Morning Brew August 19 2022
Senior Relationship Manager
Summary: Looking for direction in low volumes
Wall Street could grind higher yesterday after Cisc`s positive earning pulled tech higher, Cisco gained 5.8% and Nvidia 2.4%.
Noteworty is that volumes are extremely low, yesterday was the second lowest volume of the year as investors and traders are looking for inspiration and a clear direction.
Hawkish comments out of the Fed talk the USD and rates higher, Esther George said she and her colleagues will not stop tightening policy until they are "completely convinced" that overheated inflation is coming down acc to Reuters.
The 10 Year Yields rose to 2.92 and the 2 year 3.25, the spread between the two declined to 33 BPS:
The USD Index rose to 107.60 a months high. EURUSD fell to 1.0080, GBPUSD broke below the 1.20 to 1.1910, USDJPY 136.30. Gold and Silver fell to 19.33 and 1754 while Bitcoin broke below 23k again.
Our Kim Cramer sees new lows possible: EURUSD and GBPUSD testing key supports. Will they hold or will EURUSD test parity again and GBPUSD drop to 1.14? UK retail sales came better than feared but the last month was revised lower a decent amount.
The Turkish Lira came under more pressure as the central bank lowered rates despite soaring inflation. We broke above the 18 mark to a new all time high in the USDTRY rate.
While EU Inflation came in line with expectations, ECB`s Schnabel raised concerns on economic growth, further weighing on the Euro. Dax traded lower and is nearing a key support : If DAX closes below 13,455 downtrend has been confirmed.
On Monday, China is expected to lower rates at 3:15 in the morning,
The Calendar is fairly thin and a slow day is likely unsell there are any severe surprises. Stay on your toes
- Friday: UK Retail Sales, Canada Retail Sales.
- Friday: China Merchants Bank, CNOOC, Shenzhen Mindray, Xiaomi, Deere
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- 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.