what does inflation mean?

Economic sentiment in the eurozone increased to 99.9 in January, the third consecutive increase. Service sector businesses were particularly upbeat, resulting in stubbornly high selling price expectations. The latter will be taken as hawkish input for the ECB meeting Service sector businesses are particularly upbeat at the moment   Can we trust sentiment indicators? When consumer confidence was at its lowest last September, consumption continued to grow. Now that it’s recovering, we see signs of faltering household consumption. January’s economic sentiment indicator paints a picture of recovery while data released today show Germany’s economy contracted in the fourth quarter. While there is some doubt about how well these indicators track economic performance at the moment, we don’t want to ignore them either. Manufacturing businesses performed slightly weaker than before, but optimism about production in the months ahead is on

The Witchy Trio: Commodities Supercycle, Inflation, and… Recession?

The Witchy Trio: Commodities Supercycle, Inflation, and… Recession?

Sebastian Bischeri Sebastian Bischeri 18.04.2022 15:59
  If the current market phenomena were to star in a Shakespeare drama, they would be ideal candidates for the Three Witches. Can you guess who would play who? Have you ever heard of Shakespeare’s mythological characters, the Three Witches? They are depicted as prophets who represent evil, darkness, chaos, and conflict. If you look at the market today, you will find ideal candidates for these dark roles. However, while rising commodity prices and inflation have a casting win in their pocket, there is no certain actor to play the third witch. Would the recession stand a chance?   Related article: Deutsche Bank Shook DAX! French Election, Inflation And ECB Are Factors Which Shaped DAX (GER 40), CAC40, FTSE 100 And IBEX35 - Top Gainers, Top Losers     No Easter eggs today – instead, here is a story that may provide food for thought. (Credit: Macbeth meets the three witches; scene from Shakespeare's 'Macbeth'. Wood engraving, 19th century. Wellcome Collection. Public Domain Mark) Let’s start by representing an economic cycle with its different phases: Global commodity prices – in particular energy prices – surged at a fast pace following the COVID crisis. Notably, as major central banks responded to the economic slowdown by printing money, rising levels of inflation were observed as a result of accommodating monetary policy combined with accelerating oil and gas demand. The context was tight supply and high volatility triggered by (geo-)political unrest around the world (crises, wars, etc.). In fact, those inflationary periods of surged prices (foremost, fuel prices are often those pulling the trigger) are usually followed by a sudden drop in consumer confidence and, therefore, a sudden fall in demand, which may lead to a recession phase.   Article on Crypto: Hot Topic - NEAR Protocol! Terra (LUNA) has been seeing a consistent downward price trend, DAI Should Stay Close To $1   To predict those phases, some analysts tend to spot the inverted bond yield curves. In one of its articles, Investopedia explains The Impact of an Inverted Yield Curve as the following: “The term yield curve refers to the relationship between the short- and long-term interest rates of fixed-income securities issued by the U.S. Treasury. An inverted yield curve occurs when short-term interest rates exceed long-term rates. Under normal circumstances, the yield curve is not inverted since debt with longer maturities typically carry higher interest rates than nearer-term ones. From an economic perspective, an inverted yield curve is a noteworthy and uncommon event because it suggests that the near-term is riskier than the long term.” Now let’s have a look at the mystic US government yield curves over the past 30+ years: US 10 YR in Orange versus US 2 YR in Blue US 30 YR in Red versus US 5 YR in Indigo (Source: TradingView) The inversion of yield curves – typically with a two-year rate higher than the ten-year rate or even a five-year rate higher than the thirty-year rate – has occurred prior to each of the last US recessions. This phenomenon also briefly happened last week and lasted for almost two trading days. (Credits: Small Exchange, Inc. Newsletter Apr 11, 2022) As you can see, the above charts demonstrate that US treasury yield curve inversions may sometimes be followed by a sudden drop in equity prices. Alternatively, David Linton was also showing how big falls in bonds were preceding big falls in stocks in a recent tweet: (Source: Twitter) Okay, now let’s ask ourselves a few questions. Do you think that the Federal Reserve (Fed) will be able to tighten its monetary policy as planned? Will stocks collapse? Will this trigger a recession? If so, when? In what phase of the economic cycle do you think we are? 3, 4 or in between, maybe? The first speculative scenario Growth will continue for now, and so will demand... However, as soon as the Fed begins to tighten as planned, the S&P will plummet. So, the Fed will either be forced to stop to prevent a crashing stock market and falling risk sentiment from hitting growth, or just go ahead with tightening to keep inflation at bay and face the consequences. In the latter case, Powell loses his job... The second speculative scenario Following ongoing inflation, there could be a recession with a collapse in demand in about 6 months or so. On the energy side, despite the drop in demand, prices shouldn't drop too much as they might still be supported by limited supplies. Any ideas about a projected time horizon? Regarding the Fed, I don't believe much in rate hikes. If they do so, they will plunge off their looming debt cliff. Maybe the Fed could keep communicating about future hikes if the markets are crashing. However, if they do any actual hikes, I bet they would probably be tiny ones, just to show some signals, but in the end, the actual rates wouldn't be much changed. J. Powell seems to be pretty much stuck. (Source: Giphy) Anyway, it is a moment of truth for central banks. Let me know what you think in the comment section. That’s all, folks, for today. I hope you’ve had a great Easter weekend! Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Sebastien BischeriOil & Gas Trading Strategist * * * * * The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Walt Disney Results Are Beyond  All Expectations. Large Chinese Company Fires More Than 9K Employees!!! Market Newsfeed - 11.08.2022

British Pound (GBP) Power! Will GBPUSD Go Down Anymore!? (Australian Dollar To US Dollar) AUD/USD Is Volatile, GER 40 (DAX) To Pause Longer?

Jing Ren Jing Ren 19.04.2022 08:42
Summary: GBPUSD tests critical floor AUDUSD breaks support GER 40 seeks support GBPUSD tests critical floor The RSI’s oversold situation may cause a temporary bounce towards 1.3060. The US dollar continues upward as markets wager a 50 bp Fed hike next month. The pound’s latest rally came to a halt in the supply zone around 1.3150 which coincides with the 30-day moving average.   Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun   As the pair gives up its recent gains, the bears still retain control of the direction and seem to be ready to double down at rebounds. A drop below 1.3000 would attract momentum selling and push the pair to November 2020’s lows near 1.2860. The RSI’s oversold situation may cause a temporary bounce towards 1.3060. AUDUSD breaks support As the RSI recovers into the neutral area, the pair may face stiff selling pressure around the support-turned-resistance at 0.7400. The Australian dollar remains under pressure after dovish RBA minutes. A fall below the demand zone between 0.7380 and 0.7400, which sits on the 30-day moving average, has put the bulls further on the defensive.   For you: Forex Rates: British Pound (GBP) Strengthening? Weak (EUR) Euro? GBP, NZD And AUD Supported By Monetary Policy?   As the short-term prospect turns bearish, depressed offers compound the lack of bids, driving the Aussie even lower. 0.7300 would be the next target. As the RSI recovers into the neutral area, the pair may face stiff selling pressure around the support-turned-resistance at 0.7400. GER 40 seeks support The bulls need to push above 14320 in order to turn the cautious mood around. The Dax 40 retreats as risk appetite remains subdued across equity markets. The index is still under pressure after it struggled to hold above the psychological level of 14000. The current pennant may turn out to be another distribution phase. Additionally, a break below 13900 would make the index vulnerable to a new round of sell-off. 13600 would be the next support. The bulls need to push above 14320 in order to turn the cautious mood around. Then 14600 will be the final hurdle before an extended recovery could materialize.
EUR/USD: US Dollar (USD) Supported By A 75bp Rate Hike!? EUR Influenced By Last Week's Activities, Price Of Gold (XAUUSD) May Not Stop Below $1980

EUR/USD: US Dollar (USD) Supported By A 75bp Rate Hike!? EUR Influenced By Last Week's Activities, Price Of Gold (XAUUSD) May Not Stop Below $1980

Jing Ren Jing Ren 20.04.2022 08:12
EURUSD consolidates post-sell-off The US dollar rallies as a 75bp rate hike by the Fed could be on the table. The single currency remains under pressure after last week’s sell-off. 1.0920 has become an important supply area after buyers’ failed attempts to push higher. Further above, the psychological level of 1.1000 is another support-turned-resistance, suggesting that the path of least resistance is down. Bearish trend followers could be waiting to fade the next rebound. The pair is treading water above 1.0760 as the RSI rises back to the neutrality area. Article on Crypto: Altcoins Showing Promising Growth - Take a Look at Solana (SOL), POLKADOT (DOT) and SHIBA INU (SHIB-USD)| FXMAG.COM XAUUSD keeps high ground Gold slipped as the greenback rallied across the board amid the Fed’s increasingly hawkish stance. The previous rally cleared the resistance at 1990 but struggled to grind to the psychological level of 2000. A drop below 1961 revealed underlying weakness and caused a liquidation of leveraged buyers. 1940 at the base of a previous breakout is the next stop to gauge the bulls’ commitment. An oversold RSI may trigger a buy-the-dips behavior and lead to a limited rebound. 1980 is now the closest resistance. Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun SPX 500 breaks channel The S&P 500 recoups losses as the quarterly earnings season heats up. The index has been sliding down in a bearish channel, which indicates a cautious mood in the short term. The latest rally above the upper band (4420) and resistance at 4460 could prompt sellers to cover their positions, paving the way for a potential reversal towards 4590. 4360 is a fresh support. In fact, a series of higher lows would show buying interest and convince followers to jump in with both feet. Otherwise, 4300 would be the next support.
The AUD/USD Currency Pair Trading At Its Lowest Level Since Two Years, Hang Seng Index Was Flat

$2000 Level Of Gold Price (XAUUSD) Noted But Not Yet Present! Awaiting Fed Vs. Gold Battle!

Alex Kuptsikevich Alex Kuptsikevich 20.04.2022 10:27
Gold is falling fast, having lost about 3% to $1940 from Monday's peak. On Monday, the bulls are locally capitulating after an unsuccessful attempt to push the price above $2000. It would be a mistake to attribute gold's fall to an expensive dollar. Since the start of the year, the dollar index and gold have had a more than 80% correlation versus -0.34% in 2021, reflecting that investors see gold and the dollar as defensive assets amid the Russia-Ukraine conflict. Yesterday the dollar index slowed its rise towards the end of the day. It reversed to a decline on Wednesday morning, while gold has been actively declining since the beginning of the week, reinforcing their close correlation. Read next: Monetary Policy Drives EUR/USD, The Future of the EUR/GBP Awaits the Bank Of England's Speech - Good Morning Forex| FXMAG.COM With EURUSD near 1.08, GBPUSD near 1.30 and USDJPY one step away from 130, the dollar is near historical extremes Gold's recent retreat could be a sign of hope for a détente in the European conflict and a desire to lock in profits from the powerful movement of recent days. As it is difficult to find signs of de-escalation in the news, we are leaning towards the second option. With EURUSD near 1.08, GBPUSD near 1.30 and USDJPY one step away from 130, the dollar is near historical extremes. The same can be seen in the Dollar Index, which since last week has been trading above 100, a psychologically crucial round level. Read next: Altcoins' Rally: Solana (SOL) Soars Even More, DOT and SHIBA INU Do The Same! | FXMAG.COM Since the beginning of February, gold has found support on the declines toward its 50-day moving average in the last rally. If a test of this level in the coming days also confirms the resilience of this support, we could see a new high soon. On the long-term gold chart, the pullback from the highs in 2020 and the subsequent smooth recovery is a handle in a "cup-and-handle" pattern, whereby a cup has formed over eight years since 2012. This pattern will gain strength should gold consolidate above $2000 with a final target near $3000.
What Direction Could Be Defined By US Data? (ECB) Christine Lagarde Speaks Today. Important Days Ahead Of Us

Euro To US Dollar (EUR To USD): That's An Amazing USD Performance, Will USDCAD (Canadian Dollar) Stay Close? USDJPY (Japanese Yen) Beats Records!

Jason Sen Jason Sen 20.04.2022 10:39
EURUSD retests 37 YEAR TREND LINE SUPPORT AT 1.0760/20. Longs need stops below 1.0670. Obviously there is nothing more important than this level this week. Longs at 1.0760/20 initially target 1.0820/50. Above here is more positive targeting 1.0900/20 then 1.0960/70. USDCAD strong resistance at 1.2650/70. Shorts need stops above 1.2690. A break higher is a medium term buy signal. Related article: Monetary Policy Drives EUR/USD, The Future of the EUR/GBP Awaits the Bank Of England's Speech - Good Morning Forex| FXMAG.COM Very minor support at 1.2610/1.2590 & again at 1.2525/05 today. If we continue lower look for 1.2480/70. We have another buying opportunity at 1.2440/10. Longs need stops below 1.2370. A break lower is an important medium term sell signal. USDJPY beat 14 year trend line resistance at 127.10/50 & rocketed another 200 pips!! The pair has 13 blue bodied daily & 7 weekly candles in a row. So sell signal yet despite severely overbought conditions. Above 129.50 look for 129.90/95 then 130.25/35, perhaps as far as 130.75/85. First support at 128.45/25. Further losses can target 127.80/70. Unlikely but if we continue lower look for strong support at 127.10/126.90. Read next: Gold Price Falls, Volatility in Wheat Futures and The Price Of Palladium| FXMAG.COM EURJPY higher as expected reaching 139.67 & no sell signal yet as we become overbought. Further gains can target 139.95/99 then 140.40/50 & 140.85/95. GBP To USD GBPUSD retests last week's low at 1.2990/70 after the bullish engulfing candle so now we just have to see if we get a double bottom buy signal or if the pair break lower for a sell signal. So far the bulls are winning as we bounce from 1.2977. A break below 1.2955 should be a medium term sell signal. Our longs target 1.3060/70 & 1.3100/10, perhaps as far as first resistance at 1.3150/70. Please email me if you need this report updated or Whatsapp: +66971910019 – To subscribe to this report please visit daytradeideas.co.uk or email jason@daytradeideas.co.uk
Tempting FX Pair - GBP To USD! Analysis And Tips For British Pound To US Dollar

Monetary Policy Drives EUR/USD, The Future of the EUR/GBP Awaits the Bank Of England's Speech - Good Morning Forex

Rebecca Duthie Rebecca Duthie 20.04.2022 10:17
Summary: EUR/USD and Monetary Policy. Bank Of England's Speech on Thursday effect on the GBP related currency pairs. AUD/CHF as a reflection of investor risk sentiment. Related article: Japanese Yen (JPY) Weakens Against The Dollar, USD/CAD Stable And The Inevitable Strengthening Of The USD, IMF/World Bank Events Monetary Policy driving the EUR/USD price action. Since the market opened this morning, the EUR has strengthened against the USD and the market sentiment is bullish, the rise in price is small but significant given the current economic conditions. With the differing monetary policy of the European Central Bank (ECB) and the US Federal Reserve (Fed) the EUR/USD currency pair price is low. In the coming weeks it is likely to see the dollar strengthening thanks to the expectations of the Fed to tighten monetary policy. Whereas, there is no certainty on when the ECB will begin rising interest rates. EUR/USD Price Chart Value of the GBP Awaits BOEs Speech Since the market opened this morning the price of the currency pair has increased, however, market sentiment for the EUR/GBP has changed from bullish yesterday to a mixed today. The strengthening EUR against GBP comes in light of the Bank of Englands (BOE) announcements tomorrow regarding the future monetary policy of the country, investors are expecting more hawkish actions. EUR/GBP Price Chart  Read next: Altcoins' Rally: Solana (SOL) Soars Even More, DOT and SHIBA INU Do The Same! | FXMAG.COM AUD/CHF Since the market opened this morning, the value of the AUD/CHF has increased, and has a bullish market sentiment. This currency pair can be used as a good reflection of risk sentiment, this is because the AUD is risk-on and the Swiss Franc is considered as a safe-haven currency. AUD/CHF Price Chart GBP loses some ground on the JPY The price of the GBP/JPY currency pair has (in general) been on the rise as a result of the rapidly depreciating value of the Yen. However, since the market opened this morning the price has decreased despite the bullish market sentiment, possibly due to the uncertainty regarding the future of the GBP and the upcoming BOE’s announcements. GBP/JPY Price Chart Sources: Finance.yahoo.com, teletrade.eu, dailyfx.com
Elon Musk Sells 8 Millions Tesla Stocks? Here Is Why!

Unexpectedly Gold Price (XAUUSD) Falls, Canada And Chicago - Weather Makes Wheat Futures Fluctuate. The Price Of Palladium - Industrial Activity Is Taking Strain

Rebecca Duthie Rebecca Duthie 20.04.2022 11:23
Summary: The price of gold fell to the lowest price in almost 2 weeks. Volatility in U.S Wheat futures due to the Weather. Palladium Prices driven down by the rising dollar index. Gold Prices Hit Lows - elevated U.S treasury yield affecting the demand of the commodity The price of gold hit its lowest value in almost 2 weeks as a result of the elevated U.S treasury yield affecting the demand of the commodity. The increase in the yields also increases the opportunity cost for investors who hold gold because the commodity is not yielding. Investor expectations of the Fed's hawkish outlook could be the reason for the price fall, especially inlight of the expected Fed Speech this week. Price Chart of Gold Read next: Altcoins' Rally: Solana (SOL) Soars Even More, DOT and SHIBA INU Do The Same! | FXMAG.COM Chicago SRW Wheat Futures - terrible weather conditions in the US and Canada are causing supply fears The price of Wheat has been volatile over the past week, the terrible weather conditions in the US and Canada are causing supply fears, however market sentiment for this commodity has struggled to shake its bearish tone. Chicago SRW Wheat Futures Price Chart Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun Palladium Price - the war continues, the industrial activity is taking strain The price of Palladium saw an increase in price as an initial market reaction to the start of the Russia-Ukraine war, and as the war continues, the industrial activity is taking strain. However, on Tuesday, the price of palladium fell as a result of the rising dollar index. Palladium Futures Price Chart Sources: Finance.yahoo.com, economies.com
Investors In Crisis!? Inflation, Rates Hikes And Geopolitics. Where Are Investors Putting Their Money - Now Vs. Then?

Investors In Crisis!? Inflation, Rates Hikes And Geopolitics. Where Are Investors Putting Their Money - Now Vs. Then?

Chris Vermeulen Chris Vermeulen 20.04.2022 16:55
Investors have been processing high inflation reports, rising interest rates, surging energy, commodity, and real estate prices. So, what is the market saying about which markets investors have favored the last couple of years vs where are they putting their money right now? A way to determine this is to simply plot the indices and then see how they stack up against each other. Price data should also be viewed and analyzed in a multi-timeframe environment: short-term, medium-term, and long-term. Additionally, we want to know how the market we’re trading is performing compared to its peers. As a trader or investor, we know it’s important to determine if a market is in a bull, bear, accumulation, or distribution phase. Additionally, we want to know how the market we’re trading is performing compared to its peers. Related article: Japanese Yen (JPY) Weakens Against The Dollar, USD/CAD Stable And The Inevitable Strengthening Of The USD, IMF/World Bank Events The following charts provide snapshots of how the SPY ETF (US S&P 500) is doing compared to the other US and global stock indices. The year-to-date chart is showing us a maximum volatility spread of 15.73%. This is simply the difference between the highest stock index, Australia 200 +1.18% vs the lowest stock index US Nasdaq 100 -14.55%. Australia’s market has recently done well due to its strong energy and commodity interests which in turn has contributed to the strengthening Australian dollar. SPY YEAR-TO-DATE DAILY: MAX VOLATILITY 15.73%      www.TheTechnicalTraders.com – TradingView The Hong Kong and China stock markets have been plagued with numerous Covid issues in 2020, 2021, and now recently again in 2022. The volatility spread at first doesn’t seem that significant but over time it can be substantial. This is one of the reasons why our team continually tracks global money flow according to each country's stock index but additionally other types of markets and asset classes. Our quantitative trading research is crucial in determining which markets to trade and how to efficiently employ trading capital. Read next: Altcoins' Rally: Solana (SOL) Soars Even More, DOT and SHIBA INU Do The Same! | FXMAG.COM This maximum volatility spread during 2021-2022 is 44.42%. The highest stock index, India 50 +23.75% vs the lowest stock index Hong Kong 33 -20.67%. The Hong Kong and China stock markets have been plagued with numerous Covid issues in 2020, 2021, and now recently again in 2022. SPY 2021-2022 DAILY: MAX VOLATILITY 44.42%      www.TheTechnicalTraders.com – TradingView Now we can take a longer-term view of the past 2+ years covering Covid before and after. We notice that the Nasdaq 100 is the overall leader despite its recent negative performance in 2022. This maximum volatility for 2020-2022 is 89.70%. The highest stock index, US Nasdaq 100 +69.70% vs the lowest stock index Hong Kong 33 -20.00%. SPY 2020-2022 DAILY: MAX VOLATILITY 89.70%      www.TheTechnicalTraders.com – TradingView KNOWLEDGE, WISDOM, AND APPLICATION ARE NEEDED It is important to understand that we are not saying the market has topped and is headed lower. This article is to shed light on some interesting analyses of which you should be aware. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades to our subscribers, and in the last six trades we entered in March, all have now been closed at a profit! Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list. Sign up for my free trading newsletter so you don’t miss the next opportunity! Successful trading is not limited to when to buy or sell stocks or commodities. Money and risk management play a critical role in becoming a consistently profitable trader. Correct position sizing utilizing stop-loss orders helps preserve your investment capital and allows traders to manage their portfolios according to their desired risk parameters. Additionally, scaling out of positions by taking profits and moving stop-loss orders to breakeven can complement ones’ success. WHAT STRATEGIES CAN HELP YOU NAVIGATE The CURRENT MARKET TRENDS? Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens. Historically, bonds have served as one of these safe-havens, but that is not proving to be the case this time around. So if bonds are off the table, what bond alternatives are there and how can they be deployed in a bond replacement strategy? We invite you to join our group of active traders and investors to learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
Ether (ETH), (BTC) Bitcoin, LUNA, NFT - They All Plunges! Crypto Market Crash Aka "Cryptogeddon" | Conotoxia

Netflix Crashing!? Netflix Stock Price (NFLX) Falls More Than 35%? Subscribers Fled!

Rebecca Duthie Rebecca Duthie 20.04.2022 21:27
Since the market opened this morning Netflix stock price has fallen by more than 35%, the price fall came shortly after the company announced it had lost more than 200 000 subscribers in the first quarter of 2022 and are forecasting losing a further 2 000 000 subscribers in the coming quarter. The drop in value comes hand-in-hand with investor sentiment and the post-covid world. In addition, subscribers are seeming to be rethinking their subscription commitments to the streaming service. Related article: Japanese Yen (JPY) Weakens Against The Dollar, USD/CAD Stable And The Inevitable Strengthening Of The USD, IMF/World Bank Events The current market sentiment, Elon Musk and other factors causing Netflix stock price to dive. The price of Netflix’s stock has also been affected by more competitors entering the market, the loss of 700 000 Russian subscribers as a result of the Russia-Ukraine conflict, consumer budget tightening as a result of the current market conditions and Elon Musk’s opinion on Netflix’s shares being affected by the ‘woke mind virus’. Related article: Monetary Policy Drives EUR/USD, The Future of the EUR/GBP Awaits the Bank Of England's Speech - Good Morning Forex| FXMAG.COM Given the forecast for the next quarter, the stock price of streaming service is unlikely to see any large increases anytime soon. Netflix Price Chart Sources: Finance.yahoo.com, Theguardian.com, nypost.com
The Forex Market Is Under Strong Pressure From Geopolitical Events And Statistics

How To Hedge Against Inflation? Crypto? Is Bitcoin (BTC) The Answer?

