Senior Relationship Manager
Summary: Energy Worries Weigh on Europe
Good Morning
On this US Holiday, risk aversion and a weak Euro dominate overall sentiment. Russia announced it was not taking Nord Stream online again after the recent maintenance – a further surege of energy cost is expected and is weighing on Indexes. the Euro and GBP.
The USD Index reaches a new high of above 110, levels not seen since the early 2000`, ne next big chart level would be the 120.
EURUSD Fell to below 99 and a 20 Year Low against the USD, GBPUSD below 1.15 Bitcoin and ETH are trading at 19700 and 1562, Gold and Silver are so far stable at 1711 and 18.08.
The Dax Index is under pressure, losing 3% off Fridays Close int eh Future (measured against the cash index close at 17:30 the previous day) So far the 12,438 level is holding up.
Several European governments announced emergency measures to help deal with high energy costs and there is an EU Energy crisis meeting on September 9th. Sweden is setting up a emergency finds to the tune of €23 bio and Germany €65 bio
The Chinese PMI fell slightly on renewed Covid fears.
It seems the Energy Cost Crisis will dominate the news this week, also the ECB rate decision will be watched closely on Thursday, as of now, a probability of 92% is being traded for a 75 BPS hike, in the US a 57% chance for a 75 BPS hike (on September 22)
Markets are stuck in Limbo trying to assess the implications of Jerome Powell’s speech on Friday.
Economic Data
Today: Swiss GDP, International PMI, EU Retail Sales
Tuesday: De Industrial Orders, EU and US PMI,
Wednesday: AU GDP, China Exports, DE Industrial Output, EU GDP, CA Care Decision,
Thursday; CH Unemployment Rate, ECB Rate decision, US Jobs data
Friday: CN PPI, CA Unemployment rate
Expiries
Physically Settled Futures:
White Sugar - Oct 2022 (WV2) will expire 7th Sep at 9:00 GMT
Euro-BONO - Sep 2022 (FBONU2) will expire 7th Sep at 12:00 GMT
Euro-BTP - Sep 2022 (FBTPU2), Short-Term-Euro-BTP - Sep 2022 (FBTSU2), Euro-Bund - Sep 2022 (FGBLU2), Euro-BOBL - Sep 2022 (FGBMU2), Euro-Schatz - Sep 2022 (FGBSU2), Euro-BUXL - Sep 2022 (FGBXU2), Euro-OAT - Sep 2022 (FOATU2), will expire 7th Sep at 1500 GMT
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