Market Quick Take - January 7, 2022 Market Quick Take - January 7, 2022 Market Quick Take - January 7, 2022

Market Quick Take - January 7, 2022

Macro 6 minutes to read
Saxo Strategy Team

Summary:  Markets chopped back and forth to close approximately unchanged yesterday in the US, while the action was more upbeat in Asia overnight as many observers are looking for an easing cycle to begin soon in China. Oil prices posted new local highs and have more than wiped out the sell-off inspired by the omicron variant news that broke in late November. The focus later today is firmly on the US December jobs report, especially whether wage rises are accelerating and feeding new inflation concerns.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - US technology and growth stocks were under pressure again yesterday but ended the session unchanged and looking to continue its pressure this morning in early European trading. If the market continues to shred growth stocks, we could go down and test the 15,500 level which was the latest support level during the December decline. The US 10-year yield continues to make higher lows and if the upward trend continues it will add headwind for US equities. The big event coming up for equities is the Q4 earnings season starting next week with US financials but the key earnings to watch are from technology released in a couple of weeks' time.

EURUSD - since late November, the EURUSD supermajor has traded within the tight 1.1222 to 1.386 range as traders scratch their heads on which direction the price action will break. Interestingly, the pair hardly reacted to a nominally very supportive development for the US dollar this week in the form of a far more hawkish FOMC Minutes than expected, which saw US treasury all along the yield curve jumping higher. The next test for the pair and its chart levels arrives with today’s US December jobs report.

EURGBP – sterling has worked its way stronger over the last three weeks, perhaps on its hands-off approach on the spread of the omicron variant relative to the responses elsewhere, particularly in mainland Europe, where gatherings and activity have been severely limited in many cases. Still, EU-UK yield spreads at the front of the curve have not shifted notably over the last two weeks. The EURGBP pair has traded below the prior cycle low near 0.8380, leaving only the major range support back since the Brexit vote of late 2016 near 0.8275 as the next focus.

Cryptocurrencies – continued to stumble as the price action in Bitcoin pushed toward the next key chart area into 40k, and with Ethereum also continuing to lose altitude. One theory for the weakness in price action this week is that the shutdown of the internet in Kazakhstan due to protests has pulled as much as 15% of the bitcoin mining network off-line. With the country declaring that order has been restored, the eventual renewal of internet access there will be important for establishing the attribution to the price action from this source.

Crude oil (OILUKMAR22 & OILUSFEB22) as well as EU gas (TTFMG2) are some of the best performing commodities this week. Tight supply being the main theme supporting both markets. In oil, rising front month spreads are signaling growing supply tightness driven by disruptions in Libya and geopolitical risks associated with rising fuel protests in Kazakhstan, a 1.9 million barrels a day producer. Together with signs OPEC+ will struggle to implement its 0.4m b/d increase has helped off-set any short-term demand worries related to surging virus cases around the world. Not least in China, where its zero-tolerance policy means any outbreak is met with strong containment measures stifling mobility and consumer spending. Brent resistance at $83 followed by $85.50.

Gold (XAUUSD) and especially silver (XAGUSD) have had a challenging start to 2022, and just like last year the selling has been driven by surging bond yields. This time in response to stronger economic data and signs the Federal Reserve could move to tighten faster. However, considering US ten-year real yields has spiked higher by 30 basis points to –0.80%, the highest since last June, the 2% sell-off in gold has been relatively small, being partly offset by a softer dollar and cryptocurrencies as well as virus and geopolitical risks. The now established triple top at $1830 has weakened the technical outlook with support at $1783 preventing an even deeper selloff. Today’s focus squarely on the US job report (see below).

US 10-year Treasuries and German Bunds - The FOMC minutes provoked yields higher on both sides of the Atlantic as, by surprise, Federal Reserve’s members discussed the winding down of the Fed’s balance sheet. Yesterday, ten-year yields approached the pivotal level of 1.75%. If they break above this level, they could rise fast to test 1.80%. Yet, we cannot forget that an increasingly aggressive Federal Reserve will undermine growth keeping long-term yields compressed. Thus, the rise in yields might slow down in the coming weeks. We continue to see the potential for a bear-flattening of the yield curve. In Germany, Bunds rose to –0.03% aiming to test resistance at 0%.