Conotoxia Comments Conotoxia Comments 20.04.2022 21:46
Last year alone, the number of investors in the cryptocurrency market may have increased by nearly 70 percent. - This is according to the "2022 Global State of Crypto Report" published by Gemini Exchange. The report was created after surveying 29,293 adults in 20 countries. The age of the respondents ranged from 18-75, and the survey was limited to those earning more than $14,000 per year. The report helps understand the global adoption of cryptocurrencies among retail investors. It shows that 41 percent of those surveyed made their first investment in cryptocurrencies in the past year, and overall, the total number of investors has increased by about 70 percent in 2021 alone. Key excerpts from the report: More than half of cryptocurrency owners in Brazil (51 percent), Hong Kong (51 percent) and India (54 percent) started in 2021. Among high-income respondents in developed countries, cryptocurrency ownership is trending upward, with 40 percent or more in the United Kingdom, Germany and France reporting cryptocurrency ownership. Regulation is causing concern around the world. Among those who do not own cryptocurrencies, 39 percent in Asia Pacific, 37 percent in Latin America and 36 percent in Europe say there is regulatory uncertainty surrounding cryptocurrencies. Inflation drives adoption Another important finding is that inflation appears to be a key driver of investor adoption. One reason to pay attention to the Gemini survey is that it asked questions about inflation. The report highlights that countries that have recently experienced hyperinflation tend to agree with the statement "cryptocurrencies are the future of money." Respondents from countries that experienced a 50 percent or higher devaluation of their currency against the U.S. dollar over the past 10 years were more than 5 times more likely to say they plan to purchase cryptocurrencies in the coming year than respondents from countries that experienced currency devaluations of less than 50 percent, including South Africa, Mexico, India and Brazil. In the latter country, where the local currency has been devalued by more than 200 percent against the U.S. dollar, 41 percent of respondents own cryptocurrencies. In the U.S., 40 percent of cryptocurrency holders see them as a hedge against inflation. If inflation continues to be an issue around the world, it seems likely that this trend could increase In general, the higher a country's inflation rate, the higher the adoption rate of cryptocurrencies can be. If inflation continues to be an issue around the world, it seems likely that this trend could increase. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Still Going Up The Price Of Crude Oil (WTI/BRENT) When Energy Stocks Will Start To Soar?

Still Going Up The Price Of Crude Oil (WTI/BRENT) When Energy Stocks Will Start To Soar?

Alex Kuptsikevich Alex Kuptsikevich 21.04.2022 11:10
Oil gained 1.5% on Thursday morning to $103.75 per barrel for WTI and $108.2 for Brent, continuing to cling to the uptrend since December. Over the past six weeks, oil price movements are no longer unidirectional, but the market remains in 'crisis mode'. In April, oil is supported on the declines towards the 50-day moving average, as we saw yesterday. The uptrend is not only supported by the abrupt withdrawal of oil from Russia and the accompanying decline in production there. There are also shipment problems in Libya and prolonged pipeline repairs in Kazakhstan. Oil producers in the US seem to be stepping up. Last week saw production increase to 11.9M barrels per day - a new high since May 2020 - from 11.8M. Fluctuations could prove to be a manifestation of the supply shifting to Europe Related article: Japanese Yen (JPY) Weakens Against The Dollar, USD/CAD Stable And The Inevitable Strengthening Of The USD, IMF/World Bank Events Meanwhile, US oil stocks and production data remain volatile. Commercial inventories collapsed by 8M barrels after jumping by 9.4M last week. Such fluctuations could prove to be a manifestation of the supply shifting to Europe. Strategic stocks showed a net decline of 4.7M after 3.9m the previous week. The volume of oil in strategic storage fell to the lows in the last 20 years. However, it is not yet enough to turn around commercial inventories. Related article: Monetary Policy Drives EUR/USD, The Future of the EUR/GBP Awaits the Bank Of England's Speech - Good Morning Forex| FXMAG.COM Another potential area of pressure on the oil price - a strengthening dollar Oil supply constraints continue to put together a relatively bullish picture for oil, preventing a price reversal to the downside. A real bearish victory requires either a sharp increase in production in the US or OPEC countries or a dramatic fall in demand. We see no clear signals for either direction. Another potential area of pressure on the oil price - a strengthening dollar - is also failing for the second day in a row, temporarily working on the bulls' side.
Follow EUR/USD, EUR To GBP And The Rest Of EUR Pairs - Inflation In Euro Area Continues To Worry Investors After Reaching New High

Follow EUR/USD, EUR To GBP And The Rest Of EUR Pairs - Inflation In Euro Area Continues To Worry Investors After Reaching New High

Walid Koudmani Walid Koudmani 21.04.2022 12:02
Today's Euro area inflation report continued to show the alarming rate of increase in prices mainly driven from energy prices and services. The euro area annual inflation rate was 7.4% in March 2022, up from 5.9% in February and noticeably higher than when compared to a year earlier (1.3%). Stagflation scenario? While we have already seen a slight change in tone from some members of the ECB, hinting at rate hikes sooner than previously expected, today's report could further incentivize the bank to act in an attempt to avoid the increasingly likely stagflation scenario. It will be important to keep an eye on today’s speech from the ECB head Lagarde after another member of the ECB , Kazaks, stated they believe asset purchases may be terminated before Q3 2022 - much earlier than it was expected. Gold price returns to key support area ahead of central banker speeches The price of gold has seen a noticeable pullback after reaching a high of $1958 yesterday while stock markets started the day trading higher following better than expected earnings from Tesla. The precious metal has once again returned to a previous support area of and could continue to see an increase in volatility as investors await today's comments from the heads of BoE and ECB. While the ECB appears to be changing its opinion slightly on the possibility of adjusting its fiscal and monetary policy to contend with record inflation, it remains to be seen how and if Lagarde will downplay the situation in order to calm the markets. In any case, gold might see a reaction to the $1945 area once again after the price managed to rebound several times in the past.  
U.S Yields Expecting Further Increases!?, Announcement Of PMIs Prelims For The Private Sector - FOREX Today

U.S Yields Expecting Further Increases!?, Announcement Of PMIs Prelims For The Private Sector - FOREX Today

Rebecca Duthie Rebecca Duthie 22.04.2022 19:00
Summary: Market sentiment for the EUR/USD currency pair showing bearish signals. Bullish outlook for the EUR/GBP as the EUR strengthens against the GBP. UK retail sales saw a large decrease, causing investor confidence for the currency to fall. USD gains ground on the EUR in light of further expected increases in yields in May The Dollar has strengthened against the EUR since the market opened this morning, in general the dollar is strengthening against all currencies at the moment. After the prelims on private sector PMIs this morning, the EUR originally gained some ground against the USD but has since fallen again, possibly as a result of the new expected increases in U.S yields in May, causing more investor confidence in the USD. EUR/USD Price Chart EUR gains on the GBP as expectations arise for ECB to increase yields. Since the market opened this morning, market sentiment for this currency pair is bullish. The Euro has gained ground on the GBP inlight of the Private sectors PMIs announcements this morning as well as the expectations that the European Central Bank could increase yields in July. EUR/GBP Price Chart GBP Weakens against the USD Since the market opened this morning, market sentiment for this currency pair is bearish. The GBP has weakened against the USD inlight of the announcement of the Feds intentions to increase the U.S yields by a further 50bps, at the same time, UK retail sales saw a large decrease. This fall counteracted the strengthening seen after the increased expectations of the BoE’s interest rates. GBP/USD Price Chart   Related article: https://www.fxmag.com/forex/ecb-announcements-to-possibly-tighten-monetary-policy-strengthens-the-euro-eur-usd-eur-gbp-aud-nzd-and-eur-chf-all-increased The Japanese Yen strengthened against the AUD today. Market sentiment for this currency pair is showing as mixed. In general the JPY has been weakening in the past days. This weakening had pushed the value of this currency pair higher, however, since the market opened this morning, the AUD has weakened against the JPY. AUD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com
The Structure Of Views And Economic- Mercantilism And Libertarianism

Can (XAUUSD) Gold Price Plunge To $1800!? Silver Price (XAGUSD) To Decrease As Well?

Jason Sen Jason Sen 25.04.2022 09:59
Gold first support at 1927/24 but longs need stops below 1920. A break lower targets 1915/12. Below 1910 look for 1900, perhaps as far as 1890. Strong resistance at 1940/45. Shorts need stops above 1950. Read next (By Jason Sen): British Pound To Canadian Dollar (GBP/CAD) Bounces To Ease Severely Oversold Conditions As Predicted, EUR/USD again holds important 5 year trend line support at 1.0850/20 | FXMAG.COM Silver best support for this week at 2390/80. Longs need stops below 2365. A break lower is a medium term sell signal. Minor resistance at 24.50/60. Strong resistance at 2485/95. Shorts need stops above 2505. WTI Crude JUNE first support at 102.00/101.50. Longs need stops below 101.00 (a low for the day here again on Friday). A break lower however targets 9900/9850 & 9750/9700. We could fall as far as very strong support at 94.50/9400. Longs need stops below 9350. Read next: Euro To US Dollar (EUR To USD): That's An Amazing USD Performance, Will USDCAD (Canadian Dollar) Stay Close? USDJPY (Japanese Yen) Beats Records! | FXMAG.COM Holding support at 102.00/101.50 allows a recovery to minor resistance at 104.50/105.00. Above 105.50 however look for 106, perhaps as far as 107.30/70. Shorts need stops above 108.50. Please email me if you need this report updated or Whatsapp: +66971910019 – To subscribe to this report please visit daytradeideas.co.uk or email jason@daytradeideas.co.uk
(NVDA) Nvidia Stock Price Plunged! Meme Stocks' Performance Seems To Be Surprisingly Good

US Yields Have Declined! Gold Price (XAUUSD) Is Back In The Game! Gold Trades Near $1900, COVID In China Leave Investors Unsure

Conotoxia Comments Conotoxia Comments 26.04.2022 10:25
The price of gold appears to be back above $1,900 per ounce on Tuesday, after a 3-day decline. The rise seems to have taken place with a slight weakening of the US dollar and a drop in US Treasury bond yields, which may have made bullion more attractive. Investors may be monitoring the deteriorating Covid virus situation in China after authorities in Beijing expanded testing to a larger part of the city The U.S. dollar appears to have retreated today from a two-year high reached during the previous session, while the 10-year bond yield may have fallen from a three-year high, retreating to around 2.8 percent. Given the growing uncertainty about the outlook for global economic growth, the market may be gauging the Federal Reserve's willingness to tighten monetary policy quickly. Additionally, investors may be monitoring the deteriorating Covid virus situation in China after authorities in Beijing expanded testing to a larger part of the city, raising fears of a shutdown of the capital. In addition, Russia told the world not to underestimate the significant risk of nuclear war, which it says it wants to reduce, and warned that conventional Western weapons are a target in Ukraine. Gold can be seen as a store of value during economic and political crises. Read next: Conotoxia - Who's Gonna Stop Dollar (USD)!? EUR/USD Plunging Below 1.00? What A Surprise! Crude Oil Price Goes Down!| FXMAG.COM European buyers have refused to buy millions of barrels of Urals crude from Rosneft PJSC Meanwhile, in the oil market, WTI crude futures appear to have risen to around $99.5 a barrel on Tuesday, after a two-day decline that took prices below $100. However, the supply situation appears to remain tight. There is still a risk that the EU could join the U.S. and U.K. in banning Russian oil imports as the war in Ukraine continues. European buyers have refused to buy millions of barrels of Urals crude from Rosneft PJSC, while Asian refiners have given up on Russian oil because of sanctions imposed on the company that carries the cargoes. As a result, the world on the one hand may be reducing oil demand by the prospect of weaker economic growth and lower demand from China due to the epidemic. On the other hand, there are still chances of reduced oil supply in Europe due to war and sanctions, which may put upward pressure on production. Thus, the price of WTI crude oil, due to the opposing factors, may remain in a consolidation of $92-114. Read next: Conotoxia - (USD) Dollar Index - Fed Floors It! Hawkish Rhetoric And Interest Rate Hike? British Pound In Crisis? GBP/USD Affected By Weak Retail Sales Data!| FXMAG.COM   Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Only Ugly US Data Could Reverse Sentiment | Gilt Yields In UK Were Steady To Lower

ING Economics: "Rates and FX are waking up to a less hawkish Bank of England reality"

ING Economics ING Economics 28.04.2022 15:36
Markets are expecting too much tightening from the Bank of England and are slowly waking up to a less hawkish reality. This means gilts will struggle to follow Treasury and Bund yields higher, and the curve should price out hikes. Sterling has started to react to the weaker consumer data and, barring a very hawkish surprise, risks look skewed to the downside In this article The gilt canary in the coal mine Click to scroll down FX: Waiting for the penny to drop We're expecting the Bank of England to hike in May and June, but the tone is turning more cautious. The BoE's voting pattern and lower growth forecast should be hints that hike expectations at the front-end of the curve are excessive. As the central bank hits the pause button in the summer, we expect markets to wake up to the less hawkish reality. The gilt canary in the coal mine After months of being at the forefront of the core rates market sell-off, with a clear underperformance in the second half of 2021 relative to US Treasuries and German Bund when the BoE ramped up its hawkish message, gilts are now warning that the sell-off is running out of steam. A string of weak sentiment data had the market re-rate recession probabilities and gave weight to the comparatively cautious tone adopted by the BoE.Breaking 2% to the upside remains a possibility for 10Y gilts but we expect them to continue to lag Bund and USTs if bond selling resumes. We foresee yields ending 2022 at 1.8% and the rally should accelerate next year. We also caution that impaired liquidity conditions in the gilt market make outright selling by the BoE less likely in the near term. Source: Refinitiv, ING The UK is far from being the only economy with a worrying growth trajectory, and we should eventually see German Bund and US Treasuries catch up to the gilt rally. Our best guess is that will happen in the third quarter this year once the Federal Reserve has a few hikes under its belt and once inflation has stabilised. It is however noteworthy that, after being ahead of the pack when it came to tightening, it now looks as if the BoE has the luxury to adopt a more prudent approach when inflicting more policy tightening on its domestic economy. Source: Refinitiv, ING We have been warning for months that the policy rate path implied by GBP swaps looked too aggressive, but that a turnaround was only likely once the BoE tightening cycle is well underway. "The gilt curve should re-steepen helped by deflating rate hike expectations" Hike expectations have now started to come off, but we think this is only the beginning of the adjustment lower. This has started a race between front and back end rates. We think curve dynamics will depend on when global yields peak. If we’re right in seeing a few more months of global bond sell-off, then the gilt curve should re-steepen during the same period, also helped by deflating rate hike expectations. Our four scenarios for the May BoE meeting and expected market reactions   FX: Waiting for the penny to drop Sterling has had a bad week at the office. The Bank of England's broad trade-weighted measure of the pound has sold off 2% over the last week due to a combination of weak UK consumer data and a much tougher risk environment on the pincer movement of higher US real rates and weaker Chinese growth prospects. Incidentally, GBP/USD has had one of the highest G10 FX correlations with global equities over the last few months. "Sterling has had a bad week at the office" In looking at the various EUR/GBP reactions to the four BoE scenarios outlined above, we have used our Financial Fair Value (FFV) model as a guide. This identifies key drivers of EUR/GBP pricing such as yield differentials, the shape of the UK yield curve, and the equity environment as inputs. The problem is those yield differentials have lost some of their explanatory power recently. In fact, one has to go back to earlier in 2021 when say a 5bp move in the GBP/EUR yield two-year differential was worth about a 1% move in EUR/GBP. A repricing lower of hike expectations means GBP could take a leg lower Source: Refinitiv, ING Assuming that the beta on the yield differential driver is lower, we present more conservative EUR/GBP levels in our scenario analysis above. Our baseline scenario sees some modest GBP weakness, for example, EUR/GBP to 0.8450 on the BoE event risk. But James Smith has been making his case that the BoE Bank Rate will end the year at 1.25% as opposed to the 2.15% currently priced by the market. If and when that penny drops, GBP could take another large leg lower and GBP/USD may end up far closer to the 1.20 level than we had originally forecast. TagsSterling | Interest Rates | Fx | Bank Of England DisclaimerThis publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more (link to: https://think.ing.com/about/content-disclaimer/)
Stocks Market: What Can We Expect From Shopify Stock Price?

Bitcoin Price (BTC/USD) Plunges, Is Crude Oil Endangered!? Awaiting Disney, AMC And Rivian Earnings | Soft US inflation could reverse risk appetite this week! | MarketTalk: What’s up today? | Swissquote

Swissquote Bank Swissquote Bank 09.05.2022 11:05
Last week closed on a negative note, as US NFP data came in stronger-than-expected, revived Federal Reserve (Fed) hawks, and sent the major US indices lower. And the new week starts on a negative note, as well, after the Chinese Li Keqiang warned that the jobs situation in China is getting ‘complicated and grave’ as the government’s zero Covid policy is taking a heavy toll on the country’s economy, and impacts the rest of the world negatively, as well. But US inflation print due Wednesday could help improving investor sentiment this week, if the data confirms a slow down in US inflation from multi-decade high levels. The next natural target for Bitcoin bears is the $30K psychological support Oil is up this Monday on G7 commitment to ban Russian oil, but Saudis cut the price of their oil due to the Chinee slow down. The US 10-year yield gains field above 3% mark, and US dollar consolidates near two-decade highs. Bitcoin dived to the lowest levels since January over the weekend. The next natural target for Bitcoin bears is the $30K psychological support. The only thing that could reverse the dollar appreciation against majors, and Bitcoin is a soft inflation read on Wednesday! Watch the full episode to find out more! 0:00 Intro 0:33 Week starts moody 1:12 Oil up 3:00 Strong jobs revive Fed hawks, but soft CPI could calm them down! 5:06 Macro events of the week 6:46 Bitcoin hits lowest since January 8:03 Earnings calendar: Lordstown, AMC, Disney, Occidental Petroleum & Rivian 8:51 End of Rivian’s lockup period, beginning of new challenge Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
The IMF Warned That 2023 Would Be Worst Than 2022, As The US, EU And China Would All See A Decline In Growth

Commodities Prices And Problems With Supplies Are Still In Charge Considering US Inflation | US corporate pricing power set to delay inflation’s decline | ING Economics

ING Economics ING Economics 11.05.2022 09:23
US small business optimism held steady in April after three consecutive falls. Nonetheless, businesses retain the ability to pass higher costs onto their customers and this will keep inflation sticky. Ongoing supply chain issues and rising fuel costs mean 2% inflation is a distant prospect Business sentiment holds steady, but firms still want to hire The recent US data has been mixed and that has helped to fuel fears that the economy could experience a marked slowdown, especially with the Federal Reserve firmly focused on inflation and hiking interest rates. Dollar strength is acting as a further headwind to growth by making US exports less price competitive in what is already a challenging external demand environment for companies. In this regard this morning’s National Federation of Independent Business survey for April was marginally better than expected at the headline level with optimism holding steady versus expectations of a fourth consecutive monthly drop. Nonetheless it is still the weakest level since April 2020 in the immediate aftermath of the pandemic striking. The details show a slight improvement in the proportion of small businesses expecting higher sales, but there was a little more pessimism on the outlook for the economy and whether it was a good time to expand. Set against this softer environment, firms are still struggling with worker shortages and are desperate to hire. The NFIB released the labour components last Thursday, which a net 46% having raised worker compensation during the past 3 months and 27% expecting to do so further. Inflation pressures show no sign of moderating Looking to tomorrow's inflation data the NFIB report shows a net 70% of companies raised their selling prices in the past 3 month - down from last month's 72% balance, but this is still the second highest reading in the survey's 47-year history. Moreover, a net 46% of firms plan to raise their prices further over the next three months (down from 50%, but this is still the 6th highest reading in the survey's history). This reinforces the message the despite concerns about where the economy is heading, businesses continue to have pricing power and highlights the breadth of inflation pressures in the economy. The ability to raise prices is seen across all sectors and all sizes of businesses NFIB price indicators show no sign of a turn in inflation Source: Macrobond, ING Inflation may be peaking, but 2% is a long way away Tomorrow's CPI report will probably show that inflation has passed the peak, due largely to lower used car prices, but in the absence of major improvements in supply chains and geopolitical tensions, the descent to the 2% target will be very slow and may not be achieved until the very end of 2023. However, with national gasoline prices hitting a new all-time high yesterday that will come as little comfort to most households. TagsUS Inflation Federal Reserve Business optimism   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Hungarian Forint (HUF) May Be Rising! ING Economics Expects Bank Of Hungary To Hike The Rate By 100bp!

Worsening (HUF) Hungarian Forint? Inflation - Can Hungarian Situation Get Any Worse? | Double-digit inflation arrives in Hungary | ING Economics

ING Economics ING Economics 11.05.2022 09:18
The pro-inflationary impact of the war in Ukraine is finally filtering through into the data. Monetary policy might shift to a higher gear Food inflation came in at 15.6% year-on-year, showing a significant acceleration 10.3% Core inflation (YoY) ING forecast 9.7% / Previous 9.1% The impact of the war is finally appearing in inflation data April's inflation data is finally showing the impact of the Ukraine war. While the March release was a relatively pleasant surprise, with only a moderate acceleration in price pressure, inflation in April was the total opposite. There has been a sharp rise in prices: on a monthly basis, it reached a 1.6% rate. The last time we had such a strong dynamic was in 2012 after a VAT increase. The bad news is that the current tide in prices is not the result of a single measure. Roughly 50% of the consumer basket items showed double-digit year-on-year inflation in April. Against this backdrop, the 9.5% year-on-year headline inflation print is hardly surprising. Main drivers of the change in headline CPI (%) Source: HCSO, ING The details Food inflation came in at 15.6% year-on-year, showing a significant acceleration. Both unprocessed and processed items are contributing to the elevated price pressure. Despite prices of some basic food being capped, there is strong repricing everywhere: the monthly food inflation is three to four times higher than usual. This is a result of several supply-side shocks (transportation, agricultural commodities, energy, wages, etc.) and probably the weak forint. The second-most important contributor behind the sharp acceleration is the other goods and motor fuel category, which covers household goods, toiletries and pharma products and goods for recreation and education. Durables are also showing a remarkable 11.1% yearly price increase, a major contributor to inflation pressure. Rising industrial producer prices are showing up in consumer prices as demand-supply mismatch prevails. Services inflation accelerated by only 0.3ppt reaching 6.3% year-on-year in April, but monthly inflation has remained much stronger than usual, pointing toward a significant repricing pattern. Only clothing, alcoholic beverages and tobacco hold back the year-on-year inflation print. The latter is only a base effect due to an excise duty hike in tobacco products carried out in April 2021. The composition of headline inflation (ppt) Source: HCSO, ING Underlying inflation reaches double-digit territory The last point also means that, as alcoholic beverages and tobacco are not part of the core inflation basket, this base effect didn’t have a beneficial effect on core inflation. While headline inflation accelerated by 1ppt, the core reading rose by 1.2ppt. With that, double-digit underlying inflation has arrived in Hungary: the Statistical Office registered a 10.3% year-on-year core indicator. The central bank’s underlying inflation indicators, which are good predictors of medium-term developments in price changes, have also moved into the double-digit category. Headline and underlying inflation measures (% YoY) Source: HCSO, NBH, ING Further acceleration ahead Inflation in Hungary is expected to rise further in the coming months, as the economy continues to show a significant demand-supply mismatch. Labour shortage, rising wages and other supply-side shocks are increasingly spilling over into consumer prices, with companies enduring significant pricing power. Recent surveys are showing that roughly 60-80% of companies (depending on their respective sectors) are planning further price rises. In light of today’s upside surprise, headline inflation will soon reach double-digits as well. The extent and timing of the peak in price pressure highly depend on the fate of price caps, but as of now, we see the peak well above 11% in the third quarter. On average, we forecast a 10% headline reading in 2022. The central bank might raise the pace As far as monetary policy is concerned, as underlying inflation is also strengthening to an extraordinary extent (1.8% month-on-month), the National Bank of Hungary will hardly have an opportunity to think about stopping the interest rate hike cycle anytime soon. In our view, the recent data will urge the central bank to rethink its tightening path both from the perspective of its length and its peak. We see a possibility that the central bank will speed up its effective rate hiking from the recent 30bp tempo to 50bp or even 75bp in May. Against this backdrop, our 8.25% terminal rate call seems outdated and we now see the peak in base and 1-week deposit rates at above 9%. TagsNational Bank of Hungary Monetary policy Inflation Hungary CPI   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
"Fight Against Inflation Is Our Primary Concern..." Central Banks Predicate

