Senior Relationship Manager
Summary: Too Much Too Fast Optimism into Quarter End may be exaggerated
Good Morning,
We saw a massive rise in stocks yesterday in what Reuters calls 'Mystifying' U.S. stock rally. The Dow gained 0.27%, the S&P 500 0.71%, and the Nasdaq 1.31% and the S&P 500 is up 11% since March 8, its biggest 15-day percentage gain since June 2020. Reasons are still large inflows, short coverings after the Ukraine but also Quarter end purchases. Apple gains 11 days in a row, the longest streak since 2003 and adds 400 bio in Market cap.
Oil, Gold and Silver lost yesterday but could recover off the lows. UKOILMAY trades as low as 104.90 to recover to 111.55.
Silver broke below 24 to recover 85 cents and Gold hit 1890. Current Levels are 24.85 and 1924.
EURUSD gained 200 pips to trade at 1.1108 and GBPUSD 1.3110, USDJPY fell to 121.99, Bitcoin is holding above the 45k resistance, now 47500.
These are exactly the kind of moves we were warning about.
Uraine reacted with skepticism to Russia's promise to scale down military operations around Kyiv ,
Russia has offered to buy back dollar bonds maturing next week in roubles and the dispute between Russia and the G7 on the payment terms for Russian Energy seem to escalate. The German IFO warns of more companies than ever looking to raise prices and are expecting inflation so exceed 5% on an annual basis for the first time since 1981.
Today the market will be driven by the proceedings in Ukraine and negotiations between the G7 and Russia, the Suisse KOF at 9:00 and the EU Economic sentiment at 11, the German CPI at 14: 00 and last but not least the US PCE at 14:30.
Continue to be careful in nervous markets.
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