What is going on?

China set for imminent easing?  - a report in the Chinese Securities Journal, an operation run by China's official Xinhua News Agency, suggests that the first quarter of this year may be a “key window” for China to ease monetary policy before the US begins its rate cycle. This could include both cuts to banks’ reserve requirement ratio and cutting the policy rate.

US President Biden places primary blame for January 6th riots on Capitol Hill last year on Trump, saying that the former president’s “bruised ego matters more to him than our democracy or our Constitution. He can’t accept he lost”. Some suggest Biden may seek to use the speech as a launch point for the mid-term elections in November of this year, campaigning with Democrats on accusations that Republicans are guilty of voter suppression and even gun control. Biden’s approval ratings are near the lowest they have been in his presidency.

Bed Bath & Beyond sees buying from “meme traders” despite revenue guidance cut. The company reduced its fiscal outlook for revenue of low inventory levels due to global supply constraints and narrowed the upper end of its operating margin expectations guidance, which is most investor books would have been negative, but Bed Bath & Beyond is part of the meme-stocks complex and shares were brought regardless showing the disconnection in some pockets of the market between reality and sentiment.

Walgreens dropped 3% on disappointing earnings outlook. Despite beating estimates on EPS in the last quarter, which was driven by selling millions of Covid shots and tests administrated, the outlook for the entire fiscal year guidance below estimates disappointed investors.

What are we watching next?

US December jobs report up later today – watching payroll growth and average hourly earnings. The nonfarm payrolls change number today is expected out at about +450 after a tepid +210k in November, although the “two-month net revision” number bears watching, as the US Bureau of Labor Statistics has had difficulty collecting data over the last year and has consistently underestimated the pace of jobs growth, with every month since July seeing growing positive revisions, from a +119k revision in August to a +235k revision in November. As well, the Average Hourly Earnings data deserves watching, with the market looking for +0.4% month-on-month growth and a sharp drop to +4.2% year-on-year due to the basing effect of a significant surge in December 2020. The official unemployment rate is based on an entirely different “household survey” and its plunge to 4.2% in November from 4.6% in October, together with a labor force participation rate that has not normalized to pre-pandemic levels, tells its own story of labor market tightness. Analysts suggest that the generous benefits and spectacular portfolio gains since the pandemic outbreak have taken millions of older workers near retirement out of the work force, never to come back. In the pre-pandemic cycle, it took a full two years for the unemployment rate to drop from 5.0% to 4.2%, a feat that was accomplished in three months last year.

The annual rebalancing of the world’s two biggest commodity indexes, the energy heavy S&P GSCI and the broader Bloomberg Commodities Index (BCOM) will start today, and over a five-day period the indexes, followed by billions in assets, will reset their positions based on how the individual commodities performed in 2021, production levels and overall trading volumes. However, while creating a great deal of attention, the general market impact should be limited with the changes being well flagged in advance.

Earnings Watch – no earnings today but the Q4 earnings season starts next week with the following earnings releases.

Tuesday: Yaskawa Electric, Acciona Energias Renovables, Albertsons, TD Synnex
Wednesday: Aeon, Abiomed, Jefferies, Shaw Communications
Thursday: Fast Retailing, IHS Markit, Delta Air Lines, Seven & I, Chr Hansen
Friday: Wells Fargo, BlackRock, First Republic Bank, JPMorgan Chase, Citigroup

Economic calendar highlights for today (times GMT)

0800 – Czech National Bank meeting minutes
0930 – UK Dec. Construction PMI
1000 – Euro Zone Dec. CPI Estimate
1200 – Mexico Dec. CPI
1330 – US Dec. Change in Nonfarm Payrolls
1330 – US Dec. Unemployment Rate
1330 – US Dec. Average Hourly Earnings
1330 – Canada Dec. Net Change in Employment / Unemployment Rate
1500 – Canada Dec. Ivey PMI
1500 – US Fed’s Daly (Non-voter) to speak 

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.