Some May Even Not Imagine How US Inflation (CPI Data) Can Affect Asian - Chinese Market And Forex Pairs With US Dollar Like USD/JPY And USD/CNH

ING Economics ING Economics 11.05.2022 13:54
All quiet in Asia ahead of US inflation In this article Macro outlook What to look out for: China and US inflation Source: shutterstock Macro outlook Global: The big story today is going to be the April US CPI release, and markets may be quite muted ahead of this. Our Chief US Economist has written about this in the context of the latest NFIB business survey, so please check out this link for more details. But to summarise, whatever happens tonight, he isn’t looking for US inflation to fall quickly. That may bring back concern about potentially more aggressive FOMC behaviour. In this vein, Loretta Mester yesterday suggested that if inflation wasn’t falling by the second half of the year, the FOMC may need to increase the pace of its tightening. US stocks managed to eke out some small gains yesterday after the big falls earlier this week. But trading was choppy, and it could have gone either way. We don’t read too much directional steer into this for Asia’s open today. G-10 FX continued to show USD support, but movements were not large. EURUSD drifted down to about 1.0530 from about 1.0560 yesterday. The AUD still looks pressured lower and is about 0.6937 as of writing. Other Asian FX was fairly muted, though note there is a BNM meeting today, so a “no-change” which is on the cards, could see the MYR softening further. Bond markets were also fairly muted. 2-year US Treasury yields edged up slightly, but the 10Y US Treasury bond yield drifted back under 3.0%. 10Y JGBs have been drifting higher – challenging the 0.25% level, and breaching it intraday, so we may be due an official response of sorts imminently.    China: April CPI and PPI inflation rates are expected to slow from March due to lower metal and coal prices and weak demand for consumer goods. We will probably see higher prices for pork and fertilizer. This set of data reflects slower economic growth resulting from the Covid-19 social distancing measures. Korea: The Jobless rate remained unchanged in April at 2.7% (vs the market consensus of 2.8%) for the third straight month, while the labour participation rate improved to 63.8% (vs 63.5% in March), indicating that the labour market continued on a recovery track. Reopening is supporting employment growth in service sectors such as retail sales, recreation, and transportation. Despite a gloomier outlook for manufacturing, employment in that sector posted a solid gain for the eighth straight month. However, one potential caveat to this month’s report was that the majority of the employment growth came from the older age group (60+) while the 30’s (supposedly the most productive group) lost the most jobs. President Yoon Seok Yeol’s party has proposed a supplementary budget plan to the government this morning. Although the size was in line with the market expectation of about KRW33tr, it is noted that the extra budget would not require additional bond issuance. More details will be released tomorrow. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM What to look out for: China and US inflation Korea unemployment (11 May) China CPI and PPI inflation (11 May) US CPI inflation (11 May) Philippines 1Q GDP (12 May) US PPI inflation and initial jobless claims (12 May) Malaysia GDP (13 May) Hong Kong GDP (13 May) US Michigan sentiment (13 May) TagsEmerging Markets Asia Pacific Asia Markets Asia Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Grzegorz Dróżdż (Conotoxia) talks midterm elections

Rising Inflation In The US Means Rising US Dollar (USD), Chinese COVID Policy Seems To Be Almost Impossible | US inflation, a make-or-break moment for investors! | MarketTalk: What’s up today? | Swissquote

Swissquote Bank Swissquote Bank 11.05.2022 11:12
It’s D-day of the week: we will see whether inflation in the US started easing in April after hitting a four-decade high in March, and if yes, by how much. A soft inflation read will come as a relief that the Federal Reserve’s (Fed) efforts to tame inflation start paying off, but any disappointment could send another shock wave to the market. In the FX, the US dollar extended gains, despite the easing yields yesterday, as the risk-off flows continued supporting the greenback For now, activity on Fed funds futures give almost 90% chance for a 50-bp hike in FOMC’s June meeting; there is a lot left to be priced for a 75bp hike, if the data doesn’t please. To avoid pricing in a 75bp hike at next FOMC meeting, we must see an encouraging cooldown in inflation. In the FX, the US dollar extended gains, despite the easing yields yesterday, as the risk-off flows continued supporting the greenback.   The barrel of US crude tipped a toe below the $100 level on news that the Europeans softened their sanctions proposal against the Russian oil The levels against the majors like euro, yen and sterling remained flat, but the positive pressure in the dollar, combined with Turkey’s unconventional monetary policy start giving signs of exhaustion. The dollar-try advanced past the 15 mark, and the government asked institutions to make their FX operations within the most liquid trading hours. Two weeks ago, the bank had revised its regulations on banks' reserve requirements, applying them to the asset side of balance sheets in order to strengthen its macroprudential policy toolkit. The latter required reserves now pressure the overnight rates to the upside – suggesting that the unconventional policy is near limits. Energy are up and down… but mostly up. The barrel of US crude tipped a toe below the $100 level on news that the Europeans softened their sanctions proposal against the Russian oil, but oil is already above the $100 this morning. The upside potential is fading due to slower global growth prospects, and the Chinese lockdown. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM Watch the full episode to find out more! 0:00 Intro 0:24 All eyes on US inflation data! 2:30 Market update 3:50 Strong US dollar threatens lira stability 5:50 Risks in energy markets remain tilted to the upside 6.35 Why Chinese zero Covid policy won’t work 8.07 Coinbase hit hard by crypto meltdown 8:39 Energy, still the best option for investors Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.  
Representatives Of The ECB Claim That By The End Of 2023, Inflation Should Have Reached The Target Level

Here Is Why US Inflation Data (CPI) Is That Important Not Only For US Dollar (USD) Its Index (DXY), But Also For Stocks, Bonds And Other Assets | Conotoxia

Conotoxia Comments Conotoxia Comments 11.05.2022 15:28
Today at 14:30 important macroeconomic data for the US economy will be published, which may also affect asset valuations outside the United States - we are talking about inflation data. In March 2022, inflation in the United States rose to 8.5 percent, which was the highest reading in 40 years. The rise in prices, in turn, may have affected several market measures. First, it forced the Fed to act, as the Federal Reserve is supposed to care about price stability and should raise interest rates if prices rise. This in turn could have influenced expectations of higher USD interest rates in the future and a strengthening of the dollar to levels last seen 20 years ago. Further expectations of rising rates could lead to an increase in bond yields, where for 10-year bonds they are in the region of 3%. The increase in bond yields, expectations of further tightening of monetary policy, and shrinking of the Fed's balance sheet, in turn, are information that could adversely affect the stock market, which in the case of the Nasdaq 100 index found itself in bear market territory. This spiral seen in many markets may continue until investors fully discount inflation, rising yields, and expectations of interest rate hikes. Interestingly, the latter had already begun to fall earlier in the week as recession fears increased. Currently, based on the federal funds rate contracts, the market is assuming a peak for hikes in mid-2023 at 3.00-3.25 percent. That's lower than the 3.5-.375 percent assumed as recently as the beginning of the month. The determinant, in turn, of whether there is a chance of full pricing for U.S. rate hikes may be where inflation will be. If this one peaks this six months and starts to fall, the market may stop assuming very aggressive Fed action. This, in turn, could bring relief to the bond market, the stock market, and also lead to the US dollar being close to its cyclical peak. Hence, today's and subsequent data on price growth in the U.S. economy could be so important. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Forex: GBP/USD. The Support Has Been Rejected 3 Times. Uptrend!

Inflation (US CPI) Rises, So Does US Dollar (USD)! (SPX) S&P 500 And Nasdaq Have Decreased! Is Hawkish Fed Going To Hunt Again? | FxPro |

Alex Kuptsikevich Alex Kuptsikevich 11.05.2022 15:36
The dollar got a fresh boost, with stocks coming under renewed pressure after a new batch of US inflation data. The annual inflation rate slowed from 8.5% to 8.3% The US consumer price index rose 0.3% in April after 1.2% a month earlier. The annual inflation rate slowed from 8.5% to 8.3% but was higher than the expected 8.1% y/y. Particularly worrying for markets is the development of core inflation. The corresponding index added 0.6% m/m and 6.2% y/y last month, higher than the expected 0.4% and 6.0%, continuing the sprawl of inflation. Higher-than-expected inflation is now positive for the dollar and weighs on equities as it suggests a more robust Fed response While the annual rate of core and core inflation seems to have peaked, higher-than-expected inflation is now positive for the dollar and weighs on equities as it suggests a more robust Fed response. With inflation far from the 2% target, the Fed will be inclined to act faster (raise rates more than 50 points at a time) or stop hiking at a higher level. A significant risk demand indicator, bitcoin, has already moved out of the range with a lower boundary in January 2021 Locally, we see a tug-of-war around the dollar against the euro and yen near the lows of the past two weeks and swings against the pound and the franc near this week’s extremes. However, a significant risk demand indicator, bitcoin, has already moved out of the range with a lower boundary in January 2021. The S&P500 and Nasdaq futures were also pushed back to this week’s lows, indicating continued bearish pressure.
The Forex Market Is Under Strong Pressure From Geopolitical Events And Statistics

Gold $1200 Scenario? After Higher US CPI Release, Fed Is Expected To Tackle Inflation, So Gold Price (XAUUSD) May Plunge Again | FxPro

Alex Kuptsikevich Alex Kuptsikevich 11.05.2022 15:38
Gold dipped to $1832 on Wednesday morning, pulling back to a critical support line in the form of the 200-day moving average, losing more than 11% from the peak levels reached in early March. Gold has been losing buyers amid a jump in US government bond yields Gold has been under systematic pressure for the past month and a half amid a rally in the dollar. In addition to this increase in the underlying price, gold has been losing buyers amid a jump in US government bond yields. However, it is too early to talk about a break in the uptrend in gold, but only a retreat into deep defences ahead of essential data. Most of the time, the correlation between inflation expectations and long-term bond yields governs the dynamics in gold. Weak real bond yields lead to a pull in the precious metal as investors look to protect the purchasing value of capital.  A significant event for the gold outlook is today’s US inflation release With high interest rates and inflation control, investors prefer to earn yields in bonds by selling off gold. A significant event for the gold outlook is today’s US inflation release. The market reaction to this event could be decisive for gold in the coming days or weeks. If gold manages to develop a pullback from current levels, we could see a sharp increase in buying over the next few days Consolidation below $1830 on the day would be an essential bearish signal that could rapidly decline towards $1800. Moreover, there would be an immediate question of double-top formation through 2020 and 2022 peaks as an early signal of a long-term downward trend with a potential of $1200. If gold manages to develop a pullback from current levels, we could see a sharp increase in buying over the next few days, as we did in early February and late November. But unlike those episodes, this time, the bears might not wait for a quick reversal, and a further rally would be an important signal that gold continues to claw its way out of the prolonged correction. In this case, the nearest stops might be the levels near $1900, and further, the market might quickly target a renewal of the historic highs above $2075 before the end of the year. 
Forex: Could Incoming ECB Decision Support Euro?

Although US Bonds Yields May Be Higher, Current Circumstances Are Not Clear As US CPI Release And Correlated Fed Interest Rate Decision In June Are To Shape Markets | ING Economics

ING Economics ING Economics 11.05.2022 17:15
The inflation concerns are easing ahead of today’s US CPI reading. We doubt central bankers will back down so soon, however. Markets are coming around to our view that a peak is near in yields, but we think it might still be a couple of months away In this article US 10yr edges back below 3% on remarkable easing in inflation expectations The inflation scare is easing but beware of circular reasonings Global growth gloom means holding psychologically important levels will be more difficult Today’s events and market views The peak in yields may be near US 10yr edges back below 3% on remarkable easing in inflation expectations The juxtaposition between rising real rates and falling inflation expectations remains, and over the past 24 hours the fall in inflation expectations has been dominant. And that’s why the US 10yr yield has dipped back below 3%. Right now, US 10yr inflation expectations are in the region of 2.65%. They were in excess of 3%, albeit briefly, a few weeks back, at which point talk of a 75bp hike in June were sounding like a solid call. Now that inflation expectations are well down, the 50bp promised looks fine. "10yr real rate in the area of 1% would not look out of whack" Meanwhile the 10yr real yield is now above 30bp. Add that to the inflation expectation and we get the sub-3% 10yr Treasury yield. The move higher in the real yield has been spectacular. Back in March it was deeper than -100bp. The move to 30bp is a sign that the economy has morphed away from the need for ultra-loose policy. And a continued move higher takes it towards a more normal footing. In fact a 10yr real rate in the area of 1% would not look out of whack. If we got there, inflation expectations would fall far more. The adjustment higher in real yields is a threat to risk asset valuations Source: Refinitiv, ING   Today’s US CPI number will be important, but not determinative. In other words it should not have a material impact on the 10yr inflation expectation. That said, if it’s an outsized / surprise number, it’s then more likely to have an impact out the curve. Our central view is in line with the market view, where we do see a fall in contemporaneous inflation, consistent with the recent tendency for inflation expectations to ease lower. We’ve been surprised by this though, and think it’s too early to call it a trend. The inflation scare is easing but beware of circular reasonings The ‘peak inflation’ narrative should receive a boost from slowing US annual headline and core inflation readings today but we would be cautious about chasing the move lower in rates. As always, forward-looking markets could apply a heavy discount to central bank rhetoric but an acceleration in monthly core CPI means Fed officials are unlikely to change tack just yet. One should also remember that the decline from the inflation peak will be very slow indeed, keeping pressure on the Fed to act. Swaps show inflation is no longer the market's only concern Source: Refinitiv, ING   US CPI and Eurozone HICP swaps have dropped significantly this month Further afield, inflation compensation offered by US CPI and Eurozone HICP swaps has dropped significantly this month. Should markets conclude that central banks can now afford to be less hawkish? Only up to a point. To some extent, the drop in inflation swaps is owing to a deteriorating global macro environment, but the post-FOMC timing of this drop also suggests that it has at least as much to do with expectations that central banks will deliver on expected tightening. We would be careful with such circular reasonings. Global growth gloom means holding psychologically important levels will be more difficult For an example of the doubt setting in investors’ mind about central banks’ ability to tighten policy, look no further than yesterday’s better-than-expected German (Zew) and US (National Federation of Independent Business) sentiment indicators. None of the readings was enough to alleviate global growth gloom but the NFIB details in particular could have brought inflation fears back to the fore. We suspect it is too early to call the end of the hawkish re-pricing, with central bankers still very much on their front-foot when it comes to delivering monetary tightening. Bonds risk failing a psychologically important test Source: Refinitiv, ING   We have sympathy with the growing view that there is a short time limit to this tightening cycle We think a better candidate for a peak in yields in this cycle is during the third quarter of this year, after the ECB’s expected first hike and after the couple of additional 50bp hikes the Fed has committed to. This being said, turning points are notoriously difficult to pick and we have sympathy with the growing view that there is a short time limit to this tightening cycle. Should 10Y bonds fail to hold on to their recent jump above the psychologically important levels of 3% for Treasuries and 1% for Bunds, it may take a lot of good news to test these levels again. Today’s events and market views Germany (10Y) and Portugal (8Y) make up today’s Euro sovereign supply slate. This will come on top of a dual tranche NGeu syndicated deal in the 3Y (new issue) and 30Y (tap) sectors. In the US session, the Treasury will auction 10Y notes. The main release of note in the afternoon will be the April CPI report. Consensus is for the annual readings to cool down from the previous month but a monthly acceleration in core could muddy the picture for rates. There is also an extensive list of ECB speakers on the schedule, culminating with interventions from Christine Lagarde and Isabel Schnabel. TagsRates Daily   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Cautious optimism

ECB's Lagarde Teases Rate Hike, Bitcoin Price (BTC/USD) Defends From Deep Plunge

Craig Erlam Craig Erlam 11.05.2022 17:06
Stock markets are pushing cautiously higher again on Wednesday as investors await a huge inflation report from the US ahead of the open on Wall Street. The report is expected to be the first that will indicate inflation has peaked and a sharp decline is underway. That doesn’t mean inflation is expected to return to target any time soon but it will come as a massive relief to investors, households and businesses alike after months of watching price pressures accelerate higher. The fear is that the data today doesn’t tell us what we want to hear. A slower deceleration or worse, none at all, would be an enormous blow and I expect equity markets would feel the full effects of it. The extent to which that would be the case would obviously depend on how bad the data is. On the flip side, considering the shock to equity markets recently, a low reading that marks the end of the ascent and falls in line with the view that price pressures will ease considerably in the months ahead could be very positive for stock markets. Investors will be hoping the inflation data can provide a tailwind for equity markets for the rest of the year and perhaps even allow for interest rate expectations to be pared back. There may be some scarring from the last six months which may stop investors from getting too excited initially but indices are at a steep discount now after recent moves and a low inflation reading could tempt some back in. Lagarde drops subtle rate hike hint After months of pushback, it seems the ECB is forming a consensus around raising interest rates in the coming months. Noises from policymakers in recent weeks have alluded to that and Christine Lagarde today ever so slightly deviated from her policy of ambiguity to hint at the possibility of a July hike. That would align with where markets stand on the lift-off and make the ECB the latest central bank to abandon its transitory argument and belatedly start tightening. Whether Europe will pay the price for their hesitation, as may be the case in the UK, US, New Zealand and many other countries, isn’t clear. It may well depend on how swiftly it agrees to raise rates and how entrenched inflation becomes. There’s no doubt they don’t quite have the problem the UK and US have, for example. Bitcoin stays above crucial support as Terra plunges Bitcoin survived a brief dip below USD 30,000 on Tuesday and is making small gains so far today, easing pressure on the critical support in the process. It could have been much worse for bitcoin if it got caught up in the Terra debacle, which is down more than 50% on the day despite being a stablecoin by definition. That it hasn’t sent shockwaves throughout the broader crypto space will come as a relief to bitcoin HODLers for now. But that could change and a break below USD 30,000 could make them very uncomfortable. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The US Has Again Benefited From Military Conflicts In Other Parts Of The World, The Capital From Europe And Other Regions Goes To The US

Fast rising U.S. CPI data adds to equity market woes | Saxo Bank

Saxo Bank Saxo Bank 12.05.2022 16:22
Summary:  The larger than expected April U.S. CPI and core CPI reversed the attempt of the equity market to rebound and brought major U.S. equity indices firmly back onto their down trends. The surprising strength in services is particularly worrying and the money market is pricing in 143 bp hikes (i.e. almost three 50 bp hikes) in the next three FOMC meetings. What’s happening in markets? What spooked markets overnight was US inflation rose more than expected, which gives the Fed more ammunition to rise rates (more than they mapped out). Rising rates will cause further carnage, as when rates rise, bond yields tend to rise, which may trigger the US 10-year bond yield, to rise back over 3%,  (which is a better yield than the Nasdaq and S&P500 combined – just think about that for a second). As such the Nasdaq (with an average dividend yield of 0.9%) continued to fall and lost 3.2%. The Tech heavy index is down 28% from its high, and the technical indicators suggest it will likely continue to fall on a weekly and monthly basis, which supports our bearish fundamental view. The S&P500 lost 1.7% on Wednesday, (it has an average dividend yield of 1.66%). The U.S. treasury yield curve flattened 13 bps since yesterday’s CPI release.  The 10-year yield fell 10 bps to 2.89% while the 2-year yield rose 3 bps to 2.64%. It is worthwhile to note that the 10-year yield has fallen 30 bps in just three days from its May 9 high of 3.20%.  The treasury market is sending signals of investors being worried about a sharper slow-down in the U.S. economy.  In Australia, the Aussie share market fell 1% and hit a support level 6,991 points, but energy companies hit new highs. If the ASX200 falls further bellow this level, it could fall 2.2% to the next support (at 6,837 points). The technical indicators, suggest this could occur, with the MACD and RSI suggesting a weekly and monthly could pull back. We ideally need to see better than expected news to break the cycle. All in all though, it’s worthwhile continuing to back those stocks that are outperforming and are likely to outperform this trajectory, with rising cashflow and earnings growth. Just take a look at today’s best performing stocks as an example. In Energy there is Ampol (ALD) up 3.5% with its shares hitting a 2-year high, and Viva Energy (VEA) up 3% to its highest level since 2019. China and Hong Kong equity markets rebounded from their lows. After a weak opening, stocks traded in Hong Kong, Shanghai and Shenzhen rebounded from their lows.  Hang Seng Index (HSI.I) was down  1% and CSI300 (000300.I) recouped all its early loss to close the morning session flat.  Infrastructure related A share, in particular county seat modernization names rallied.  Sunac China, China’s 4th largest property developer, failed to make a coupon payment of a dollar bond.  The news pushed down the shares of other Chinese developers traded in Hong Kong. Asia stocks follow Wall Street down. Japan’s Nikkei (NI225.I) was down 1% in the Asian morning following US CPI release overnight and the slide in US indices overnight. Steel makers like Japan Steel (5631) and Kobe Steel (5406) surged in a big way after earnings results and profit outlook was better than expected. Singapore’s STI Index (ES3) was also in the red. Singtel (Z74) was up over 1% leading on the index as it broadened its 5G network to underground metro line. Chinese electric car maker Nio (NIO) is going to start trading on the Singapore stock exchange form May 20. FX range trading continues. The USD had a hard time reacting to the US inflation print, suggesting range trading patterns may continue for now. While USDJPY slipped below 130 on lower real yields, EUR was still unable to overcome inflation and growth worries even with Lagarde hinting at a rate hike for July on stickier inflation, it dipped slightly to remain above 1.05 support. AUDUSD’s move above 0.7000 was not sustained and NZDUSD returned to sub-0.6300. GBPUSD is making a steadier move below 1.2300 ahead of UK GDP release. What to consider? US inflation may have peaked but the descent will be slow and painful. April U.S. CPI came at 8.3% YoY.  Core CPI, which excludes food & energy,  was 6.2% higher from a year ago.  Reiterating what we said in this piece, while headline inflation may be showing signs of peaking as base effects turn, it is likely to stay at these elevated levels. It was important to note that the 0.6% monthly increase of Core CPI  has brought inflation back to the uncomfortably high 0.5%-0.6% range from October 2021 to February 2022, after a temporary moderation in March.  Another worrying sign was the +0.7% core service price, which was the highest since 1990. Regular rents and owner-equivalent rents rose faster than expected and prices of reopening related spending, such as airfares and hotel lodging rose sharply. The US consumer remains very strong, which gives pricing power to companies. Services inflation will also broaden further, suggesting we are in for a higher-for-longer mode. Take into the mix, a prolonged war, sustained disruptions from China and still-tight labor market. This means Fed’s hawkish rhetoric is set to stay. The money market has moved towards pricing in a 50bp hike in the Sept FOMC on top of the two 50bp moves anticipated for June and July. Oil bulls pin their ears back: Both the Saudi oil Chief and UAE have warned that all energy sectors are running out of capacity, which supports our view that the oil price will hit higher levels over the longer term and also once China is out of lockdown. That being said, Saudi Aramco (ARAMCO) has strengthened regardless, along with many other oil companies, as their cashflows are rising at record paces. ARAMCO has now overtaken Apple as the world’s most valuable company. As we have been saying for some time now, it’s wise to consider revisiting oil stocks and oil ETFs. For instance, the ETF OOO that tracks the oil price, looks like it could break above a key trigger level and re-enter another uptrend, so that’s worth consideration. Also have a look at your favorite large oil stocks with rising earnings growth. Malaysia’s rate hike will be a signal for the region. Bank Negara Malaysia started the rate hike cycle yesterday as we had expected, turning away from its patient stance in April. This comes on the back of a similar rate increase decision from the Reserve Bank of India last week in an out-of-cycle meeting. Ringgit interest rate swaps are now pricing in over 75-basis points of rate hikes over the next 6 months. This similar surge in hawkish pricing is being seen across emerging Asia, suggesting more pain for EM bonds. Potential trading ides that could be worth your consideration? US dollar and US dollar ETFs move higher. As mentioned last week the USD dollar is supported higher along with US dollar ETFS. The Invesco USD Index Bullish Fund ETF closed at a brand new record high overnight. BetaShares USD ETF is also hitting higher levels and looks like. As previously mentioned, also as our head of FX Strategy also said, we are bullish on the USD, as higher volatility and bond yield are expected. This supports the USD and USD ETFs. BTC s in a bearish long term downtrend pressured by long term yield rising. For investors it could be worth considering shorting Bitcoin given rates are likely to continue to rise for now. Buy USDHKD 12-month forward. HKD interest rates are set to rise towards or even go above those of the USD as the Hong Kong Monetary Authority (HKMA) withdraw HKD liquidity in its move to buy HKD against USD.  As the USDHKD spot rate touches 7.85, which is the weak-side convertibility undertaking of the HKMA, the HKMA intervened by buying HKD versus the dollar this morning.  Given the strength of the US dollar and the weak economic sentiment in Hong Kong and the mainland, it is likely that the HKMA will have to continue to intervene and withdraw HKD liquidity further.  Given the ample ammunition that the HKMA has in defending HKD’s Linked-exchange Rate Regime, investors who are interested in betting on persistent weakness in the HKD would be better off to take a long position of USDHKD 12-month forward (currently at around 7.83) which can go up as HKD interest rate rise even when the spot being capped at 7.85.  Key economic releases this week: Thursday: India April CPI, US April PPI Friday: US Univ of Michigan sentiment, US import price index   Key earnings release this week: Thursday: Verbund, KBC Group, Brookfield, Fortum, Siemens, Allianz, Merck, Hapag-Lloyd, RWE, Atlantia, Snam, NTT, SoftBank Group, Aegon, Naturgy Energy, Motorola Solutions Friday: Deutsche Telekom, KDDI, Honda Motor, Alibaba   For a global look at markets – tune into our Podcast.  Source: Saxo Bank
Record-breaking but near-peak inflation in Britain

