Morning BrewMay 12 2022
Senior Relationship Manager
Risk Off Sentiment remains in the driver seat and markets extremely volatile.
Indexes are under pressure despite falling yields and the USD continues to soar. This morning the GER40 falls to 13540, the USTECH to 11957 and the US500 to 3928. Tesla falls +8% weighing on sentiment further.
The USD Index rises to 104.15, EURUSD is hovering the 1.0490, GBPUSD at 1.2185, USDJOPY falls to 129.50. US ten Years fall to 2.85 the Bund Future rises by 100 BPS, interestingly Implied Vol falls more than 1%. The UK GDP came lower than expected this morning at 6.4% vs 6.8%.
Bitcoin fell to below 27k, giving up all of 2021 gains.
Oil falls on cited growth worries.
Foxconn reports an increase of 5% in profits and Softbank posts a Q1 loss of USD 13bio. Chinese developer Sunac China missed the deadline for coupon payments on a $742 million offshore bond.
Quick tech comments: S&P500 on course for target around 3,815 in May. However, 3,500 is not unlikely
Nasdaq 100 below support at 12,208. No strong support before around 11,152, DAX in down trend , next support is 13.380
US 10 Year T-Note likely to bounce to 122 and yield could correct to around 2.5%
Key economic Data is the US PPI at 14:30, the key metrics is annual number ex Food & Energy expected at 8.9%.
Tomorrow I will be on a business Trip and not writing an update. Watch out for the Chinese, German and US CPI numbers at 8:00 CET and 14:30 CET as the key events.
Our Steen Jacobsen points out that the market is sentiment driven and not really anchored to the economy so any
Physically Settled Futures:
CLM2 will expire on 20th May 2022 at 15:00 GMT.
PAM2 will expire on 23rd May 2022 at 15:00 GMT.
OILUSJUN22 will expire on 18th May at 15:00 GMT.
NATGASUSJUN22 will expire on 24th May at 15:00 GMT.
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.