Morning Brew February 17 2022
Senior Relationship Manager
Summary: Ukraine tensions grow - markets remain nervous
Equities had a mixed day yesterday and FX was dominated by the USD losing ground. It felt as if it was not clear what to focus on. US Indexes closed basically unchanged but gave up ground over night. Expect the increased Volatility to remain in place for the time being.
Reports of troop movements near Ukraine spooked sentiment and drove Gold and Silver higher. Gold is now again in reach of the 1875 resistance, Silver 23.50 and Oil 92.10. "There's what Russia says. And then there's what Russia does. And we haven't seen any pullback of its forces," U.S. Secretary of State Antony Blinken stated acc to Reuters.
This Morning there are reports that Ukrainian forces fired mortars at separatists positions..
The Fed Minutes were interpreted dovish despite stating “Most participants noted that, if inflation does not move down as they expect, it would be appropriate for the (Federal Open Market) Committee to remove policy accommodation at a faster pace than they currently anticipate” but the fact that no fixed path was defined. “Members will be updating their assessments of the appropriate setting for the policy stance at each meeting."
US Retail sales came higher than expected yesterday, growing 3.89% vs the 2% expected.
GBPUSD was supported by strong UK inflation and the weaker USD. We failed to breach the 1.36 so far and are trading 20 pips below. EURUSD seems to be focused on the Ukraine, rising to near 1,14 yesterday, falling sharply from 1.1380 to 1.1325 and are now at 1.1360. the 1 month impied volatility is at 7.3, 10% above yesterday.
Japan ran its biggest trade deficit in eight years in January
The Turkish central bank is expected to leave rates in place at their meeting today.
Nvidia Beat expectations but fell 8 USD in the aftermarket, Nestle also reported better than expected results and will suggest a higher dividend.
Key Data coming up:
Today: Turkey Rate decision, US Jobless Data and Phily Fed
18th UK Retail Sales, Eurozone Consumer Confidence
Earnings are Palantir, Roku, Walmart, Dropbox and Yamana Gold.
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.