Record-breaking but near-peak inflation in Britain

Alex Kuptsikevich Alex Kuptsikevich 19.05.2022 08:40
UK consumer prices rose by 2.5% in April, the second-biggest monthly gain in the indicator’s history since 1988. Annual inflation jumped from 7% to 9%, unseen in the indicator’s history. Metals, meanwhile, have withdrawn from the highs The longer-established retail price index last saw a high annual growth rate (11.1% y/y in April) in 1982, while such a big monthly jump (3.4% m/m) was last observed in 1980. However, despite the horror that these figures represent, there are still indications that the UK’s peak annual rate of inflation will be much lower than in the 1980s (22%) or 1970s (27%). While Output Producer Prices are showing an acceleration in the annual growth rate, rising to 14%, Input PPI has slowed from 19.2% to 18.6%. Although remaining volatile in recent weeks, oil and gas have regularly retreated from highs, limiting upward pressure on prices. Metals, meanwhile, have withdrawn from the highs. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM Early hints that UK inflation may be slowing in the coming months may allow the Bank of England to raise the rate by 25 points At the same time, there are growing questions about final global demand, which will constrain producers in shifting costs to consumers. Early hints that UK inflation may be slowing in the coming months may allow the Bank of England to raise the rate by 25 points at its next meeting in mid-June and not copy the Fed’s 50-point move. This is moderately negative news for the British currency, which started to retreat from the $1.25 area on the data after a 2.9% rally from last Friday’s lows. Short-term traders should pay particular attention to the 1.2350 area. Read next: Altcoins: What Is Litecoin (LTC)? A Deeper Look Into The Litecoin Platform| FXMAG.COM Already, a dip lower this week would suggest that the brief period of recharging dollar bulls has ended. In this case, GBPUSD could quickly fall below 1.2000, making the 1.1500 area a potential ultimate target for this attack Follow FXMAG.COM on Google News
Eurozone: We Will Be Able To Have A More Detailed Look At The Economy As PMI Data Is Released

Rates Spark: The rates upside remains real | ING Economics

ING Economics ING Economics 20.05.2022 08:41
Completing the shift of the market narrative towards growth concerns, bonds are reasserting their role as safe havens. The European Central Bank minutes confirmed the Council's desire to act faster, also with an eye on still ultra low real yields  Risks remain to the upside for rates Bonds' negative correlations with risk assets consolidates amid growth concerns As markets continue to trade in a risk-off fashion, bonds have managed to reassert their role as safe havens. The pattern of bond curves consistently rallying flatter as risk assets sell off has only reestablished itself over the past few sessions. In a way this dynamic completes the transition of the market narrative toward growth concerns, away from being dominated by central banks' prospective tightening lifting market rates out the entire curves. bonds have managed to reassert their role as safe havens This does not mean that data releases couldn't shift the focus again. Next week will offer some opportunities with the release of the flash PMI surveys for instance. And if the Fed deems inflation (expectations) are not coming down fast enough, it may well use the FOMC minutes next week to signal more hawkish moves. The 75bp-hike discussion is not entirely off the table. Unlike the ECB, the Fed has used its meeting minutes as a more active communications tool, such as outlining its plans for the balance sheet run-off. We will also watch the PCE deflator, the Fed's preferred inflation gauge at the end of next week. Risk-off drives curves flatter Source: Refinitiv, ING ECB minutes, outdated but also highlighting the upside in rates The ECB minutes have been overtaken by the quick evolution of ECB communication since the last meeting. The indication now is that a majority of the Council is backing ending net asset purchases in June and hiking for a first time in July is already common place. And markets are attaching some probability to hikes larger than 25bp. The ECB has to increasingly grapple with potential de-anchoring of inflation expectations That does not mean that the known objections of the Council’s doves are invalid: too fast tightening being counterproductive, weighing on growth without being able to do anything about inflation driven by supply shocks. The line of reasoning still holds and explains market concerns reflected in current curve flattening. But the ECB has to increasingly grapple with potential de-anchoring of inflation expectations with some of the related measures already displaying notable shifts. This shift in some inflation expectation measures had been outlined by Isabel Schnabel in one of her more recent speeches. She had also highlighted the still very low level of real yields. This hawkish argument was also found in yesterday’s minutes, with real yields remaining low while the rise in nominal yields was not enough to dampen aggregate demand and bring down inflation in the medium term. Read next: Altcoins: What Is Litecoin (LTC)? A Deeper Look Into The Litecoin Platform| FXMAG.COM EUR real rates have a long way to go Source: Refinitiv, ING   It is worth noting that back around the April ECB meeting the 10Y swap rate was just below 1.6% versus a current level of 1.65%, although following a decent rally after a brief excursion above 2% earlier this month. Real rates remain deeply negative regardless of the maturity, and if this is a measure considered instrumental at reining in inflation over the medium term, then we may have to reckon with more upside to rates. The important question is whether the ECB will have enough time to realize its goals.   The ECB's "separation principle" is still lacking detail The "separation principle" referenced in the ECB accounts states the idea that monetary policy could be set independently from any measures designed to avoid disruptions triggered by any such policy tightening. More specifically to the current situation, Eurozone sovereign bond spreads could be managed while the ECB starts hiking. However, as of now the ECB has still not provided any details on how such a tool could look in practice. Beyond stating the need to keep flexibility and pointing to the potential use of pandemic emergency purchase programme reinvestments, it appears there is no desire to have a broader discussion on the topic just yet. With ECB plans still vague, Italian bonds especially remain vulnerable With ECB plans still vague, Italian government bonds especially remain vulnerable. In the current risk-off environment Italian bonds are still positively correlated with Bunds, ie, they do not trade as risk assets, but the spreads have started to rewiden towards 195bp in 10-year maturities. We still think the market could test out widening this spread towards 250bp before the ECB steps in. ECB plans remain vague, leaving Italian bond spreads vulnerable to further widening Source: Refinitiv, ING Today's events and market views In terms of data and events it will be a quieter session today. The main focus will be on central bank speakers with the ECB's Muller, Kazaks Lane, and Centeno all scheduled for the day. In the UK we will hear from the Bank of England's Chief Economist Huw Pill. Main data of note is the Eurozone consumer confidence. In this shaky risk environment, we expect bonds to retain their poise. It would take a lot of good news for yield upside to resume at the long-end, but central bankers should keep the heat on shorter rates. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Follow FXMAG.COM on Google News
Hungarian Labour Markey Data And Turkish Monetary Policy Are Going To Arouse Our Interest | Key events in EMEA next week - 19/05/22 | ING Economics

Hungarian Labour Markey Data And Turkish Monetary Policy Are Going To Arouse Our Interest | Key events in EMEA next week - 19/05/22 | ING Economics

ING Economics ING Economics 19.05.2022 23:47
Labour market figures in Hungary and Turkish policy rates are the key releases to look out for next week The Central Bank of Turkey Content Hungary: Double-digit wage growth expected in March Turkey: Policy rate to remain on hold Hungary: Double-digit wage growth expected in March Next week we will see the latest set of labour market data in Hungary. After a significant jump in wages in February due to a six-month bonus payment to the armed forces, we expect a more moderate growth rate in March. However, due to the labour shortage and the minimum wage increase, this moderate rise will still be well into double-digit territory, around 14% year-onyear. We don’t see any significant change in the unemployment rate as the latest surveys show that companies are still complaining about a lack of labour and are ready to hire new workers. Read next: Altcoins: What Is Litecoin (LTC)? A Deeper Look Into The Litecoin Platform| FXMAG.COM Turkey: Policy rate to remain on hold Recent Central Bank of Turkey moves that 1) tightened reserve requirements to curb TRY commercial loan growth and 2) aimed to encourage a higher take-up of FX-protected deposits on the retail side and strengthen its FX reserves moves, signal that there is no reason to expect the bank to change its stance and policy rate in the near term. This is despite ongoing challenges to external balances and the inflation outlook. Given this backdrop, we expect that the policy rate will be kept unchanged at 14%. Read next: Altcoins: What Is PancakeSwap (CAKE)? A Deeper Look Into The PancakeSwap Platform| FXMAG.COM EMEA Economic Calendar Source: Refinitiv, ING, *GMT TagsTurkey Hungary EMEA Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Outlook 2023: The Major Trends And Themes For The Coming Year

Inflation - Poland: Consumption boom and upward price pressures continue | ING Economics

ING Economics ING Economics 23.05.2022 16:30
April retail sales growth was supported by low base effects, “consumption smoothing” by domestic consumers as well as purchases by and for refugees from Ukraine. Construction output growth eased and has serious headwinds ahead. In June, the MPC may hike the main policy rate by 100bp in order to curb inflationary pressure A tight labour market should keep CPI inflation elevated in Poland Strong retail sales from a low reference base The consumer boom continues. In April, retail sales jumped by 19.0% year-on-year (ING: 16.7% YoY; consensus: 16.1% YoY). Such a strong annual growth was facilitated by a low reference base from April 2021, but that is not the only explanation for the strong reading. Retail sales, %YoY Source: GUS.   Buoyant consumer spending is supported by solid domestic demand. Soaring prices have not significantly reduced purchases as consumers continue to spend despite higher price levels. The monthly seasonally-adjusted real data for different sales categories looks robust. This is all happening despite high inflation, very poor consumer sentiment, and uncertainty caused by war. Demand for goods is fuelled by rising wages and fiscal expansion, including tax cuts.   The inflow of refugees from Ukraine is an additional boost to consumption, particularly in sales of clothing and footwear (up by 121.4% YoY). The high volatility of sales in this category is also linked to the lifting of Covid-19 restrictions.   Implied retail sales deflator increased to 12.1% YoY in April from 11.3% YoY in March. Consumer demand remains robust and high price pressures persist. Construction activity slows amid declining home sales Signs from construction are clearly less optimistic as activity softened visibly last month. Construction output rose by 9.3% YoY vs. an increase of 27.6% YoY in March (ING: 16.6%YoY; consensus: 18.7%YoY). Seasonally-adjusted data points to a 5.1% MoM decline. The decline in activity was broad-based, however, the smallest monthly drop was reported in civil engineering, due to ongoing spending of local and EU funds on infrastructure. The coming months will be tough for residential construction due to: (1) the hit to housing demand from higher interest rates and more restrictive regulations, (2) the sharp upswing in prices of materials, (3) mounting shortages of labour, including outflows of Ukrainian workers and (4) elevated uncertainty linked to the war in Ukraine. Construction output, 2015=100 (S.A.) Source: GUS. Bottom line The beginning of 2Q22 brings buoyant consumer demand and persistently high price pressures. Retail sales data, although somewhat distorted by a low reference base, points to strong consumer demand. This could fuel second-round effects (producers passing higher costs onto output prices). The scale of upward pressure on producers’ costs is reflected in the PPI index, which jumped by 23% YoY in April, so companies have higher costs, which should drive up inflation in coming months.   Data on retail sales, PPI and wages provide strong arguments for further interest rate hikes. The MPC should take further policy action in order to prevent inflation from spiralling. In June, the MPC may hike the main policy rate by 100bp. We still see the NBP reference rate at 7.5% this year and the terminal rate at 8.5%, with upside risk. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Craig Erlam and Jonny Hart talk Fed minutes, Bank of Korea decision and more - Oanda Market Insights Podcast

Indonesia’s central bank keeps rates unchanged, citing global growth concerns | ING Economics

ING Economics ING Economics 24.05.2022 10:16
Bank Indonesia opted to hold out on rate hikes for now, keeping rates untouched to bolster the economic recovery Bank Indonesia Governor Perry Warjiyo has hinted that he will consider tightening policy if inflation becomes a problem 3.5% BI policy rate   As expected Central bank remains unfazed by simmering inflation pressures Bank Indonesia (BI) kept policy rates unchanged at 3.5%, matching the market consensus. BI Governor Perry Warjiyo cited concerns about the pace of global growth suggesting that Indonesia’s ongoing economic recovery would need support from monetary authorities. BI retained both growth and current account projections from the previous meeting but recognised the threat of rising price pressures.  Warjiyo indicated that inflation would remain under control although he admitted that inflation expectations warranted monitoring. BI may have felt less pressure to hike policy rates today after fiscal authorities rolled out a subsidy package to help contain the recent increase in food and energy prices.  Inflation remains on the uptrend but BI appears confident that fiscal measures can contain price pressures Source: Badan Pusat Statistik Bank Indonesia enacts dovish pause We had expected BI to keep policy rates unchanged at today’s meeting, however we believed that Governor Warjiyo would at least set the table for a June rate hike. Warjiyo did the exact opposite by pledging sustained support for the economic recovery and citing Indonesian rupiah (IDR) stability.  It appears the central bank remains confident that inflation can be contained by subsidies rolled out by fiscal authorities and that IDR would remain supported by a healthy trade surplus in the near term. As such, it appears BI is in no hurry to hike policy rates in the near term unless we see a substantial pickup in core inflation in the coming months and or heightened weakness from IDR. With BI enacting a dovish pause, expect IDR to come under some pressure as BI opts not to join the rate hike camp for now.      Read this article on THINK TagsInflation IDR Bank Indonesia Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Grains Sector Saw Continued Demand| Acceleration In The Sale Of Gold

Crude Oil And Price Of Gold (XAU/USD) Head Higher | Oanda

Jeffrey Halley Jeffrey Halley 25.05.2022 14:24
White House unnerves oil markets Oil prices continued to range trade overnight, finishing almost unchanged in New York. Asia, though, has seen both Brent crude and WTI rise. A couple of items seem to be behind the move. A sharp 4.20 million drop in gasoline inventories late in New York from the API Inventory data is likely supportive, with gasoline prices becoming a major issue in the US. Following on from that, White House officials explicitly refusing to say possible crude export restrictions were off the table appears to have spooked Asian suppliers. The last thing the world needs right now is US crude oil export restrictions with global supplies already tight. That saw both Brent crude and WTI spike 1.0% higher in early Asian trade, although those gains have eased as the session has gone on. Brent crude is 0.90% higher at USD 114.70 a barrel, and WTI is 0.65% higher at USD 110.90 a barrel. The White House likely needs to “clarify” its stance, least it creates unintended consequences by pushing crude prices higher. Brent crude, notably, is testing multi-week resistance today. Brent crude is testing resistance at USD 114.70 today, which is followed by USD 116.00, with support at USD 112.00. Failure of USD 116.00 could set up a retest test of my medium-term resistance at 120.00. ​ WTI is taking comfort from the White House stance and is sitting in a USD 108.00 to USD 112.00 a barrel range. Nevertheless, a topside breakout by Brent crude will almost certainly drag WTI higher as well, precisely what President Biden doesn’t want. Gold rises once again Gold had another decent overnight session, buoyed by lower US yields and a still-weakening US Dollar. Gold finished 0.69% higher at USD 1866.50 an ounce. In Asia, some US dollar strength has seen it weaken slightly by 0.40% to USD 1859.00 an ounce. Overall, although I acknowledge gold’s upward momentum, I remain sceptical of its longevity until it manages to hold on to material gains in the face of US dollar strength. Read next: (TRX) TRON USD Decentralised Blockchain Platform That Focuses On Entertainment And Content Sharing. Altcoins: A Deep Look Into The TRON Network | FXMAG.COM The technical picture continues to remain supportive, and it seems only a marked US dollar recovery will cap gold’s rally. Gold took out resistance at the double top at USD 1865.00 an ounce which becomes intraday support, followed by USD 1845.00 and USD 1840.00 an ounce. It should now target USD 1886.00, its 100-day moving average. That would open up a test of USD 1900.00, although I suspect there will be plenty of option-related selling ahead of that level. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News
Bank Of England Is Expected To Choose Between 50 and 75bp, Ethereum Arouses More And More Discussions As Merge Is Around The Bend

What's The Future Of British Pound (GBP)? Stocks: Snap Has Fallen! How Far Will New Zealand Dollar Go!? | Least worst choices | Oanda

Jeffrey Halley Jeffrey Halley 25.05.2022 11:05
RBNZ hikes by 50-bps The Reserve Bank of New Zealand has raised policy rates by 0.50% to 2.0% this morning, with Governor Orr setting a hawkish tone in the press conference afterwards. In the statement itself, the RBNZ’s “least worst choices” policy seemed to imply that although external risks remained, the domestic economy was strong and could tolerate tighter monetary conditions. Mr Orr seemed to be saying much the same, suggesting that terminal rates could go above 3.0% and would get there sooner, rather than later. We’ll see just how strong the New Zealand economy is in due course, but a hawkish RBNZ has seen the New Zealand dollar rally by 0.70% to 0.6505 today, making it the biggest currency gainer in Asia today. Elsewhere, Singapore’s GDP growth came in tight on expectations, rising by 3.70% YoY for Q1. With inflation data yesterday also less worse than expected, expectations for another unscheduled tightening by the Monetary Authority of Singapore have receded for now. That may bring some relief to the Malaysian ringgit, which has fallen to 3.20 against the Singapore dollar. Snap Has Fallen In Malaysia itself, Inflation data for April continues to remain benign as domestic demand stays subdued. Inflation YoY rose by just 2.30% and will leave Bank Negara, like Bank Indonesia yesterday, in no hurry to tighten monetary policy. Ominously though, the Malaysian ringgit has shown no strength versus the US dollar. USD/MYR remains at recent highs at 4.4000 even as the greenback is experiencing an extended bull market correction versus the G-10 and EMFX elsewhere. If the US dollar turns higher once again, and the MYR resumes its sell-off, Bank Negara’s hand might be forced. Overnight, the recession word weighed on stock markets once again. European PMI data was a mixed bag. Manufacturing PMIs held steady, while Services PMIs fell as consumer demand takes a hit from the rise in the cost of living. That wasn’t enough to stop the euro rally, powered by suddenly hawkish ECB heavyweights. Bank of England, has already signalled a white flag on bringing down inflation The picture was rather grimmer in the United Kingdom where the most honest central bank in the world, the Bank of England, has already signalled a white flag on bringing down inflation and pencilled in a recession next year. UK Manufacturing PMI held steady at 54.6, but Services PMIs plummeted to 51.8. The UK is facing a winter of discontent as the cost of living soars, with the railways RMT union voting to strike over pay negotiations. Expect more of this going forward. Additionally, the Chancellor is apparently preparing to widen the scope of the windfall tax on energy companies, probably to help pay for his cost of living mini-budget. UK stock markets didn’t like that. Finally, the “party gate” report on those lockdown wine frenzies in the No 10 garden is due for release today, potentially putting more pressure on PM Johnson’s leadership. ​ Little surprise that the sterling slumped versus the euro and the US dollar overnight. In the United States, the recession world hit particularly hard after the Snap Inc. induced meltdown by Nasdaq stocks overnight. US New Home Sales plummeted to 591,000 in April, while Richmond Fed Manufacturing slumped to -9 in May. The S&P Global Services Flash PMI for May fell to 53.5, with Flash Manufacturing easing to 57.5. It was the new home sales that really frightened the street, though, as house building, and its ancillary services and suppliers are a good chunk of US domestic GDP. Soaring mortgage interest rates and petrol prices appear to be doing a lot of the Fed’s work for it before it even gets started. Read next: (TRX) TRON USD Decentralised Blockchain Platform That Focuses On Entertainment And Content Sharing. Altcoins: A Deep Look Into The TRON Network | FXMAG.COM If there is one takeout from all of this for me, it is that rising inflation and borrowing rates are already crimping the demand side of the equation. Unfortunately, we are seeing very little sign of price pressures reducing due to a combination of factors, all of which have been thrashed to death here and in research everywhere. The uncomfortable reality is that central banks are going to be forced to continue the tightening path, even as growth slows around the world, because inflation has proven sticky and not transitory. That is the least worst choice central banks need to make in a stagflationary environment. I am asked every day if we have seen the low in the equity market sell-off. Hopefully, I have answered the question. US President Joe Biden’s trip around Asia continues Finally, US President Joe Biden’s trip around Asia continues. Unfortunately, with its emphasis on containing China and hawking a trade agreement empty of potential access to the US domestic market (Congress needs to approve that), the trip is not going to make much headway in re-establishing US leadership in the region. Asia really needs to see the colour of America’s money. Furthermore, the reliability of the US as a partner has taken a further hit today, with White House officials explicitly refusing to rule out the possibility that the US could enact crude oil export restrictions to help cap energy prices domestically. The US doesn’t have a crude oil problem, it has a refining and transportation problem, but let’s not let facts get in the way. I have warned about food nationalism previously, but if President Biden prioritises November’s mid-term elections over the economic war with Russia, and supporting Europe, it really is every man for himself globally. I can’t see that being positive for equities anywhere, or European asset markets full stop, or for Ukraine. Only the Kremlin is likely to be popping champagne as the US does Russia’s divide and conquer for them. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News
Fed And US Dollar (USD) Are All About Mixed Feelings, Christine Lagarde And ECB In General May Support Euro Even In July. BoE's Bailey Also Teases A Rate Hike. XAU, XAG And Crude Oil Went Higher As USD Weakened | OneRoyal

Fed And US Dollar (USD) Are All About Mixed Feelings, Christine Lagarde And ECB In General May Support Euro Even In July. BoE's Bailey Also Teases A Rate Hike. XAU, XAG And Crude Oil Went Higher As USD Weakened | OneRoyal

