Morning Brew September 16 2022
Senior Relationship Manager
Summary: Stocks and Gold under pressure, Fedex drops and UK Retail Sales Disappoint
The market narrative is far from clear and paints a mixed picture. Equities lost yesterday with the reported rationale being that decent economic data indicates an aggressive rate hike by the fed next week. The Dow fell 0.56%, the S&P 1.13%, and the Nasdaq 1.43%. Late in the day, a warning and cut in outlook spooked traders, the company lost 16% in the aftermarket and pulled indexes further down.
The chances of a 1% hike remain priced at 25%. 10 Year rates remain high at 3.45, the USD Index is approaching the 110 again, with just 0.19 to go. GBP was the gig loser at 1.1440 and EURUSD remains at parity.
Gold fell through support at 1680 and pulled Silver along, now trading at 1662 and 19.04. USDCNH also broke the 7 handle is at the highest since 2020.
The Bund Future – simulating the price of a 6% bond with 10 year to expiry is trading on support
UK Retails sales were reported worse than feared this morning, the year on year decline was -5.4% rather than the -4.2% expected.
The German government places Rosneft participations under trusteeship.
The ETH Merge fails to excite the market so far, the stronger USD seems to dominate sentiment, Bitcoin fell to below the 20k and Ethereum is down 2% overnight.
Chinas retail sales came higher than expected at 5.4% vs 3.5% expected.
Adobe fell 16% during regular trading on a takeover of Figma for USD 20 bio – the biggest ever buyout of a non-listed company.
The U.S. Consumer Financial Protection Bureau is looking at regulating "buy-now, pay-later" (BNPL) companies like Klarna and Affirm
Amazon Inc on Thursday will provide free order management on and off its platform
We expect markets to remain on edge and volatile, the HICP from the EU at 11:00 expected at 9.1% could move the market today, there is no key US release except for the University of Michigan Sentiment at 16:00. I would not be expected if we were to start hearing comments from fed speakers in the forefront of next weeks FOMC Meeting that could trigger sharp moves at any point in time.
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.