Morning Brew September 16 2021
Senior Relationship Manager
Summary: Vols at low since before Corona ahead of the FOMC
US Equities trades friendly yesterday with main Indexes gaining near 1% driven by a decline in import prices hinted that inflation may indeed prove to be transitory.
In the Asian session we saw a little risk aversion after Japan released poor export data and trading in Evergrade bonds was suspended but moves were fairly small.
Treasury yields trade at 1.3% and the USD Index remains at 92.55, EURUSD at 1.1806, XAUUSD at 1786 and XAGUSD at 23.60. holdings of SPDR Gold Trust fell 0.2% yesterday, the 1770 support is in focus for the FOMC meeting next week. If support is broken, it is likely silver will test the USD 22.50.
Canada's YoY inflation rate accelerates to 4.1% in August, the Loony rises by 0.4% against the USD.
Implied volatility is at the lowest levels since before the Corona crisis hit, 1 month EURUSD is at 4.6% and it seems quite cheap now.
Bitcoin is trading at 48300.
On shoes hit NYSE at 35 and also closed there after rising to 38 briefly.
Today, US Data at 14:30 will be released, the initial Jobless claims expected at 330k and Retail Sales expected at -0.8% will be key and the last significant release ahead of the FOMC meeting. Then the question will be the timing of tapering and the interest rate outlook (if any) provided.
Please remember the expiries tomorrow.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.