OneRoyal Market Updates OneRoyal Market Updates 30.05.2022 10:14
Weekly Recap It was another bearish week for the US Dollar as the greenback continued to sell off from YTD highs. The FOMC meeting minutes, released mid-week, did little to inspire a fresh rally in the Dollar. While the minutes confirmed the Fed’s hawkish stance and reinforced expectations for further 50bps hikes in June and July, there was little in the way of exciting details to get bulls reinvigorated. Additionally, with the Fed having seemingly turned more hawkish since that meeting, the minutes felt a little outdated. Christine Lagarde, ECB And Rate Hikes On the data front, a string of weaker-than-expected indicators out of the eurozone heightened growth concerns. With ECB’s Lagarde essentially confirming a July rate-hike, recession fears weighed on European asset markets though EUR itself remained well bid. Elsewhere, equities markets generally saw a choppy week though most indices ended the week in the green, benefitting from the weaker US Dollar. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM BOE’s Bailey warned that further rate hikes will likely be necessary in the face of rising inflation. The new fiscal package announced by the UK government this week, aimed at helping households fight rising energy bills, has further increased the likelihood of BOE rate hikes in the near-term. Weaker Dollar, Stronger Crude, Gold And Silver Commodities prices were higher over the week also. Gold, silver and oil all rallied on the back of a weaker US Dollar. With monetary policy divergence between the Fed and other central banks drying up, USD pressure has helped commodities stay afloat recently. Coming Up This Week Australian GDP Australian GDP will be closely watched this week on the back of the recent RBA rate hike. With the bank lifting rates and sounding firmly hawkish in its outlook and assessment, this week’s data might further support growing RBA rate hike expectations. With the country having emerged from one of the longest lockdowns of the pandemic, the economy has been on the bounce-back. However, as we have seen elsewhere, the economy has still been rocked by rising inflation and supply constraints. Traders will be keen to see the extent to which these factors weighed on the economy over the last quarter. BOC Rate Decision The BOC is widely expected to raise rates when it convenes for this month’s meeting mid-week. All 30 economists polled by Reuters ahead of the event are looking for a .5% hike. With this in mind, the focus will be on the bank’s forward guidance. If the BOC gives a clear signal that further hikes are coming in the near future, this should drive CAD higher near-term. However, if there is any indication that the BOC might look to hold off on any further rate hikes near-term, this will likely see cad dragged lower. Read next: Altcoins: Cardano (ADA) What Is It? - A Deeper Look Into Cardano (ADA) | FXMAG.COM US Non-Farm Payrolls The latest set of US labour market indicators this week will be closely watched as we head to the June meeting. Recent Fed commentary has been decidedly hawkish and it would likely take a major downside shock to change this narrative. Even then, it certainly wouldn’t impact the June rate hike and would likely only factor in forward guidance issued by the Fed. Still, with slowdown fears building, any weakness would no doubt act as a headwind to risk sentiment in the short-term. Forex Heat Map Technical Analysis Our favourite chart this week is the Dollar Index (DXY) The DYX has pulled back from recent multi-year highs and is now sitting on a make-or-break level at 101.94. This level was the 2020 closing high price. While the level holds as support, DXY is likely to recover and continue the longer-term bull trend. Below here, however, there is room for the correction to develop further towards next support at 100.37 Economic Calendar Plenty of key data releases to keep an eye on this week including Australian GDP, BOC rate decision and US Non-Farm Payrolls to name a few. Please see full calendar below for the complete schedule . Follow FXMAG.COM on Google News
Walt Disney Results Are Beyond  All Expectations. Large Chinese Company Fires More Than 9K Employees!!! Market Newsfeed - 11.08.2022

We Could Say High Prices Of Crude Oil, Metals And Other Commodities Are About Not Only Negative Effects, But Also About A Profit For Some People | Saxo Bank

Saxo Bank Saxo Bank 30.05.2022 12:42
Summary:  Commodities have seen hefty prices increases in the past two years, which is bad for inflation and for life in general but is one of very few asset classes where a profit can be made in very depressed markets.​ It’s hardly news that the cost of living – or inflation – is going up at a rate which the world hasn’t seen for decades. Food is getting more expensive, electricity is going up, it is more costly to buy and build stuff. In short, everything you want to do and consume costs (a lot) more than it did a year ago.There is one area – or in finance lingo, asset class – which is the root cause of this situation, and it has politicians and economists scratching their heads to find solutions: commodities. Commodities are the basic input to everything we do. It covers energy production, raw materials, metals, food, etc.When you look at commodities from a societal point of view, there isn't a lot of good news:“In short, what happens in the commodity sector is troubling. The Bloomberg Commodity Index is up 24% on the first quarter and if you look at average annual returns it has almost doubled since 2020,” says Ole Hansen, Head of commodity strategy at Saxo. In this quote, Hansen points to something interesting when dealing with an asset class like commodities, because it affects both the financial markets, and day-to-day life. When investing in an index, which is up that much in such a short time, you would usually be celebrating, but it isn’t always a good thing for commodities to climb so high, so fast.“Commodities are the basic input for everything we do, which means that when they get more expensive, so does everything else. Commodities need to find a more stable level for consumers and companies alike to feel comfortable, which no one is now,” says Hansen.As Hansen describes, surging commodity prices can have grave effects on society at large especially in less wealthy parts of the world, and its solution can be a self-fulfilling prophecy. “Most people will have to wind back on their spending. This will cause an economic slowdown, which hurts, but unfortunately seems to be the only cure right now against high inflation,” he says.The other edge While commodities need to become more stable for its societal impact, the asset class remains an enticing investment opportunity in a market where it seems like it is almost the only one you can look for a profit, even if there’s an economic slowdown. This is due to the supply and demand dynamics we are experiencing right now.Central banks are hiking rates to kill – or slow – the demand side, which is yet another reason why companies and thus equities are struggling. This should, in theory, also push the prices of commodities down, but then let’s turn our heads towards the supply side.Here, especially the Russian invasion of Ukraine, and the strict COVID-19 lockdowns in China, suppress the supply of many key commodities. This creates a dramatic imbalance between supply and demand, which means that even a global economic slowdown most likely wouldn’t bring it back to an equal footing.“If I had to pick one area to look for inspiration, it would be the metal industry. There’s a lot of amped up construction in China due to the lockdowns, which means that once they are lifted, the metal space could see a substantial increase in demand from them,” says Hansen.Queued up construction in China can push metal prices, which also could be a long play on the mining sector within equities."The equity market is probably the most difficult since the 2007-2009 financial crisis years due to a combined factor of persistently high inflation and equity valuation compression from higher interest rates. We believe that the world will be in a commodity super cycle and thus should be exposed to this through mining companies both short and long term. China's slowdown is just short-term noise. It changes nothing regarding mining companies over the coming years," says Peter Garnry, Head of Equity strategy.
The Euro Will Strengthen, But Questions Remain About What To Do Next

Supporting EUR, USD And Others - What Is Interest Rate? What Is A Negative Interest Rate | Binance Academy

Binance Academy Binance Academy 01.06.2022 16:55
TL;DR It doesn’t make much sense to lend money for free. If Alice wants to borrow $10,000 from Bob, Bob will need a financial incentive to loan it to her. That incentive comes in the form of interest – a kind of fee that gets added on top of the amount Alice borrows. Interest rates profoundly impact the broader economy, as raising or lowering them greatly affects people’s behavior. Broadly speaking: Higher interest rates make it attractive to save money because banks pay you more for storing your money with them. It’s less attractive to borrow money because you need to pay higher amounts on the credit you take out. Lower interest rates make it attractive to borrow and spend money – your money doesn’t make much by sitting idle. What’s more, you don’t need to pay huge amounts on top of what you borrow. Learn more on Binance.com Introduction As we’ve seen in How Does the Economy Work?, credit plays a vital role in the global economy. In essence, it’s a lubricant for financial transactions – individuals can leverage capital that they don’t have available and repay it at a later date. Businesses can use credit to purchase resources, use those resources to turn a profit, then pay the lender. A consumer can take out a loan to purchase goods, then return the loan in smaller increments over time. Of course, there needs to be a financial incentive for a lender to offer credit in the first place. Often, they’ll charge interest. In this article, we’ll take a dive into interest rates and how they work.   What is an interest rate? Interest is a payment owed to a lender by a borrower. If Alice borrows money from Bob, Bob might say you can have this $10,000, but it comes with 5% interest. What that means is that Alice will need to pay back the original $10,000 (the principal) plus 5% of that sum by the end of the period. Her total repayment to Bob is, therefore, $10,500. So, an interest rate is a percentage of interest owed per period. If it’s 5% per year, then Alice would owe $10,500 in the first year. From there, you might have: a simple interest rate – subsequent years incur 5% of the principal or  a compounded interest rate – 5% of the $10,500 in the first year, then 5% of $10,500 + $525 = $11,025 in the second year, and so on.   Why are interest rates important? Unless you transact exclusively in cryptocurrencies, cash, and gold coins, interest rates affect you, like most others. Even if you somehow found a way to pay for everything in Dogecoin, you’d still feel their effects because of their significance within the economy. Take a commercial bank – their whole business model (fractional reserve banking) revolves around borrowing and lending money. When you deposit money, you’re acting as a lender. You receive interest from the bank because they lend your funds to other people. In contrast, when you borrow money, you pay interest to the bank. Commercial banks don’t have much flexibility when it comes to setting the interest rates – that’s up to entities called central banks. Think of the US Federal Reserve, the People’s Bank of China, or the Bank of England. Their job is to tinker with the economy to keep it healthy. One function they perform to these ends is raising or lowering interest rates. Think about it: if interest rates are high, then you’ll receive more interest for loaning your money. On the flip side, it’ll be more expensive for you to borrow, since you’ll owe more. Conversely, it isn’t very profitable to lend when interest rates are low, but it becomes attractive to borrow. Ultimately, these measures control the behavior of consumers. Lowering interest rates is generally done to stimulate spending in times when it has slowed, as it encourages individuals and businesses to borrow. Then, with more credit available, they’ll hopefully go and spend it. Lowering interest rates might be a good short-term move to rejuvenate the economy, but it also causes inflation. There’s more credit available, but the amount of resources remains the same. In other words, the demand for goods increases, but the supply doesn’t. Naturally, prices begin to rise until an equilibrium is reached. At that point, high interest rates can serve as a countermeasure. Setting them high cuts the amount of circulating credit, since everyone begins to repay their debts. Because banks offer generous rates at this stage, individuals will instead save their money to earn interest. With less demand for goods, inflation decreases – but economic growth slows.   ➟ Looking to get started with cryptocurrency? Buy Bitcoin on Binance!   What is a negative interest rate? Often, economists and pundits speak of negative interest rates. As you can imagine, these are sub-zero rates that require you to pay to lend money – or even to store it at a bank. By extension, it makes it costly for banks to lend. Indeed, it even makes it costly to save. This may seem like an insane concept. After all, the lender is the one assuming the risk that the borrower may not repay the loan. Why should they pay?  This is perhaps why negative interest rates are something of a last resort to fix struggling economies. The idea comes from a fear that individuals may prefer to hold onto their money during an economic downturn, preferring to wait until it recovers to engage in any economic activity.  When rates are negative, this behavior doesn’t make sense – borrowing and spending appear to be the most sensible choices. This is why negative interest rates are considered to be a valid measure by some, under extraordinary economic conditions.   Closing thoughts On the surface, interest rates appear to be a relatively straightforward concept to grasp.  Nevertheless, they’re an integral part of modern economies – as we’ve seen, adjusting them can fundamentally alter the behavior of individuals and businesses. This is why central banks take such a proactive role in using them to keep nations’ economies on track. Do you have more questions about interest rates and the economy? Check out our Q&A platform, Ask Academy, where the Binance community will answer your questions.
Market

Can Apple Stock Plunge Today!? Fed Decision May Affect US Dollar (USD), S&P 500, Gold (XAUUSD) And Crypto (e.g. Bitcoin Price & ETHUSD) | Swissquote

Swissquote Bank Swissquote Bank 15.06.2022 10:28
The Federal Reserve (Fed) will announce its latest rate decision today, but most of the wild ride is certainly done by now; the market fully prices in a 75bp hike at today’s decision. The aggressive rise in hawkish Fed expectations pushed the US 2-year yield to 3.45% on Tuesday. The 10-year yield flirted with 3.50%. The S&P500 lost another 0.38%, while Nasdaq eked out a small 0.20% gain, but after hitting a fresh low since November 2020. The US futures are in the positive this morning, but the market will likely remain tense until the Fed breaks the news that it hikes by 75bp. The updated economic projections and the dot plot have an important weight for future expectations. Bigger rate hikes from the Fed, and the soaring US dollar are certainly not a gift for other central banks. The US dollar is a base currency, and the rapid appreciation in the greenback increases the cost of the goods that the other countries negotiate in terms of US dollars on international markets, starting from oil and commodities. As a result, a stronger US dollar is a bigger inflation threat for the world. This is why, the hawkish Fed expectations have a bigger domino effect power on the rest of the world. The German 10-year yield continues pushing higher, and the EURUSD sees a decent support near the 1.04 threshold after the European Central Bank (ECB) announced an unscheduled meeting to discuss the market turmoil. Cable slipped below the 1.20 mark, and a 25bp hike from the Bank of England (BoE) may not suffice to compensate the hawkish Fed, and the renewed Brexit fears.   Watch the full episode to find out more! 0:00 Intro 0:27 The Fed decision 4:26 Market update 5:32 Gold, Bitcoin down 6:43 FedEx jumps & dividend paying stocks see higher interest 7:41 Expensive dollar threatens ECB, BoE 8:52 FTSE to feel the pinch of engdangered Brexit deal Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #FOMC #decision #dotplot #ECB #unscheduled #meeting #BoE #USD #EUR #GBP #CHF #Bitcoin #MicroStrategy #crude #oil #gold #market #selloff #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH  
Bank Of England Is Expected To Choose Between 50 and 75bp, Ethereum Arouses More And More Discussions As Merge Is Around The Bend

The US Inflation - What Are The Predicted Prints?

InstaForex Analysis InstaForex Analysis 12.07.2022 13:05
Relevance up to 10:00 2022-07-13 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Markets are currently focused on the US CPI report for June, which will be released on Wednesday, July 13. Forecasts show that inflation will continue to grow, where headline inflation, which includes changes in the cost of food and energy, will increase by 1.4% month-over-month and by 8.7% year-over-year. Seeing that prices have accelerated even more, inflation has every chance of reaching 8.7%. Statistics Austria reported that in addition to the increase in fuel and heating oil prices, there has also been significant growth in restaurant and food prices. If CPI turns out as expected, the Fed will most likely make another 75 basis point rate hike at the FOMC meeting later this month, especially given last week's employment report. They may also announce a fourth increase this year. The central bank began raising rates last March, the first time since 2018. The increase back then was 25 basis points, followed by a 50 bp increase in May and a 75 bp increase in June. The CME FedWatch tool sees the same scenario, indicating a 93% chance that the Fed will raise rates again by 75 basis points this month. This outlook weighs heavily on US equities, pushing the USD index up and lowering gold prices.   Read more: https://www.instaforex.eu/forex_analysis/315917
The GBP/USD Pair Was Trading Calmly But The Volatility Still Remained Very High

UK: Recession In The End Of 2022? Scary Projections Of Bank Of England!

Saxo Bank Saxo Bank 08.08.2022 09:36
Summary:  In today’s ‘Macro Chartmania’, we give an update on the British economy. A few months ago, we warned the UK economy is one of the developed countries most likely to enter into a recession. There is no debate about it anymore. Last week, the Bank of England updated its macroeconomic forecasts for the years until 2025. These are frightening. The United Kingdom is projected to enter into a recession in Q4 2022. This could last five quarters and cause GDP to fall about 2.1 % - as deep as the recession of the early 1990s. But this is not the worst. Very often, the economy rebounds quite sharply after a recession. This is unlikely to happen this time. The slump will last. The BoE sees GDP still 1.75 % below today’s levels in mid-2025. Click here to download this week's full edition of Macro Chartmania composed of more than 100 charts to track the latest macroeconomic and market developments. All the data are collected from Macrobond and updated each week. The United Kingdom is more and more looking like an emerging market country: Political instability (the new Prime Minister will be announced on 5 September after Boris Johnson’s resignation), trade disruptions (due to Brexit and Covid-related bottlenecks), energy crisis (the risk of a blackout this winter is real) and high inflation (the Bank of England forecasts that UK CPI will peak at 13 % in October but this is certainly a bit optimistic) are all hurting the UK economy. The only major difference : there is no currency crisis. The sterling pound exchange rate is rather stable. It only dropped 0.70 % against the euro and 1.50 % against the U.S. dollar over the past week. Our bet : after surviving Brexit uncertainty, we don’t see what could push the sterling pound into a free fall. All the leading indicators point in the same direction : The worst is yet to come for the British economy. There is a consensus among economists about that very fact. The OECD’s leading indicator for the United Kingdom, which is supposed to anticipate reversals in the economy six to nine months in advance, fell to 98.6 in June. The annual rate was 7.3 % in June 2021 (partially reflecting the post-lockdown rebound). It now stands at minus 2.9 %. The change is impressive over a year. This is not only linked to Covid data noise. This is a clear sign that a recession is coming. In addition, new car registrations, which are often considered as a leading indicator of the overall UK economy, continue to drop. This also reflects the deep collapse in consumer confidence (see chart below). In July 2021, after the peak of the pandemic, new car registrations stood at 1,835,000. They now stand at 1,528,000, a sharp drop of 14%. This is the lowest level since the end of the 1970s. The recession will be long and deep. There won’t be an easy escape. This is the most worrying, in our view. The Bank of England assesses the slump will last with GDP still 1.75 % below today’s levels in mid-2025. What Brexit has not done by itself, Brexit coupled with Covid and high inflation have succeeded in doing. The UK economy is crushed. The window for further rate hikes is closing :   Last week, the Bank of England hiked interest rates by 50 basis points, from 1.25 % to 1.75 %. We think the Bank of England’s next rate hike in September (probably of 50 basis points) could be the last. Outside of the jobs markets, there are signs that some of the key inflation drivers may be starting to ease. In addition, the prospect of a long recession (five negative quarters of GDP starting in Q4 2022 all the way through to Q4 2023) will certainly push the Bank of England into a wait-and-see position. On the topic of balance sheet reduction, we don’t expect any changes in the medium-term. Gilt sales will begin shortly after the September meeting. They will amount to £10bn per quarter the first year (this amount will be revised each year). We think the Bank of England has a rather traditional approach to deal with the current macroeconomic situation. Domestic demand must be slowed down by pushing GDP below its potential level, thus increasing unemployment and lowering inflation. A key rate of 2.25 % could already have a noticeable positive impact on the overall inflation dynamics, in our view. However, this is too early to know whether the current tightening cycle will definitely be over in September. The inflation dynamics have been a bit unpredictable in recent months. This is the least we can say. The social contract is broken : Imagine the graduate entering the workforce in 2009/10, who will have been told this was a once-in-a-lifetime crash. They are now in their early 30s and having yet another once-in-a-lifetime economic crisis. They faced an economy of suppressed wages, no housing prospects, two years of socializing lost to lockdown, obscene energy bills and rent and now a lengthy recession. This will lead to more poverty and despair. The Bank of England is now forecasting that real household post-tax disposable income will fall by 3.7 % over this year and next. This would be easily the weakest two years on record since 1963. The lowest income is hit the hardest. The International Monetary Fund found the poorest households in the United Kingdom are amongst the hardest hit by the cost of living in Europe. They found that living costs for the poorest 20 % of households are set to rise by about twice as much as those for the wealthiest, for instance. If this situation would happen in France, there would be a street revolution. Remember the Yellow Vest Movement in 2018. But this is the United Kingdom. It will unlikely lead to any major political shift. There will be more social distress, wealth inequality and poverty all around, however. The sixth largest economy in the world will look even more like an emerging market country, unfortunately.     Source: Chart of Week Emerging market Britain | Saxo Group (home.saxo)
Ed Moya talks US data, Forex, cryptocurrency and more - December 1st

Podcast: Walt Disney, Electric Vehicles, US CPI And More In The Latest Saxo Market Call

Saxo Bank Saxo Bank 10.08.2022 13:20
Summary:  Today we discuss the possible reactivity to today's US July CPI data point, especially if a hotter than expected core reading challenges the market's determined bet that inflation is set to roll over and normalize over the next couple of years. We also look at an equity market that is technically rolling over, a US dollar that needs to choose a direction, and compelling commodity stories and chart points in gold, crude oil and coffee. A semiconductor, EV, deglobalization, and Walt Disney focus on the equity coverage today. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via this link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-aug-10-2022-10082022
ByBit talks trading bots. What are they? How can they help?

Crypto: As Expected! Bitcoin Price Rose After The Release Of The US CPI!

InstaForex Analysis InstaForex Analysis 11.08.2022 13:37
Relevance up to 10:00 2022-08-12 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Bitcoin reacted to the CPI print by climbing 5.1% to $24,180 After the US Consumer Price Index (CPI) rose 8.5% year-on-year, cryptocurrency prices surged. While inflation has remained at one of its highest levels in decades, the actual data came in below the expected 8.7%, prompting traders to return to the markets. Bitcoin reacted to the CPI print by climbing 5.1% to $24,180, where it hit a solid bearish resistance wall that remains the last significant barrier ahead of $28,000. If today it closes higher, it will go further. Traders breathed a sigh of relief after the release, which came in 0.2% below expectations as it could potentially lead to a less aggressive Fed rate hike schedule. Federal Open Market Committee (FOMC) At the last two meetings of the Federal Open Market Committee (FOMC), the central bank has raised interest rates by 75 basis points each time, and yesterday's decline in the CPI compared to the previous month was the first evidence that the actions taken by the central bank are beginning to bear fruit. The positive reaction to the lower-than-expected CPI was immediate, with prices in the cryptocurrency market and traditional markets rising following the news. And growth will likely continue, at least next week. What's Ahead Of Bitcoin? What will happen next with Bitcoin, the cryptocurrency market, and global financial markets, in general, largely depends on the further actions of the Fed. In the broader altcoin market, there has been an even more pronounced reaction following the release of the CPI yesterday. Several of the top 200 coins posted double-digit gains, while the top altcoin, Ether (ETH), gained almost 9%. Crypto Market Capitalisation The total market capitalization of cryptocurrencies is currently at $1.14 trillion, and the Bitcoin dominance rate is 40.3%.   Read more: https://www.instaforex.eu/forex_analysis/318692
The CNY Is Expected To Strengthen Against The Dollar As The Economy Picks Up And The US Enters A Recession

GDP Of China May Reach 4% And Go Even Deeper. Foreign Trade Is Affected By Covid, Inflation And More

ING Economics ING Economics 16.08.2022 08:59
Real estate property construction, home sales and mortgages are just part of the weaknesses we have seen in the Chinese economy. Export demand could also weaken in the coming months. This will derail job growth in China, creating a vicious cycle on consumption and economic growth despite Covid measures becoming more flexible We are downgrading China's GDP growth to 4% in 2022, from 4.4% Central bank policy rate cut China's central bank, the People's Bank of China (PBoC), has lowered the Medium Lending Facility 1Y policy rate (MLF) to 2.75% from 2.85% and the PBoC 7D reverse repo rate to 2% from 2.1%. This is the first cut since January, in a move that indicates the re-emergence of China's downward economic cycle.   We expect banks to cut the Loan Prime Rate for 1Y to 3.6% from 3.7%, and for 5Y to 4.30% from 4.45%. Weaknesses in the economy go beyond real estate The economy's downward cycle is not just coming from lower demand for home sales and fewer home-building activities. It is due to a broad-based slowing in retail sales, industrial production and fixed-asset investments.  Retail sales only grew at 2.7% year-on-year in July compared to 3.1% in June. As the surveyed jobless rate was still high at 5.4%, consumption could continue to grow slowly in the coming weeks. My preferred gauge of an average consumer's retail behaviour – clothing sales – grew at a mere 0.8%YoY in July. This is lower than the headline, which indicates that the general public is spending only a little more than last year.  Industrial production grew slower at 3.8%YoY from 3.9%, mainly from weaker growth in materials for home-building activities. Semiconductor production fell 16.6%YoY, which confirms that the industry is entering a downward cycle as global demand for smart devices is going to be lower than in previous years. This makes up a big part of exports not only for Mainland China but also for other Asian economies. Textiles contracted 4.8%YoY, which could reflect not only weak domestic demand but also high inflation which is affecting export demand.  Fixed-asset investments growth slowed to 5.7%YoY year-to-date in July from 6.1%. The weakness was mainly from the slow growth in private-owned enterprise investments, which only grew 2.7%YoY YTD, compared to state-owned enterprise investments of 9.6%YoY YTD. The bright spot was electrical machinery and equipment manufacturing, which should form part of state investments for infrastructure projects.   Forecasts Due to this set of activity data and the PBoC's rate cuts, we are downgrading China's 2022 GDP growth from 4.4% to 4%. A further downgrade is still possible, depending on export demand, which is suffering from high inflation, the ongoing Covid situation, and unemployment growth in Mainland China.  Read this article on THINK TagsSemiconductor PBoC Monetary policy GDP China Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Euro (EUR) And British Pound (GBP) Losing The Race Against U.S. Dollar (USD)! 1 Year Statistics

Euro (EUR) And British Pound (GBP) Losing The Race Against U.S. Dollar (USD)! 1 Year Statistics

Conotoxia Comments Conotoxia Comments 22.08.2022 16:44
The recent behavior of the euro and the British pound and their potential weakness against the rest of the world's major currencies is beginning to bring concerns about a sustained deterioration in the prospects for these currencies. As Bloomberg commentators note, the behavior of the pound and the euro are worrisome. We have recently seen large shifts in the euro and pound's short-term market interest rates against the U.S. dollar, with a simultaneous weakening of the GBP/USD and EUR/USD exchange rates. Last week was the worst week for the pound in nearly two years, and at the same time, the yield on the UK's 2-year bond rose by 50 basis points. Typically, the opposite happens in developed markets. Expectations of a central bank rate hike and thus an increase in short-term market yields generally strengthen the currency. The collapse in the correlation between the exchange rate and interest rates is usually associated with emerging markets, which may have lost the battle for the credibility of keeping inflation within the inflation target. The energy dependence of the UK and Europe as a whole means that their balance sheets could deteriorate in the near future, while energy commodity inflation shows no signs of abating. Rate hikes in such a situation may not stem the tide of depreciation of the aforementioned currencies, Bloomberg reports. Thus, it seems that the winter months for the EUR and GBP may be a kind of test of the credibility of the economies in the eyes of investors. Their abandonment of investments in the EUR and GBP despite rising interest rates could be potentially worrying. Moreover, it could change the entire scene of the foreign exchange market. In the dollar index, the euro has a weighting of more than 57 percent, while the pound has a weighting of more than 11 percent. Together, these two currencies alone have a weighting of almost 70 percent. Since the beginning of the year, the euro against the U.S. dollar has lost almost 12 percent, and the British pound almost 13 percent. In contrast, since August 2021, the euro has lost almost 15 percent to the dollar, and the British pound less than 14 percent. Of the major currencies, only the Japanese yen has fared worse and has weakened by almost 20 percent against the U.S. dollar over the year. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.   Source: Pound and euro similar to currencies of emerging markets?
Interest Rates In Eurozone Will Continue To Increase In The Coming Meetings

🚨Oh My! Eurozone Inflation Shocks! Have A Look At These Numbers!

