direction. Will Risk off gain short to medium term traction or will the trend prevail?
Stimulus and the Feds balance sheet supports the latter while common sense – if existing in the markets – seem to support the former.
Indexes could recover off the Thursday Morning lows but for now lack the strength to reach new highs, the USD Index fell in line with 10 year rates but remains above the 90 support level.
Chinese Retail Sales disappointed massively but did not have a huge impact on market sentiment.
Bitcoin sold off massively after Elon Musk announced. Tesla would no longer accept the crypto currency due to environmental concerns. It seems strange that he continues to announce this kind of market moving news via Twitter.
German Bunds trade at the highest level in 2 years at only -0.1%.
Next key event is the Japanese GDP during the night and the EU GDP tomorrow.
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach