..and the DXY did get to 109 (as I predicted last evening) closing just short at 1-8.96 after hitting 109.1. And not surprisingly, US markets retraced and again not surprisingly Gold retraced alongside equities in positive correlation. And if you havent noticed the US 10yr yield has climbed above 3% to 3.02%, suggesting that the bond market is pricing for even higher rates ahead, as the market is now more believing that while inflation may have peaked, it is here to stay higher than normal for at least the first half of next year.
...US market was pricing down ahead of Jackson Hole, as nerves begin to sway again. Dow fell a hefty 643pts, the S&P500 lower by 2.14% to 4138 and Nasdaq was -2.55% off. Which is all about 50% retracement of its monthly gains. Normal and to be expected, markets can't go up in a straight line. Financials were hardest hit down -2.2%. Gold miners rebounded from their days low at the start to close flat +0.08% for GDX and -0.45% for GDXJ , while XLE was also flat -0.19%.
....if the fear is Jackson Hole, personally I do not see what Powell will say there that the market has not heard before, and that is he is committed with resolve to bring inflation down. The problem is it is not what the market has not heard, it is what the market choose to interpret. If the market believes in Fed pivot that the Fed will cut rates as early as Q1 of 2023, then the market is deluded. But I should think we can believe that the Fed won't overcook the goose. They are very aware not to make that mistake, because it has been well publicised. Like past FOMC before, it is sell before the meeting (due to apprehension) and buy after it. If there is nothing new on the agenda and any new development(s) that will irk the markets, IMO we should get through this at the end of the week.
...being anticipatory yesterday, ASX may have already factored the fall in our big falls over the past two days and XJO is expected to open 25 pts down. Market participants can choose to be discerning as higher rates do not impact all stocks equally and therein lies the opportunity to pick stocks that are being re-rated, oversold below their fundamentals, no debt and decent growth trajectory, on weakness.
European energy crisis sees Euro make new, multi-decade lows vs the Buck - Newsquawk US Market Wrap
TUESDAY, AUG 23, 2022 - 06:00 AM
SNAPSHOT: Equities down, Treasuries down, Crude flat, Dollar up.
REAR VIEW: US State Department note a nuclear deal is closer now than it was two weeks ago; Saudi Energy Minister said OPEC+ may need to tighten output to stabilise the market; Oil exports from two of the three mooring points in the Black Sea terminal have been suspended; China plans USD 29bln in special loans to troubled developers; AMZN amongst SGFY suitors.
COMING UP: Data: EZ, UK & US Flash PMIs, EZ Consumer Confidence Flash, US New Home Sales Event: FOMC Discount Rate Minutes Speakers: ECB's Panetta Supply: UK (I/L) & US.
WEEK AHEAD PREVIEW: Highlights include: Jackson Hole, US PCE; PBoC LPR, ECB minutes; Flash PMIs.
CENTRAL BANK WEEKLY: Previewing Jackson Hole, PBoC, ECB Minutes, BoK; Reviewing RBNZ, Norges, CBRT.
Stocks were lower on both sides of the Atlantic Monday with fresh highs in European energy contracts on the front of minds. There was no US data or Fed speak for traders to focus on, leaving the global growth concerns to fester. Gas/power prices on the continent were buoyed in wake of Gazprom's Friday announcement that it would be ceasing NS1 flows again at the end of the month, but also support by the announcement that the CPC terminal in the Black Sea will be ceasing loadings from two out of three ports due to damage with no timetable for repairs given. The comparatively harder growth outlook in Europe saw the Euro sold, taking EUR/USD to fresh since-2002 lows, beneath parity, that's despite the greater magnitude of EGB selling to Treasuries. The selling in USTs was focused at the front-end of the curve ahead of this week's front-end auctions, although Tuesday could see some volatility on Fed pricing amid August Flash PMIs giving traders a proxy for the ISMs.