ING Economics ING Economics 31.08.2022 11:34
August inflation jumped to 9.1%, another leg up in inflation as supply shocks persist. Core inflation increasing from 4% to 4.3% will be the key concern for the ECB in the run-up to next week’s governing council meeting The gas supply crisis and droughts are adding to persisting supply-side pressures on inflation at the moment   The eurozone inflation rate ticked up from 8.9% to 9.1% in August. The increase was mainly seen in processed food and goods prices, but services also ticked up slightly. Energy inflation fell for the second month in a row on base effects and lower petrol prices, despite soaring gas and electricity prices. The main concern is the surprise increase in goods inflation. The increase from 4.5% to 5% was much larger than expected and fuels worries about second-round effects from the input cost shock lasting longer. Global supply-side pressures have been easing in recent months. Commodity prices have fallen, including food and oil, which has resulted in lower prices at the pump. Transportation costs have also moderated, and inputs are more widely available again. Still, specific European problems continue to push inflation higher. The gas supply crisis and droughts are adding to persisting supply-side pressures on inflation at the moment. Demand-side inflation remains weak in the eurozone. The output gap is still negative, household consumption is well below pre-pandemic levels and retail sales have in fact been on a declining trend since November. The latest negotiated wage growth data for 2Q came in at 2.1%, which means there is no evidence of a wage-price spiral at this point, but that the eurozone is mainly facing an unprecedented squeeze in real incomes. As the economy is slowing rapidly – and perhaps already contracting at this point – the question is how much the ECB needs to slam the brakes. Another hike of at least 50 basis points in September seems to be a done deal, with the hawks pushing for 75bp. The big question is how the ECB will respond after this, if indeed signs of economic distress become more apparent, and inflation remains highly driven by supply-side factors. Read this article on THINK TagsInflation GDP Eurozone ECB Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Analysis Of The NASDAQ 100 Index Movement

The ECB Is Paying The Price For Its Decision. Risk Assets Are Struggling In The Aftermath Of Powell’s Speech.

Kenny Fisher Kenny Fisher 31.08.2022 15:34
Stock markets in Europe turned lower again on Wednesday while US futures are more mixed, similar to what we saw in Asia overnight. Conditions remain choppy in the aftermath of Jackson Hole last week. There’s clearly a lack of conviction in the markets following a lot of hawkish central bank commentary in recent days. The narrative that investors want to believe is that inflation has peaked and is falling in the US and that a soft landing is plausible. That doesn’t necessarily align with what we’re hearing. Add to that the increasingly hawkish language from other central banks amid severe economic headwinds and the reality of the situation is seemingly becoming impossible to ignore. With 75 basis point hikes now on the table for the US, EU and UK next month, among others, it may not be entirely surprising that investors are taking a more cautious stance. ECB paying the price for dragging its feet amid record inflation The inflation data from the eurozone this morning won’t have hurt the odds of a 75 basis point hike, that’s for sure. Inflation in the bloc rose 9.1% in August, up from the previous record of 8.9% in July. With core inflation also jumping to 4.3% from 4%, the pressure is seriously mounting on the ECB to be more aggressive. The central bank is paying the price for its decision to leave the deposit rate at -0.5% for as long as it did and may have to be much more forceful now as a result. Price pressures are becoming more widespread, with energy increases easing slightly but food, alcohol and tobacco inflation accelerating to 10.6%. The inflation situation is, unfortunately, going to get worse, perhaps much worse, before it gets better, considering what’s to come with energy this winter. Gas flows halted, nervy few days ahead Gas flows through Nord Stream One have now paused for the three-day maintenance period. While Europe is keen to stress its storage levels are well ahead of schedule, the failure of flows resuming on Saturday would be a massive blow ahead of what is already going to be a nervy and expensive winter. European gas prices are near their recent highs and will likely remain so over the coming days until flows resume. If they don’t, prices could rise much further. Can bitcoin hold out much longer? Risk assets are struggling in the aftermath of Powell’s speech at Jackson Hole, the only exception arguably being bitcoin which fell heavily in the immediate aftermath but has now found its feet. In fact, it’s posting gains of more than 1% today, bucking the trend we’re seeing elsewhere, with risk assets generally underperforming. Once more we’re seeing resilience in bitcoin around $20,000; the question is how long can it hold out if sentiment doesn’t improve? For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Rising Interest Rates. How High Can They Rise?

Rising Interest Rates. How High Can They Rise?

Kamila Szypuła Kamila Szypuła 04.09.2022 10:36
Global inflation is higher, reflecting the impact of the Russian invasion of Ukraine, ongoing supply constraints, and strong demand. Many central banks are tightening monetary policy to combat inflation, and the resulting tighter financial conditions are moderating economic growth. Bank of Canada expected to raise interest rate In July, the Bank of Canada raised interest rates by 100 bp. It was the largest single rate increase since August 1998 after a series of hikes that began in March. Previously, the rate had been at 0.25 per cent where it sat since it was slashed to near-zero early in the pandemic.The BoC increased its target for the overnight rate to 2,5%, with the Bank Rate at 2,75% and the deposit rate at 2,5%. The Bank is also continuing its policy of quantitative tightening (QT). At press conference, Tiff Macklem - Governor explain what prompted your decision. The most important stimulus was that inflation in Canada was higher and more persistent than the Bank expected in its April Monetary Policy Report (MPR) and the fear of further growth as well as the lack of workers and many goods and services. Demand needs to slow down for supply to catch up and the price pressure to ease off. And the most important goal of monetary policy is to restore inflation to 2% and to achieve price stability. Source: www.bankofcanada.ca As shown by data from the Canadian bank, inflation slightly decreased. As inflation fell, the unemployment rate also fell in 22Q2. What could be positive news for the Canadian economy. According to the Bank's July speculation, inflation will fall to around 3% by the end of 2023 and will return to the 2% target by the end of 2024. Therefore, economists predict that there will be another rate hike in September. Some of Canada's major banks are forecasting the central bank will raise the key interest rate by three-quarters of a percentage point, bringing it to 3.25 per cent. The next scheduled date for announcing the overnight rate target is September 7, 2022. Some economists think Wednesday's hike could be the last for a while. The RBA will raise rate by 50 bp? At meeting at 2 August 2022, the Board of RBA decided to increase the cash rate target by 50 basis points to 1.85 %. In the simplest terms, the RBA cash rate is Australia’s official interest rate. It also increased the interest rate on Exchange Settlement balances by 50 basis points to 1.75 %. The Board places a high priority on the return of inflation to the 2–3% range over time, while keeping the economy on an even keel. The path to achieve this balance is a narrow one and clouded in uncertainty, not least because of global developments. Inflation in Australia is the highest it has been since the early 1990s. In headline terms, inflation was 6.1 % over the year to the June quarter; in underlying terms it was 4.9 %. Global factors explain much of the increase in inflation, but domestic factors are also playing a role. There are widespread upward pressures on prices from strong demand, a tight labour market and capacity constraints in some sectors of the economy. The Bank's central forecast is for CPI inflation to be around 7,75% over 2022, a little above 4 % over 2023 and around 3 % over 2024. Australia Inflation is expected to peak later this year and then decline back towards the 2–3 % range. The expected moderation in inflation reflects the ongoing resolution of global supply-side problems, the stabilisation of commodity prices and the impact of rising interest rates. Forecasts that the RBA will raise the monetary rate by 50 basis points at its meeting on September 6, raising rates to 2.35%. Not only the economic situation shows this, but also the analysis of previous decisions. The interest rate hypotheses will be confirmed or disproved at the Tuesday meeting. Source: www.bankofcanada.ca, www.rba.gov.au
The Upward Movement Of The EUR/USD Pair May Persist In The Near Future

ECB Will Continue To Hike Rates To Slow Inflation?

Kamila Szypuła Kamila Szypuła 03.09.2022 15:10
The ECB's monetary policy meeting in Frankfurt is to be held on Thursday 8 September. What can we expect? The Governing Council normally meets twice a month at the premises of the ECB in Frankfurt am Main, Germany. The Governing Council assesses economic and monetary developments and takes monetary policy decisions every six weeks and bases its monetary policy decisions, including the evaluation of the proportionality of its decisions and potential side effects, on an integrated assessment of all relevant factors. This assessment builds on two interdependent analyses: the economic analysis and the monetary and financial analysis. At Thursday's meeting, a decision will be made whether interest rates will be raised again. When prices in European economy are rising too fast and when inflation is too high – increasing interest rates mey help bring inflation back down. The Governing Council may discuss another important step on the path to normalizing interest rates that was signaled at the previous meeting. This decision is based on the Governing Council's updated inflation risk assessment. Does economy data influence on hiking intrest rates? The European Central Bank has raised interest rates for the first time since 2011 in July '22 to tackle eurozone inflation that increased to 8.6% ta those oeriod. In a surprise move, the ECB pushed its base rate up by 0.5 percentage points, after economists had expected a smaller 0.25 point rise. The economy on the old continent is slowing down. This is due to high inflation, greater uncertainty and supply problems. These factors significantly obscure the prospects of our economy for this year and the following years. German Manufacturing PMI dipped to 49.1, down from 49.3 in July. It was a similar story for the eurozone Manufacturing PMI, which dropped from 49.8 to 49.6. After the publication of data from Germany the euro has weakened. The euro's fall to parity against the dollar for the first time in two decades also poses problems for the ECB – letting the currency fall exacerbates inflation, but the opposite approach could hit growth. Also, as of July 2022, the inflation rate in the European Union was 9.8 %. The current rate of inflation in the EU is higher than at any other time. High inflation has become the dominant concern of citizens in many countries. After this data, there is a high probability of an increase from 50bp to 75bp. Future interest rate decision will largely depend on the latest data. The initiative is aimed at helping to achieve the inflation target of 2% in the medium term. ECB’s Monteary Policy The pandemic and the war in Ukraine have fostered inflationary forces. So central banks have had to shift their focus from tackling low inflation to combating high inflation. The ECB’s monetary policy response to the higher inflation outlook can clearly be rationalised based on the new strategy – in particular its symmetric inflation target. The new ECB strategy has contributed to a more solid anchoring of inflation expectations at 2%. Monetary policy decisions taken by the ECB’s Governing Council since July 2021 have been firmly grounded in the strategy. In a rapidly changing world, the ECB’s monetary policy strategy will likely need to be reviewed and adapted more regularly. Source: Eurostat.com, Investing.com, ecb.europa.eu
The GBP/USD Pair's Traders Still Use Every Opportunity To Buy

UK Inflation Is The Highest In Decades!!! China Still Closing Factories, Toyota And Apple Are In Danger?

Saxo Strategy Team Saxo Strategy Team 18.08.2022 09:48
Summary:  U.S. equities took a pause from their week-long advance, with S&P 500 retreating before its 200-day moving average. Target’s Q2 results disappointed as the retailer suffered from high inventories and U.S. consumers shifted from discretionary to grocery items. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  U.S.’s advance higher took a pause yesterday amid higher bond yields and disappointing results from Target (TGT:xnys), -2.7%. Target’s Q2 earnings fell sharply and missed consensus expectations on weaker gross margins due to slower sales in discretionary items and inventory impairments.  Lowe’s (LOW:xnys) reported mixed results, with earnings beating estimates but same-store sales growth weaker than expected. Higher U.S. bond yields triggered by a dramatic rise in U.K. bond yields and reported pension fund rebalancing-related selling added to the equity weakness.  S&P 500 dropped 0.7% and Nasdaq 100 shed 1.2%.  U.S. treasury yields rose from spilling over from a massive rise in U.K. Gilt yields and weak 20-year bond auction U.S. 10-year treasury yields jumped 9bps to 3.05%, taking cues from the sharp move higher in U.K. Gilts and European sovereign bond yields following white-hot UK CPI data. Long-end yields moved further higher on poor results from the 20-year auction.  Short-end yields fell in the late afternoon after the July FOMC minutes signaling that it “would become appropriate at some point to slow the pace of policy rate increases” which reaffirmed the market’s expectation of a 50bps, instead of 75bps on the September FOMC.  Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Hang Seng Index bounced modestly by 0.5%; CSI399 gained 9.6%. Meituan (03690:xhkg) rallied 3.3% after a 9% drop yesterday due to a Reuters story suggesting that Tencent (00700:xhkg) plans to divest its 17% stake (USD24 billion) in Meituan. Tencent denied such a divesture plan last night.  Power tools and floor care equipment maker and a supplier to Home Depot (HD:xnys) and Wal Mart (WMT:xnys), Techtronic Industries (00669:xhkg) jumped more than 10% after better-than-expected results from the two U.S. retailers. China Resources Power (00836:xhkg) +5.7% after reporting weak 1H22 results but more wind and solar projects on the pipeline. Other Chinese power producers also outperformed amid power shortages. China Power (02380:xhkg) surged more than 8%. On Tuesday, China’s Premier Li Keqiang visited Shenzhen and held a meeting with provincial chiefs from Jiangsu, Zhejiang, Shandong, Henan, and Sichuan to reiterate the central government’s push for full use of policies to stabilize the economy. Hong Kong Exchanges (00388:xhkg) fell 1.6% after reporting lower revenues, higher costs, and a 22% YoY decline in EPS, worse than market expectations. After the market close, Tencent reported weak but in line with expectations revenues and better-than-feared earnings in Q2. Tencent’s ADR climbed 3.5% overnight from the Hong Kong close. AUDUSD eying the labor market report, GBP will see more pain ahead A mixed session again overnight for the US dollar with FOMC minutes and US retail sales failing to provide any fresh impetus to the markets. AUDUSD was the biggest loser on the G10 board, sliding below 0.7000 to lows of 0.6911 after real wage data for Q2 showed a massive slump. Labor market data due this morning could further weigh on RBA expectations, if it comes out softer than expected. The weakness seen in the commodity markets, especially iron ore and copper, weighed on the antipodeans. GBPUSD stays above 1.2000 despite a 40bps gains in UK 2-year yields after the double-digit UK CPI print. USDJPY tested the resistance at 135.50 but was rejected for now. Crude oil prices (CLU2 & LCOV2) Crude oil prices made a slight recovery overnight, with WTI futures getting back to over $87/barrel and Brent futures close to $94 after data showed US inventories fell sharply. Sentiment was also supported by comments from OPEC’s new Secretary-General, Haitham Al Ghais, who said that world oil demand will rise by almost 3mb/d this year. He also said there is a high chance of a supply squeeze this year, in part because fears of slowing usage in China are exaggerated. This helped to take the focus off the prospects of the Iran nuclear deal for now. What to consider? Stale FOMC minutes hint at sustained restrictive policy Fed’s meeting minutes from the July meeting were released last night, and officials agreed to move to restrictive policy, with some noting that restrictive rates will have to be maintained for some time to bring inflation back to the 2% target. Still, there was also talk of slowing the pace of rate hikes ‘at some point’, despite pushing back against easing expectations for next year. The minutes were broadly in-line with the market’s thinking, and lacked fresh impetus needed to bring up the pricing of Fed’s rate hikes. Chairman Powell’s speech at the Jackson Hole Symposium next week will be keenly watched for further inputs. US retail sales were a mixed bag July US retail sales are a little softer at the headline level than the market expected (0% growth versus the +0.1% consensus) but the ex-auto came in stronger at 0.4% (vs. -0.1% expected). June’s growth was revised down to 0.8% from 1%. The mixed data confirmed that the US consumers are feeling the pinch from higher prices, but have remained resilient so far and that could give the Fed more room to continue with its aggressive rate hikes. Lower pump prices and further improvements in supply chain could further lift up retail spending in August. UK CPI opens the door for another 50bps rate hike UK headline inflation hits 10.1%, the highest in decades and above the 9.8% expected and for the month-on-month reading of +0.6%, higher than the +0.4% expected. Core inflation hit 6.2% vs. 5.9% expected and 5.8% in Jun. That matched the cycle high from back in April. Retail inflation rose +0.9% MoM and +12.3% YoY vs. +0.6%/+12.0% expected, respectively. The Bank of England has forecast that inflation will peak out this fall at above 13%. While the central bank forecasted a recession lasting for five quarters at the last meeting, it will be hard for them to not press ahead with further tightening at the August meeting, and in fact the scope for another 50bps rate hike is getting bigger. Reserve Bank of New Zealand hikes 50 basis points to 3.00%, forecasts 4% policy rate peak The RBNZ both increased and brought forward its peak rate forecast to 4.00%, a move that was actually interpreted rather neutrally – more hawkish for now, but suggesting that the RBNZ would like to pause after achieving 4.00%. RBNZ Governor warned in a press conference that New Zealand home prices will continue to fall. This is actually a desired outcome after a huge spike in housing speculation and prices due to low rates from the pandemic response and massive pressure from a Labor-led government that had promised lower housing costs were behind the RBNZ’s quick pivot and more aggressive hiking cycle in 2021. Australian wages grew at their quickest pace in eight years, but less than expected Australia’s wage-price index gained 0.7% in the second quarter, just shy of estimates further pressuring the Aussie dollar back toward its 50-day moving average against the US dollar. Annual wage growth came in at 2.6% but real wages - adjusted for headline inflation fell 1% QoQ, and was 3.3% lower than a year earlier, eroding consumer spending power. What’s next. All eyes will be on Australia’s Reserve Bank which might be pressured to hike more than expected at its September meeting. Despite Australian wages growing slower than expected, the RBA estimates retail gas and electric prices to rise 10-15% in the second half of the year, so that will be a focus point when they consider their next move in interest rates. Tencent reported weak but in-line Q2 revenues and better-than-feared earnings Tencent reported a revenue decline of 3% YoY in Q2, weak but in line with market expectations.  Non-GAAP operating profit was down 14% YoY to RMB 36.7 billion and EPS fell 17% YoY to RMB2.90 but they beat analyst estimates.  Revenues from advertising, -18% YoY, were better than expected.  In the game segment, weaker mobile game revenues were offset by stronger PC game revenues. Disappointing results from Target and mixed results from Lowe’s Target reported EPS of USD0.39, missing estimates.  The company indicated strength in food and beverage, beauty, and household essentials but weaker in discretionary categories.  Gross margin of 21.5%, down from 30.4% year-ago quarter and below expectations. Lowe’s reported better than expected EPS of USD4.67 (vs consensus USD4.58) but a decline of 0.3% in same-store sales.  Lowe’s inventories grew 11.6% YoY, substantially lower than peer Home Depot.  With a 15% increase in product costs, the inventory volume was in effect down low-single digit. Power crunch in China shut factories Chongqing is limiting power supply to industrial users from yesterday to next Wednesday.  In Sichuan, Foxconn’s Chengdu factory is suspending operations for six days from August 15 to 20 due to a regional power shortage. The suspension is affecting Foxconn’s supply of iPad to Apple.  The company says the impact “has been limited at the moment” but it may affect shipments if the power outage persists.  The Chengdu government is imposing power curbs on industrial users to ensure electricity supply for the city’s residents.  Toyota and CATL are also suspending some operations in Sichuan due to a power shortage. Foxconn has started test production of the Apple watch in Vietnam Foxconn has started test production of the Apple watch in its factories in Vietnam. With the passage of CHIPS and Science Act earlier this month in the U.S., investors are monitoring closely if Taiwanese and Korean chipmakers as well as their customers may be accelerating the building up of production capacity away from China.  World’s biggest Sovereign Wealth fund posts its biggest half-year loss on record   Norway’s oil fund, the world’s biggest owner of public traded companies lost 14.4% in the six months through to June. In currency terms that’s $174 billion. The slump was driven by the fund’s loss in technology stocks with Meta Platforms (owning Facebook and Instagram) and Amazon, leading the decline. However, just like the market, the fund’s energy sector delivered positive share price performance, benefiting from a sharp rise in earnings in the oil, gas, and refined energy product sector. Meanwhile, investments in logistics property helped the fund’s unlisted real estate holdings gain 7.1%, though they account for 3% of its assets. Japan’s inflation will surge further Japan’s nationwide CPI for July is due to be reported at the end of the week. July producer prices came in slightly above expectations at 8.6% y/y (vs. estimates of 8.4% y/y) while the m/m figure was as expected at 0.4%. The continued surge reflects that Japanese businesses are waddling high input price pressures, and these are likely to get passed on to the consumers, suggesting further increases in CPI remain likely. More government relief measures are likely to be announced, while any little hope for a Bank of Japan pivot is fading. Bloomberg consensus estimates are calling for Japan’s CPI to accelerate to 2.6% y/y from 2.4% previously, with the ex-fresh food number seen at 2.4% y/y vs. 2.2% earlier. For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 18, 2022
The AUD/USD Currency Pair Trading At Its Lowest Level Since Two Years, Hang Seng Index Was Flat

The AUD/USD Currency Pair Trading At Its Lowest Level Since Two Years, Hang Seng Index Was Flat

