Absurd headline risk for now as risk conditions are deteriorating
Saxo Market Call
Summary: The market action yesterday and overnight underlined the extreme headline risk in this market, as well as the poor liquidity conditions. Yesterday, the market attempted a heroic recovery on hopes for the Fed put backstopping the market, before we get covid vaccine maker Moderna's CEO out roiling the waters with loud concerns on the new omicron variant's potential to evade the current vaccines. Elsewhere, we look at signals from the US Treasury and EU sovereign bond markets, note that financial conditions are in a very different place relative to any other outbreak of volatility this year, especially in terms of widening credit spreads, look at key equity stories and much more. Today's pod features Peter Garnry on equities, Althea Spinozzi on fixed income, and John J. Hardy hosting an on FX.
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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.
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