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Summary: Welcome to Central Bank Week
Good Morning
Welcome to Central Bank Week
On Wednesday, the FOMC will release it`s rate decision and outline it`s considerations in the press conference. On Thursday the Fed will be followed by the Swiss national Bank and the Bank of England. What is expected?
Fed: +0.75% with 79% Probability, 1% with 21% probability
SNB: +0.75% with 60% Probability, 1% with 40% probability
BoE: +0.5% with 57% Probability, 0.75% with 43% probability
Ahead of the FOMC there are few significant economic releases, the Japanese and the Canadian CPI would need to surprise to have a real impact, as all eyes are on the Fed.
Today the UK will say goodbye to Queen Elisabeth II and markets will be closed.
Stocks lost heavily last week, the S&P lost 4.77%, the Dow Jones 4.14%, and he Nasdaq 5.48%. the GER40 looks like it will test the 12400 support. We are currently at 12720.
The USD Index is trading at 110, GBPUSD just below 1.14, EURUSD below parity and the Yen at 143.35. Gold and Silver have found some support, Gold at 1660 to trade at 1665, Silver could gain from below 19 to 19.40.
Worries that the central banks will hike too aggressively into a recession seem to drive equities lower while FX traders are uncertain in the short term. Goldman Sachs answers the question on how high rates will go with: "Our answer is high enough to generate a tightening in financial conditions that imposes a drag on activity sufficient to maintain a solidly below-potential growth trajectory." They see the Fed to hike 75 basis points this week and 50 November and December.
U.S. President Joe Biden said U.S forces would defend Taiwan in the event of a Chinese invasion
FedEX tumbled 21.4% on Friday.
VW is seeing a valuation of Porsche at €76 bio, let us see if an IPO of a luxury car maker is a great idea in a recession
Expiries
Physically Settled Futures:
CADUSD - Sep 2022 (CDU2), E-micro CAD/USD - Sep 2022 (MCDU2) will expire 19th Sep 15:00 GMT
Light Sweet Crude Oil (WTI) - Oct 2022 (CLV2) will expire 20th Sep 15:00 GMT
Expiring CFDs:
PLATINUMOCT22 will expire 21st Sep 15:00 GMT
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.