Saxo Bank Saxo Bank 07.09.2022 09:54
Summary:  Good news to the US economy spells bad news to the bond markets and equities. Crude oil prices stumble on restricted movements in the city of Guiyang in China, while the Newcastle Coal price moves to its own beat roaring to a brand new record high. With this in light, Australian GDP data will be a focus today with Australian coal exports hitting $100 billion. USDJPY at record highs again, so what's next for that FX pair, plus why to watch the AUDUSD. Plus what to expect from the Bank of Canada today, and NIO earnings. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  Good news to the economy is bad news to the bond markets and the stock market.  The solid ISM Services data removed the little remaining hope of a soft landing from the mind of bond traders and pushed up yields and the higher bond yield in turn dragged down the stock markets.  After the end of the reporting season and companies headed for the blackout period, stock traders spent their days mulling over what the Fed is going to do next and turned deeper into the belief that the summer rally might end up being a bear market rally and decided to trim long positions amid low liquidity and lack of retail participation. The unfolding of an energy crisis across the pond in Europe added to the negative sentiment.    S&P500 was down 0.4% and Nasdaq100 declined 0.7% on Tuesday. Bed Bath & Beyond (BBBY:xnas) tumbled 18.4% following the news that the company’s CFO committed suicide, the announcement of firing 20% of its workforce and selling 12 million of new shares.  U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) After the much strong than expected ISM Services prints, treasuries were sold off, 2-year yields +12bps to 3.5%, 10-year yields +16bps to 3.35%; 30-year yields +16bps to 3.50%. The money market curve is pricing in over a 70% chance of a 75bp hike at the September FOMC and a terminal rate of about 3.90%. The long-end of the curve was also pressured by the announcement of 19 investment grade new issues with a total amount over USD35 billion.   Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) A-Shares in the mainland markets noticeably outperformed shares traded in the Hong Kong bourse.  CSI300 surged almost 1% but Hang Seng Index was flat. The escalated natural gas price in Europe cast doubts on the resilience of the European chemical industry to maintain its output level of basic chemicals and encouraged expectations of Chinese basic chemical makers to export more to Europe. The A-share basic chemical space gained over 3%.  Increases in lithium carbonate prices caused a rise in the share prices of lithium miners.  The National Energy Administration released a consultative paper that encourages the development of the national electric grid to enable the taking up of more solar power onto it.  The non-ferrous metal names gained after the Ministry of Industry and Information Technology issued draft guidelines on reaching the stage of intelligent manufacturing for the non-ferrous metal industry by 2025.  Intelligent manufacturing is solve optimization problems in production by utilizing real-time data analysis, artificial intelligence, and machine learning.   Shares of Chinese property developers listed in Hong Kong surged after Guangzhou R&F (02777:xhkg) sold a hotel for RMB550 million and CIFI (00884:xhkg) sold a Hong Kong site.  These asset disposals stirred up optimism about improving the balance sheet and liquidity of Chinese developers, Country Garden (02007:xhkg) +9.3%, Longfor (00960:xhkg)+5.8%, and China Resources Land (01109)+4.5%. Electric vehicle manufacturers rebounded from 1% to 3%, bringing the industry’s week-long meltdown in share prices to a halt.Newcastle Coal prices hit new record highsAs Europe is facing an energy crisis this winter, it will need to increase energy imports. So, in anticipation of such a scenario, this might explain why the Australian coal price trades at a record, along with the futures price. We already know the UK importing is Australian LNG, so consider Australian coal could be heading to Europe more broadly next. Australian energy supply is already likely to run low in 2023, which also supports coal prices running higher. But for coal companies, their earnings and free cash flow will likely increase. Coal companies have been the best performers in global equities this year, after delivering the most earnings growth, with some companies like Whitehaven Coal (WHC) seeing 1,500% earnings growth YoY. Coal loaded at Australia’s Newcastle port hit $436.71, an all-time high. And triple the price this time last year. Coal futures prices are $463, implying the coal price will move up.USDJPY at record highs againA run higher in US yields, with 30-year yields touching 3.5%, underpinned a further move lower in the Japanese yen. USDJPY inched higher to 143.55 this morning in Asia, printing a fresh 24-year high. The market is challenging the Bank of Japan’s yield-cap policy yet again, and with no resistance in sight, the move and volatility is set to rise further. While the FX weakness alone may not be enough for the BOJ to pivot in order to maintain its credibility, higher oil prices and weakness in yen is spelling immense trouble on the inflation story as well. That could feed some pressure from the government on the BOJ policy.    The offshore yuan weakened to 6.98 At the back of the spreading of pandemic lockdowns and the strong U.S. dollar, USDCNH rose to 6.9800 and is set to challenge the 7 handle. USDCNY fixing will be on watch today, as a sharp depreciation of the currency is unlikely to be accepted just ahead of the 20th party congress that starts on October 16.  Crude oil prices (CLU2 & LCOV2) Demand concerns seemed to take over the supply issues yet again with China’s lockdowns extending further. The city of Guiyang joined Chengdu in restricting movement by the public amid renewed outbreaks of COVID-19. WTI futures slumped below $87/barrel while Brent dropped below $93. Global demand slowdown concerns also picked up after rate hikes this week. The Reserve Bank of Australia announced a 50bps rate hike on Tuesday, with Bank of Canada expected to go today and European Central Bank on the cards for tomorrow. A fresh surge in dollar also weighed on commodity prices.    What to consider? US ISM services in further expansion While the S&P services index continued to signal weakness with a 43.7 revised print for August, the ISM services on the other hand expanded further to 56.9 from 56.7 in July and came in above expectations. Business activity accelerated to 60.9 from 59.9, while the prices paid component remained elevated at 71.5, in contrast to the decline we saw to 52.5 for the manufacturing sector. New orders rose to 61.8 from 59.9 and employment rose into expansionary territory at 50.2 from 49.1.  China’s exports in August are expected to have slowed China’s exports in August would probably come in weaker (Bloomberg consensus: 13% YoY vs 18.0% YoY in July) as container throughput data suggested. The resurgence of pandemic control restrictions, production disruptions due to power rationing, and a high base last year could have contributed to the deceleration.  Economists are expecting China’s imports in August to slow (Bloomberg consensus: 1.1% vs 2.3% in July). South Korea’s August export data released last week showed a 5.4% YoY decline in total exports and a 3.4% YoY decline in chip exports to China.  Slower commodity inflation could have depressed China’s import growth as well in August. Australian economic growth data is a big focus today down under. If weaker than expected AUD could weaken Australian economic growth is expected to show 1% growth q/q in the second quarter and 3.5% y/y. GDP will likely get a boost from record commodity exports (which will likely account for 1% of GPD YoY), record retail sales, and a pickup in overseas travel. However, construction costs and hampered residential construction activity could weigh on the headline GDP figure. AUDUSD is on watch with the currency pair trading at its lowest level since June 2020. If the figures today are better than expected, we could see a knee-jerk short-term rally up. However, over the medium to longer term, the fundamentals support the USD moving up and the AUD potentially continuing to lose out with the favored FX currency, the USD gaining momentum and strength amid the energy crisis and Fed hawkishness. The technical indicators suggest the AUDUSD could also retest the March 2020 low of 0.61380, which is the currency pairs lowest level in 19 years. Australia’s Reserve Bank rose rates 0.5% to 2.35%, but it will do little to slow inflation The RBA hiked rates by 0.5% as expected yesterday, in a bid to stave off inflation, taking Australia’s official cash rate to 2.35%. The only thing that the RBA has slowed after hiking rates 1.75% so far since May is the property market. Property prices have seen their biggest drop since the 80’s and construction made its biggest decline since 2016. This is a credit concern as Australia has one of the highest debt levels in the world (debt to GPD is 126%). If the RBA keeps rising rates as they suggest, debt-to-income levels could hit GFC highs. The RBA’s rate hikes have done nothing to slow inflation, and coal prices, which are the biggest contribution to Australian CPI. What you need to consider, is how can the RBA's hikes fix the commodities supply/demand imbalance. We also think coal momentum is likely to rise in anticipation of demand picking up with peak energy season around the world, and Europe is likely to tap on Australia's shoulder for energy.   Australia’s trade surplus surged up for the 13th month, propelled by coal exports  Australia’s trade surplus rocked up to A$18.3bn in the June quarter, bolstering Australia’s balance on goods and services to A$43.1bn, which is the highest level on record. This was fueled by commodity exports and Australia’s trade balance (exports less imports) rising to a record after commodity exports hit a record high, with coal exports exceeding A$100bn annually for the first time. Bank of Canada to hike rates today After a July rate hike of 100bps, Bank of Canada meets again today. The consensus is calling for a 75bps rate hike to bring rates to a restrictive territory, given that inflation continues to run well above target and economic demand is holding up well. The pace of tightening is however likely to slow down in October, and so the messaging will be key to watch at today’s meeting.  NIO earnings ahead While the earnings release date for NIO has been moved around multiple times it should be final now so tomorrow one of China’s largest EV-makers will report Q2 earnings. Investors will focus on the Q3 outlook for revenue growth and margins in order to gauge when NIO can break even on its operations. California’s blackout threat worsens, and the state keeps nuclear power on standby  Amid a massive heatwave and wildfires sweeping the state, power use in California has hit an all-time high and officials have again warned residents to prepare for rolling blackouts. We first wrote about this on Monday but now the state’s grid operator issued another round of warnings, calling on consumers to limit energy demand while the state issued a level-2 energy emergency alert. Officials expect to ratchet the emergency warning up to level 3, which would mean blackouts are imminent. The prospect of outages underscores how grids are becoming vulnerable amid extreme weather as they transition from fossil fuels to renewable energy.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – September 6, 2022 | Saxo Group (home.saxo)
Financial Conditions Look Quite Scary. How Central Banks Fight Inflation?

Financial Conditions Look Quite Scary. How Central Banks Fight Inflation?

ING Economics ING Economics 04.09.2022 11:00
Market rates are set to rise as financial conditions are not tight enough in the US; the US 10yr yield could even go as far as topping 3.5% again. That will pull rates higher elsewhere, including those in the eurozone. Remarkably, financial conditions are significantly tighter in the eurozone than in the US. That heaps more pressure on the Fed than on the ECB In this article So, how do central banks fight inflation exactly? Eurozone financial conditions are already looking quite scary Remarkably, US financial conditions are still too loose A stark contrast So, how do central banks fight inflation exactly? Central banks impact the macroeconomy by finessing financial conditions. It’s not as simple as setting official rates though; it requires the wider financial system to push in the same direction. Most importantly, market rates need to be in tune with central bank thinking. Credit spreads are key too; wider credit spreads add to the all-in funding costs for corporates and households, amplifying the impact of higher market rates. And this together with other central bank liquidity management tools will broadly determine overall financial conditions. Not sure I'd recognise a financial condition if I saw one ...   Source: ING estimates Eurozone financial conditions are already looking quite scary In the eurozone, the Bloomberg measure of financial conditions has seen a virtual collapse from June through to August. At the beginning of June, conditions were moderately tight (about 0.25 of a standard deviation below normal). By the end of August, they were extremely tight (some 2.5 standard deviations below normal). This contrasts with extremely loose conditions at the beginning of 2022 (1.5 standard deviations above normal). The ECB of course hiked in mid-July, preceded by an end to bond buying (and targeted longer-term refinancing operation unwinds), which tightened eurozone financial conditions. Remarkably, lower market rates and tighter credit spreads through July did not prevent an overall tightening in eurozone financial market conditions. In fact, they're looking quite scary right now. They are practically back to the extreme briefly seen when the pandemic first struck, and the only periods where eurozone financial conditions were tighter were during the Great Financial Crisis of 2008 and the Sovereign Debt Crisis of 2011. This suggests that the ECB has less to do. All they need to do is sustain this, not intensify it. Super big hikes are not needed. Remarkably, US financial conditions are still too loose There is a remarkable contrast to be drawn with the US, where financial conditions tightened right through to the end of June (1.5 standard deviations below normal), driven by Fed hikes, rising market rates and wider credit spreads. But then it reversed. A notable fall in market rates and a tightening in credit spreads, which ran from mid-June to end-July, loosened US financial conditions quite considerably, pulling them practically back to almost normal by mid-August. Remember the US 10yr yield fell from 3.5% to almost 2.5% during this period, and risk assets rallied. Hence the easing in conditions. This easing was counter-productive to the Fed’s stated ambition to tighten financial conditions, and was a factor underpinning the crystal clear speech from Chair Powell at Jackson Hole: this Fed wants and needs to see tighter financial conditions, and will do its bit to tighten them by hiking the funds' rate at upcoming Federal Open Market Committee meetings. In fact, in the lead-up, and through the second half of August, market rates and credit spreads reverted and started to do what they should be doing at this stage of the cycle, rising and widening respectively. A stark contrast Currently, we find a stark contrast between the eurozone and the US. US financial conditions are just 0.35 of a standard deviation below normal, while eurozone ones are 2.5 standard deviations below normal; even though it’s the Fed that’s done most of the tightening. From the perspective of the US, a required objective is to re-tighten conditions considerably from here, which is code for rising bond yields and widening in credit spreads, to be capped off with a 75 basis point hike from the Fed on 21 September. For the eurozone, things are more opaque. There is a deeper energy-impacted macro crisis afoot, and financial conditions are already super tight. Higher market rates and wider credit spreads ahead can deepen this further. The ECB can cap this off with a decent hike in September but does not need to do as much cajoling as the Fed might have to do in the weeks ahead. And the ECB does not need to do as much aggregate hiking either, relative to the job the Fed still has to do.     Source: https://think.ing.com/articles/rates-for-monthly-heres-why-rates-will-keep-rising/?utm_campaign=September-01_rates-for-monthly-heres-why-rates-will-keep-rising&utm_medium=email&utm_source=emailing_article&M_BT=1124162492   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The IMF Warned That 2023 Would Be Worst Than 2022, As The US, EU And China Would All See A Decline In Growth

Real Wages Will Falling. Expected Actions Of The European Central Bank

ING Economics ING Economics 04.09.2022 09:21
The expanding negative energy shock is likely to initiate a recession from the third quarter and we're likely to see a GDP contraction. Rising natural gas prices are also keeping inflation higher for longer. A more hawkish ECB is likely to raise rates again in September and October, but the recession should put a - temporary - end to the tightening cycle In this article Recession is coming Energy shock erodes real incomes Inflation to come down only very gradually A more hawkish ECB Recession is coming After a relatively strong second quarter (+0.6% quarter-on-quarter) after Covid lockdowns were largely stripped away, the eurozone has now probably fallen into recession. The Composite PMI indicator fell in August to 49.2, the second month in a row below the 'boom-or-bust' level. With the forward-looking new orders component also declining again, it looks as if it is only going to be downhill in the coming months. And the strong inventory build-up will add to production cutbacks.  Survey indicators are at recession levels Source: Refinitiv Datastream Energy shock erodes real incomes The headwinds facing the eurozone are only increasing. The summer drought will not only hurt the agricultural sector, but the low level of the Rhine River is also distorting supply lines for German manufacturing, while in France the lack of cooling water is impacting nuclear power generation. This, however, is small fry compared to the breadth of the negative energy shock Europe is experiencing. Natural gas prices have more than tripled since June, pushing more energy-intensive companies to cut production or idle plants. The hit to household purchasing power is massive; real wages are falling more than 5% year-on-year. With consumer confidence hovering at very low levels, chances are slim that households will delve into their savings to uphold their consumption expenditures. And as companies are equally hit by the energy shock, final demand is faltering and financial conditions are tightening and we see business investment falling back in the coming quarters. As we expect the energy market to remain very tight (and prices therefore high) we pencil in three consecutive quarters of negative growth, starting in the third quarter of this year. This still results in 2.6% growth in 2022, mainly on the back of a strong carry-over effect, while for 2023 we now expect a 0.6% GDP contraction. Inflation to come down only very gradually As for inflation, the higher cost of natural gas is only partially compensated by slightly lower oil prices. On top of that, a natural gas levy in Germany will add to inflation from October onwards. This will keep headline inflation close to double-digit levels in the next three months. At the same time, underlying inflationary pressures are bound to soften on the back of the economic slowdown. In the business surveys, selling prices' expectations have now been moderating for a few months in a row, while supply chain tensions and shipping prices have also eased. And the second-round effects, popping up through higher wages, remain muted for now. As a matter of fact, negotiated wages only rose 2.1% year-on-year in the second quarter, according to the ECB. Putting it all together, inflation will only come down very gradually, although we see a return to the 2% level towards the end of 2023 as still feasible provided, of course, that energy prices don’t increase much further. Selling prices' expectations are moderating   A more hawkish ECB The European Central Bank has become somewhat more hawkish. In Jackson Hole, ECB Board Member, Isabel Schnabel, said that the uncertainty about inflation persistence requires a forceful policy response, a statement that was echoed by several members of the Governing Council. We therefore now expect a 50-basis point rate increase in September and another 25bp rise in October. Thereafter we still expect to see a long pause. Let’s be clear about this: if the ECB is consistent with the risk scenarios it published in June, it should already forecast a recession in its September staff forecasts. While the bank might still pull off a rate hike in October, the necessity of tightening further after that, in the midst of a worsening recession, will probably not appeal to the majority of the Governing Council members.   Inflation GDP Eurozone ECB   Source: https://think.ing.com/articles/monthly-eurozone-economy-set-to-shrink-in-2023/?utm_campaign=September-01_monthly-eurozone-economy-set-to-shrink-in-2023&utm_medium=email&utm_source=emailing_article&M_BT=1124162492   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Aramco Is Confident It Can Maintain Its Market Share In Asia

Singapore Expect Sales To Remain In Expansion. Austraila Expect A Very Strong Contribution To GDP From The Net Trade Side.

ING Economics ING Economics 03.09.2022 09:28
Next week's calendar is relatively light but we do have a key central bank decision and some inflation data out in the next few days In this article The week ahead Australia’s 2Q GDP report and the RBA meeting Price pressures continue to build in the Philippines Retail sales reports in Singapore   The week ahead Australia’s releases are in the spotlight this coming week as the Reserve Bank of Australia decides on policy while 2Q22 GDP data is also released. Within the rest of the region, the Philippines will report August inflation data that will likely show the continuation of the year-long upward trend. Meanwhile, Singapore's July retail sales data is expected to grow despite inflationary limitations. Australia’s 2Q GDP report and the RBA meeting We will get a day-ahead steer towards the GDP figure on 6 September, with the net export figures. The trade balance during 2Q22 was extremely strong relative to 1Q22, so we anticipate a very strong contribution to GDP from the net trade side. Domestic demand figures should also look pretty strong, though labour shortages may crimp this somewhat. A figure of 1.0% quarter-on-quarter seems possible to us, a bit stronger than the 1Q22 growth rate of 0.8%. Meanwhile, the Reserve Bank of Australia will probably not be swayed all that much by the GDP numbers, though they will likely be strong and tilt the balance a little towards larger rate increases. But the RBA will probably also have taken comfort in the 2Q22 wages price index, which showed a growth rate of only 2.6% year-on-year, softer than had been expected despite clear evidence of labour shortages and the record low unemployment rate. September will probably still deliver a 50bp rise in rates, taking the cash rate target to 2.35%, but there is a growing sense that the central bank may slow the pace of tightening from here on, and that may also add some downside risk to this meeting too.   Price pressures continue to build in the Philippines August inflation in the Phillippines will likely stay elevated given rising food prices and expensive energy. We predict inflation to settle at 6.4%YoY, flat from the previous month although still well above the central bank’s target. Transport fares are set to be adjusted higher, for the second time this year, which should ensure that inflation remains firmly on an upward trajectory in the coming months.  Retail sales reports in Singapore July retail sales will be reported next week. We expect retail sales to remain in expansion although the pace of growth should moderate from the previous month. Sales will be supported by the return of tourists although surging inflation should cap growth. Inflation recently hit 7%YoY, which should sap some consumption momentum.    Asia Economic Calendar   Source: Refinitiv, ING Asia week ahead Asia Pacific Asia Markets Asia Economics Source: https://think.ing.com/articles/asia-week-ahead-philippine-inflation-and-singapore-retail-sales/?utm_campaign=September-01_asia-week-ahead-philippine-inflation-and-singapore-retail-sales&utm_medium=email&utm_source=emailing_article&M_BT=1124162492   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Podcast: A Look At New Sources Of Concern, Financial Conditions Continue To Deteriorate Badly

Grantham: "My Bet Is That We're Going To Have A Fairly Tough Time Of It Economically And Financially"

InstaForex Analysis InstaForex Analysis 01.09.2022 14:36
Investor Jeremy Grantham who has been warning of a 'superbubble' says it is yet to pop despite turbulence in the stock market this year. The co-founder of Boston Asset manager GMO said on Wednesday in a research note that growth in the US stock market from mid-June to mid-August is in line with a rally in a bear market, which usually takes place after a sharp fall. The 83-year-old investor reckons that "the current superbubble features an unprecedentedly dangerous mix of cross-asset overvaluation [...], commodity shock, and Fed hawkishness." At the beginning of the year, Grantham predicted that underlying stocks would collapse by nearly 50%. The S&P 500 fell by 25% from its January peak in June. The index soared in the following two months. Nevertheless, US stocks have now been bearish for the fourth straight session. Well-known strategists, like Mike Wilson for Morgan Stanley, warn investors that the market is yet to bottom. "You had a typical bear market rally the other day and people were saying, 'Oh, it's a new bull market," Grantham said in the research note. "That is nonsense." "First, the bubble forms; second, a setback occurs, as it just did in the first half of this year, when some wrinkle in the economic or political environment causes investors to realize that perfection will, after all, not last forever, and valuations take a half-step back. Then there is what we have just seen—the bear market rally. Fourth and finally, fundamentals deteriorate and the market declines to a low." Grantham is known for having predicted Japan's asset price bubble in the 1980s, the dot-com bubble, and the US housing bubble that came before the 2008 financial crisis. Some of his other bearish warnings have been wrong, or at least premature. He mentioned some other short-term issues, such as the impact of the Russia-Ukraine conflict on food and energy crises in Europe, monetary tightening, and China's ongoing Covid woes. He also pinpointed how rising inflation was driving the stock market down in the first half of the year, and elaborated on how falling corporate profit margins would lead to new losses. "My bet is that we're going to have a fairly tough time of it economically and financially before this is washed through the system," Grantham said. "What I don't know is: Does that get out of hand like it did in the '30s, is it pretty well contained as it was in 2000, or is it somewhere in the middle?"       Relevance up to 10:00 2022-09-02 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/320553
A Decline In US Treasury Yields Will Be The Determining Factor

Will The FED's Monetary Policy Affect Inflation?

InstaForex Analysis InstaForex Analysis 01.09.2022 14:13
Gold continues to trade under pressure, dropping to $1,700 an ounce. US Federal Reserve Chairman Jerome Powell's keynote speech last week had a sustained impact that continues to push US equities and precious metals lower. His speech was strong and clear, confirming that the Fed is determined to bring down inflation at all costs. According to the Evening Briefing by Bloomberg, Powell has given up on the possibility of a soft landing and is now aiming for something that could potentially cause much more suffering for US corporations and individuals. However, many analysts are convinced that the Fed's hawkish monetary policy will not be enough to achieve its intended goal. Further, the article states that analysts have called this economic scenario the paradoxical name of "growth recession." It differs from a soft landing in that it is defined as a protracted period of meager growth and rising unemployment. The belief that Chairman Powell is trying to reduce inflation with a "growth recession" to avoid an outright recession is similar to cutting out a picture to fit the frame. The simple truth is that a recession is most likely inevitable, and the question is how deep it will be and how much pain it will cause corporations and Americans in 2023. Achieving an inflation target of 2% when the latest data relative to PCE is above 6% is a pipe dream without an increase in interest rates or a gradual increase in rates with the understanding that this will be a multi-year process of fighting inflation. A historical perspective on how various Federal Reserve Chairmans have faced the challenge of bringing inflation to a manageable target shows that this has never been accomplished without raising interest rates to meet the inflation target.         Relevance up to 11:00 2022-09-02 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/320561
With High Inflation, Why Isn't Gold Rising?

With High Inflation, Why Isn't Gold Rising?

Jing Ren Jing Ren 05.09.2022 23:56
The sales pitch for gold is that it's a hedge against inflation, because it doesn't lose its value. It is a real commodity, unlike fiat currency. Yet, as inflation has skyrocketed around the globe this year, the price of gold has not. In fact, after peaking out in March, it has since trended lower. What gives? Prices are relative One of the things to keep in mind, first, is that gold is priced in dollars. So, sure, there has been inflation in many other currencies (with the notable exception of the yen, which is a whole different story). But the dollar has gotten relatively stronger, despite inflation. Partially, because inflation in other currencies has been even bigger. Take the EURUSD, for example, which popped down to the 0.9900 handle, the lowest in over 20 years. Since the start of this year, the Euro has depreciated over 13% against the dollar, well above the 8.9% annual inflation that was last recorded. In fact, the annual depreciation of the Euro has been almost 17%. That's almost 8% of net benefit for anyone who kept dollars over the last year, despite the highest inflation in the shared currency. Why does this matter? It means that Europeans (and Chinese, Indians, Turks, etc) don't need to buy gold to hedge against inflation in their own economies. Holding dollars was a much better investment than keeping money in the bank. So, what's happening to the price of gold really depends on what's going on with the dollar. But the dollar is worth 8.5% less than it was one year ago. Wouldn't buying gold be an even better option? If we were looking in the past, sure. But when investors decide what to invest in, they are looking to the future. What's the best asset to have in their portfolio going forward, while the inflation readings that we have are for the last year. It's all about expectations One of the reasons that the price of gold rolled around in March is because of increased geopolitical tensions. But the other that has been more long lasting is that's when the Fed started hiking rates. Sure, it was expected that inflation would rise for a while, as it takes some time for monetary policy to take effect. But, eventually, the Fed is going to get inflation under control. Meaning that inflation is expected to go down. More to the point, interest rates are expected to keep rising. People who invest in dollar-denominated fixed income (treasuries, bonds, other securities) would see increasing yields. What that means is that even though inflation is high, in fact, because it's high, there is an expectation of increasing returns for those who hold dollars. Meanwhile, gold doesn't pay dividends or interest. What about the hedge, then? In other words, as inflation rises, the more likely the Fed will be to raise rates and drive down that inflation. That makes the dollar get stronger, so in comparison the price of gold goes down. Gold is a hedge against inflation before it rises. But once there is high inflation, the picture turns around. Assuming the Fed does manage to control inflation. Basically, once inflation is high, it's too late to "hedge" against inflation that already happened.
The AUD/USD Lost After RBA Governor Remarks, The End Of An Era For The UK

The AUD/USD Lost After RBA Governor Remarks, The End Of An Era For The UK

Saxo Bank Saxo Bank 09.09.2022 09:11
Summary:  U.S. Treasury yields rose 6-7bps after the ECB hiked 75bps and Fed Chari Powell’s speech. U.S. equity markets were quiet and managed to finish the session moderately higher. Reserve Bank of Australia Governor Lowe said interest rates were not on a “pre-set path” as the economic outlook was uncertain. Crude oil bounced by 1%. In Japan, a meeting between the MOF, BoJ, and FSA sent signals that FX intervention remains on the cards. The European Union is holding an emergency meeting to discuss measures to tackle the energy crisis in Europe and China is scheduled to release CPI and PPI today. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  U.S. stock markets closed higher in a choppy session, S&P 500 +0.7%, Nasdaq 100 +0.5%.  Trading was quiet after the well-anticipated ECB 75bp hike and Powell’s now consistent hawkish script.  The 6-7bp rise in bond yield did not move stocks.  VIX edged down further to 23.6. On the corporate front, T-Mobile (TMUS:xnas) announced a buyback program authorization for 7.5% of the company’s market cap and expected to complete the buyback by Sep 2023. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) Following a 75bp hike by the ECB and Fed Chair Powell sticking to his hawkish stance in a speech yesterday, U.S. treasury yield jumped 6 to 7 bps across the curve.  Money market rates are pricing in a 85% chance of a 75bp hike on September 22.  Chicago Fed President Evans said the Fed “could very well do 75 in September” but his mind “is not made up” yet. The Treasury Department announced the size of next week’s 3/10/30-year auction at a total size of USD91 billon.  Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index underperformed its major Asian peers which advanced more than 1% across the board to continue its multi-session decline since the beginning of September and finished the day 1% lower.  The weakness in Tencent (00700.xhkg), -3.1%, Chinese developers, and energy stocks dragged down the benchmark index in Hong Kong.  According to filings to the stock exchange, about USD7.6 billion worth, or 2% of the market cap, of Tencent shares have been transferred to CCASS, the Stock Exchange of Hong Kong’s clearing and settlement system.  Prosus, Tencent’s largest shareholder holding 27.99% of shares outstanding, confirmed that it has transferred 192 million shares of Tencent to CCASS and is selling Tencent shares.  In June, Prosus (PRX:xams) announced that the company was going to offload its stake in Tencent to raise cash to buy back its own shares and Naspers’ (NPN:xjse) shares (Prosus’ parent) at a discount to NAV. The Chinese developer space was once again under selling pressure.  CIFI (00884:xhkg) tumbled 13.6% following credit agency S&P downgraded the long-term rating of the company’s senior unsecured debts by 1 notch to BB- from BB. Country Garden (02007:xhkg) plunged by 6.8%.  Energy stocks declined on sharp fall in crude oil price, CNOOC (00883:xhkg) -3.6%, PetroChina (00857:xhkg) -1.9%.  The Chinese automaker space was sold, Great Wall Motor (02333:xhkg) -4.7%, Geely (00175:xhkg) -3.1%, BYD (01211:xhkg) -3.0%, Li Auto (02015:xhkg) -3.0%, XPeng (09868:xhkg) -2.6%. After the Hong Kong market close, Bilibili (09626:xhkg/BILI:xnas) reported a larger than expected loss in 2Q2022 on the deterioration of gross and operating margins.  The company’s ADR plunged 15%.     USDJPY paid little heed to Japan’s three-party meeting USDJPY stuck close to 144-levels on Thursday despite stronger signs of concern from the Japanese authorities. The meeting between Japan’s MOF, central bank and FSA ended with some strong verbal signals that direct intervention remains on the cards, but even if that was to happen, it will only increase the volatility in the yen and cannot possibly reverse the move as long as the monetary policies of the US and Japan continue to diverge. EURUSD gained some bids in early Asian morning to rise to 1.002, but the move remains fragile especially with the emergency meeting scheduled for today. GBPUSD reversed the overnight weakness to rise to 1.1540 with dollar losing some momentum in early Asian trading hours.  Crude oil prices (CLU2 & LCOV2)  A slight recovery was seen in crude oil prices overnight despite the hawkish Fed rhetoric and a further surge in the dollar. Supply side dynamics remained in focus, with the EIA saying that crude inventories rose by 8.85 million barrels last week, while supplies dropped in the largest storage hub of Cushing. Gasoline inventories also gained, but there was no change to oil production. Putin warned that Russia will not supply energy to any nation that backs a US-led price cap on its crude oil sales. However, with WTI futures now priced at ~$83/barrel and Brent futures below $90, eyes are again on OPEC+ which hinted earlier this week the intention was to keep crude oil prices around the $100-mark. Demand concerns have picked up since the OPEC meeting due to widening China lockdowns and more aggressive central bank rate hikes.   Copper (HGc1) Copper is showing signs of stabilizing despite demand concerns from China as Covid restrictions continue to be tightened. Copper rose above $3.50 per pound overnight, as supply concerns remain top-of-mind with mining companies continued to struggle to meet their production targets with top producer Chile has seen its exports slump to a 19-month low due to water restrictions and lower ore quality - while demand from China, surprisingly is showing signs of strengthening as infrastructure push ramps up. Having found support last week at $3.36/lb, after retracing 61.8% retracement of the July to August rally, copper is currently staring at resistance in the $3.54 area where recent lows and the 55-day moving average merges. For a real upside and trend reversal to occur the price needs to break above $3.78/lb while a break below $3.36/lb could see the metal take aim at $3/lb.  What to consider? The Queen of England has passed away and Charles has taken the throne  It’s the end of an era for the UK with the passing of Queen Elizabeth, age 96. Some of the Queen’s key moments since reigning from the 1980s to today include: in 1986 Elizabeth became the first monarch to visit China. It was an important piece of Britain’s diplomatic effort as it prepared to return Hong Kong to Chinese control. In 2011, The Queen became the first British monarch to set food in Ireland in 100 years, with the trip being widely praised as a historic moment of reconciliation. In 2012 the Queen celebrated 60 years on the throne and in 2022 Elizabeth became the first and only British monarch to reach 70 years on the throne. Politicians from the Commonwealth and across the world paid tribute to the Queen. UK Parliament will pay tribute to Queen Elizabeth on Friday and Saturday. Australian Parliament will not sit next week.   ECB’s 75bps rate hike As was generally expected, the European Central Bank went ahead with a 75bps rate hike on Thursday, taking the deposit rate to 0.75%. President Lagarde said risks to inflation are on the upside and growth are on the downside, but did not rule out further tightening. The ECB raised projections for inflation (5.5% in 2023 now vs 3.5% earlier), lowered growth for 2023 (0.9% vs 2.1%), and 2024 (1.9% vs 2.1%) while raising growth for 2022 by a notch. Lagarde said that 75 bps was not the norm, but “moves will not necessarily get smaller” as policy was dependent on data and on a meeting by meeting basis, echoing Lane’s comments from last week. ECB’s Lane was however noted to be more hawkish yesterday than what his previous comments suggested. This keeps the door for another 75bps rate hike still open.  Fed Chair Powell stays in the chorus Fed Chair Jerome Powell stuck to the tune that the Federal Reserve members have been singing, suggesting a 75bps rate hike at the September meeting as inflation reins. He noted that the labor market is “very, very strong” and wages are elevated, while also signaling that growth will likely fall below trend. On inflation expectations, a key concern for Fed officials, the Fed chair said that today they are well anchored over the long-term, but the clock is ticking and the Fed has more concerns that the public will incorporate higher inflation expectations in the short-term. Fed’s Evans also hinted at a 75bps rate hike for September. With the chorus on inflation getting louder and market pricing for September being very close to a 75bps rate hike, a softer headline inflation print next week likely has the potential to usher in a relief rally. If, however, inflation remains high, we could see another leg down in equities.   Australia’s trade surplus halves as coal and iron ore exports fall from record highs. What next? Australia’s trade surplus almost halved in July, plunging from A$17.1b to an A$8.7b surplus, when the market expected the surplus balance to fall to just A$14.5b. It comes as exports of coal and iron ore fell from their record highs, dragging down total exports by 10%. Coal export earnings fell 17% with the northern hemisphere in peak summer, while iron ore export earnings fell 15% tarnished by China’s slowdown. Australian imports (covering outbound tourists) rose 5% with Aussies escaping the record cold winter to enjoy the European sun. The market responded to the drop in exports, with the Coal futures price falling to a 3-day low, losing 1.7%, taking the two-day loss to 7%, which pulls the price away from its record. For investors it’s a timely reminder, energy commodity prices are seasonally impacted, and could remain volatile before picking up later this year when we think peak buying is expected. Australian bonds and equities price in the RBA will be less aggressive, so it’s risk-on again RBA Governor Phillip Lowe sees a slower pace of rate hikes while conceding a sharp slowdown in global growth will make it hard to avoid a soft landing. The AUDUSD lost 0.4% after his remarks. While short-term rates as measured by the 3-year Australian bond yield fell 0.17% - supporting the risk assets rally. As such, the Australian Technology Sector surged to its highest level in a week. But sophisticated Australian investors seem skeptical that the RBA will slow the pace of hikes. Australian interest rate futures suggest rates could peak at 3.6% by mid-next year. We think the market would also be especially rate rises will slow as Australia’s Resources Minster was tapped for the second time to restrict Australian energy exports, as the nation is tipped to run out of energy in 2023. EU proposes five measures to curb gas demand and prices Ahead of Friday’s emergency energy meeting, European Commission President Ursula von der Leyen proposed five radical steps to curb costs and demand: 1) Smart savings of electricity by mandatory targets to reduce peak hour demand for electricity; 2) Cap on revenues of companies producing electricity with from low-cost sources such as wind and solar with profits being re-channeled to vulnerable people and companies; 3) Solidarity contribution from fossil fuel companies; 4) Liquidity support for energy utility companies in order for them to cope with elevated market volatility; 5) Cap on Russian gas revenues on the remaining 9% Russia supplies to Europe, down from a pre-war level around 40%. China’s PPI is expected to have risen as CPI remained stable in August PPI is expected to fall sharply to 3.2% (Bloomberg consensus) in August from 4.2% in July.  Base effect and a decline in coal prices in August could be factors contributing to the deceleration in producer price inflation.  CPI, however, is expected to edge up to 2.8% in August from 2.7% in July.  Analysts suggest that favourable base effect was offset by vegetable price increases amidst the heatwave. Bilibili reported below expectation earnings on margin compression   Bilibili (09626:xhkg/BILI:xnas) reported a worse than expected adjusted loss per share of RMB4.98 (Bloomberg consensus: loss per share RMB4.37, 2Q2021: loss per share RMB2.23). Revenue came in at RMB4.91 billion, largely in line with analyst estimates. The larger-than-expected loss came from disappointing margins.  Gross margin contracted to 15.3% from 16.4% in 1Q2022 and 22.4% in 2Q2021 due to the weak performance of the mobile game business (segment revenue -15% YoY).  Operating margin deteriorated to -39.4% in 2Q2022 from -33.9% in 1Q2022 and -20.9% in 2Q2021 which are attributable to higher general and administrative expenses +44% YoY) as well as research and development expenses +68% YoY).   The company’s revenue guidance of RMB5.6bn-5.8bn for 3Q was below market expectations.  A lender appointed receivers to siege Evergrande’s Hong Kong headquarters premises The Financial Times said that a lender had appointed receivers to siege the headquarters building of China Evergrande (03333:xhkg, suspended) and looked to force a sale of the premises.  The distressed developer’s Hong Kong headquarter has been pledged to secure a loan from a syndicate of lenders led by China Citic Bank International.  Evergrande has previously been served a winding-up petition and is scheduled to have a hearing on the petition at the High Court on 28 Nov 2022. Separately, the Wall Street Journal reports that a consortium of Chinese state-owned banks and private enterprises agreed to pay USD1.05 billion in a court-arranged auction for Evergrande’s 14.6% in Shengjing Bank, a regional bank based in Shenyang, Liaoning province. For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.     Source: APAC Daily Digest: What is happening in markets and what to consider next – September 9, 2022 | Saxo Group (home.saxo)
For What It Is Worthy To Pay Attention Next Week 23.01-29.01

The United Kingdom's Anti­-inflation Plan, The ECB Doesn't Expect A Recession In The Eurozone

Saxo Bank Saxo Bank 09.09.2022 09:19
Summary:  The USD weakened sharply overnight, led by a tumbling USDJPY on comments from Bank of Japan governor Kuroda after he met with Prime Minister Kishida. Risk sentiment was buoyant yesterday and overnight on the weaker US dollar and after the ECB hiked by 75 basis points as most expected, the most in the central bank’s history. EURUSD has backed up well above parity again ahead of an EU Summit that will attempt to outline a common approach to soaring power/gas prices amidst limited supplies ahead of winter.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities continued to rally yesterday with S&P 500 futures pushing above the 4,000 level to close at 4,005, and even more impressively momentum is extending this morning in early European trading hours. The rally still seems to be mostly technically driven, but there was some support for US equities in yesterday’s initial jobless claims data showing little negative pressures in the US labour market. After the US market close, DocuSign shares rose 17% as the technology company delivered a strong result and raised its outlook breathing some fresh optimism into the technology sector. The next big event for US equities is the US August CPI report on Tuesday. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index soared 2.6% today, snapping a six-day losing streak, following August inflation data in China surprised on the downside and raised hope for more monetary easing to come from the Chinese policymakers. Mega-cap internet stocks strongly, Meituan (03690:xhkg) +5.5%, Netease (0999:xhkg) +4.8%, Baidu (09888:xhkg)+3.6%, Alibaba (09988:xhkg) +3.1%, Tencent (00700:xhkg) +1.7%. One notable underperformance in the internet space was Bilibli (09626:xhkg/BILI:xnas) which plunged nearly 17% after reporting a larger than expected loss in 2Q2022 on the deterioration of gross and operating margins. Ahead of the mid-autumn festival, catering stocks gains, Jiumaojiu (09922:xhkg) +6.7%, Haidilao (06862:xhkg) +2.6%. Chinese property names rallied, led by Country Garden (02007:xhkg) which jumped 14%. CSI 300 climbed 1.3%, led by property names, financials and dental services.  USD broadly weaker after ECB meeting and USDJPY correction overnight Bank of Japan Governor Kuroda commented on the undesirability of sharp JPY moves in comments overnight after meeting with PM Kishida. This took USDJPY back below 143.00 two days after it nearly touched 145 in its latest surge higher. The threat of intervention may not hold the JPY higher for long if global yields continue higher again. Elsewhere, the USD was sharply lower despite a solid bounce-back in US treasury yields and EURUSD traded well north of parity again after an initially choppy reception of the expected 75-basis point hike from the ECB and President Lagarde’s press conference. The action took EURUSD back to the cusp of important resistance in the 1.0100 area, which has been the resistance of note for more some three weeks. The move was supported by surging European short yields, although the energy/power situation will remain the focus for the euro. Crude oil (CLV2 & LCOX2) The oil price weakness seen this week following the break below $91.5 and $85 in Brent and WTI may still end up being a temporary development with the dollar weakness seen overnight, especially against the yen and euro, adding a bid back into the market. Dr. Copper meanwhile is recovering as demand from China show signs of improving. Potentially a signal to the energy market of not getting too carried away by a temporary lockdown related slowdown in Chinese demand. However, with US implied gasoline demand falling below 2020 levels last week, a potential recovery above the mentioned level is likely to be muted. Focus on Putin and his threat to cut supply to nations backing the US-led price cap on crude sales and OPEC+ which may intervene should price weakness persist. Copper (COPPERUSDEC22) Copper trades higher with the futures market signaling increased tightness, primarily due to a pickup in Chinese demand and imports, which despite lockdowns has seen the infrastructure push ramping up. In addition, a lower-than-expected August CPI and PPI may give the PBoC more room to ease conditions. Exchange monitored inventory levels has dropped to an 8-month low at a time where mining companies struggle to meet their production targets with top producer Chile seeing its exports slump to a 19-month low due to water restrictions and lower ore quality. Speculators have increased short positions in recent weeks as a hedge against recession and China weakness, and they are now increasingly exposed. Support at $3.54 and for a real upside and trend reversal to occur the price needs to break above $3.78/lb. Bitcoin This morning Bitcoin rose the most in more than a month, surpassing the psychological $20k level and now trading at around $20.5k. This is despite a report published by the White House Office of Science and Technology Policy yesterday, stating that cryptocurrencies make a significant contribution to energy usage and greenhouse gas emissions in the US, and that they recommend monitoring and potential regulation. It could have a significant impact on cryptocurrencies using the proof-of-work consensus mechanism such as Bitcoin. US Treasuries (TLT, IEF) US Treasury yields bounced back toward the top of the range after the previous day’s decline, keeping the attention on the cycle highs for the 10-year yield near 3.50%. The treasury sell-off was sparked around the time of Fed Chair Powell firm comments on fighting inflation, which sent 2-year treasury yields some 8 basis points higher. The latest weekly jobless claims figures was out around the same time and showed the lowest level of claims since late May. What is going on? The ECB hiked interest rates by 75 basis points This was a unanimous decision of the ECB governing council. This is a major signal sent to the market. The move was aimed to catch up with the neutral rate (though the ECB acknowledges they don’t know where the neutral rate is). The ECB also revised upward its inflation forecasts sharply (from 6.8 % to 8.1 % this year). Growth forecasts were also revised. But the ECB still doesn't expect a recession in the eurozone (GDP growth expected at 0.9 % versus prior 2.1 % this year). During the press conference, ECB president Christine Lagarde opened the door to further interest hikes. This is no surprise. She committed to keep hiking over 2, 3 or 4 meetings (including today’s). This implies further hikes until October, December or February, followed by a pause. Forward guidance is not dead, finally. Expect a 50 basis point hike in October, in our view. The German 2-year Schatz yield rose over 20 basis points to yesterday to close at new cycle high of 1.33%. The United Kingdom announces a massive anti­-inflation plan Yesterday, the new prime minister Liz Truss announced a major plan to fight the high cost of living related to energy prices. There are five major measures: 1) capping household bills at £2500 per month. 2) a new £40bn liquidity scheme with the Bank of England for energy firms who need it. 3) no further windfall tax (a tax levied on an unforeseen or unexpectedly large profit). 4) speeding up the deployment of clean energy but at the same time granting more oil and gas licenses for North Sea. and 5) commitment to net zero 2050. If this is successful, it means that the peak in UK inflation will certainly be lower (by 4-5 %). So far, the government believes that the peak could be between 13 and 18 %. This is a broad range. But it shows the level of uncertainty about the short-term economic outlook. Finally, Truss refused to evaluate the total cost of the new plan. Several experts believe it could be close to £150bn, over 6% of UK GDP. DocuSign shares up 17% in extended trading Q2 revenue was much better than expected but confirmed its fiscal year outlook on revenue which was better than the underlying consensus which was clearly below analyst estimates. The company sounded optimistic on the billing outlook, which is the key indicator for future growth, and as a result traders pushed shares 17% higher in extended trading. Apple warned by US government against using Chinese chips Congressional Republicans including Senator Marco Rubio of the Senate intelligence committee and Michael McCaul of the House foreign affairs committee expressed alarm at reports that Apple cited Yangtze Memory Technologies as one of its suppliers of flash memory chips used for phone storage.  “Apple is playing with fire”, said Senator Rubio, threatening scrutiny of the company. Apple said it would not sell iPhones using the chips outside China. What are we watching next? EU Summit today on emergency intervention in power markets and possibly to cap imported Russian gas prices The EU may be able to cap electricity prices, but this could mean a shortage of output relative to demand, i.e., forcing rationing over the winter period when demand surges. Russian leader Putin has called any plan to cap prices “another stupidity”. Swedish election this weekend Swedes go to the polls on Sunday, with the right populist Sweden Democrats expected to become the second-largest political party. In the past, the right-leaning main parties have been unwilling to consider alliances with the Sweden Democrats, as their positions were seen as too extreme, but this has made for very fragile left-coalitions in recent years because of the lack of a sufficient plurality in Parliament. Earnings to watch Today’s key earnings release is Kroger which is a large US supermarket chain with a strong competitive position in the current inflationary environment. Analysts are expecting revenue growth of 8.6% y/y in FY23 Q2 (ending 31 July) and lower operating margin expected due to rising input costs. Today: Kroger Earnings releases next week: Monday: Oracle Tuesday: DiDi Global Wednesday: Inditex Thursday: Polestar Automotive, Adobe Economic calendar highlights for today (times GMT) 0930 – ECB President Lagarde to speak 1230 – Canada Aug. Net Change in Employment / Unemployment Rate 1600 – US Fed’s Waller (Voter) to speak 1600 – US Fed’s George (Voter) to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher         Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-9-2022-09092022
The UK Markets Remain Volatile, Possible Contraction Of The Eurozone Economy

British Pound (GBP) And UK Economy: Next Week Is Full Of Vital Releases - Inflation, GDP And Labour Market Data

ING Economics ING Economics 09.09.2022 15:38
Next week's US inflation numbers will need to be quite surprising for the Fed to deviate from a 75bp hike at its September meeting. The Bank of England's scheduled meeting has been postponed, and instead the focus will be on several pieces of key UK data In this article US: Core inflation likely to rise to 6.1% UK: Bank of England to stick to 50bp rate hike despite energy package Source: Shutterstock Article updated on 9 September to reflect the postponement of the Bank of England's scheduled meeting US: Core inflation likely to rise to 6.1% We have the last full week of economic data ahead of the September Federal Open Market Committee (FOMC) meeting, but it will take some surprising numbers to make the Fed deviate from a third consecutive 75bp rate hike. After all, the economy is posting decent growth, creating jobs in significant numbers, and Fed Chair Jerome Powell is arguing that “we need to act now, forthrightly, strongly as we have been doing and we have to keep at it until the job is done”. The data includes CPI, which should show headline inflation being depressed by lower gasoline prices, but core inflation is likely to rise to 6.1% from 5.9%. Retail sales should post flat growth, but remember this is a nominal figure and those falling gasoline prices will be a major drag. Real consumption is likely to be up in the third quarter. We also expect manufacturing output to grow further. The deteriorating global outlook and weakening domestic housing market combined with the cumulative impact of policy tightening and the strong dollar means we think the Fed will moderate its hiking to 50bp in November and 25bp in December. Weaker wage pressure and more limited month-on-month increases in CPI thanks to lower import and other input costs would certainly help this argument. UK: Bank of England to stick to 50bp rate hike despite energy package The United Kingdom will observe a period of mourning following Queen Elizabeth II’s death on Thursday, and Parliament will be adjourned during this time. The Bank of England's scheduled meeting has also now been postponed to the following week, but the ONS has confirmed that several pieces of important data will still be released. Here's what we expect: July GDP (Monday): Expect a large bounce-back from June, where the addition of an extra bank holiday artificially distorted the monthly GDP numbers. Depending on the arrangements during the period of mourning, the addition of an extra bank holiday in September is possible, and this would factor into the GDP numbers for the current month. We’ll therefore have to wait until the fourth quarter to get a clearer idea of how the economy is faring in GDP terms, and we suspect there’s still a risk of a negative growth figure. However, the announcement of an energy price guarantee by the government considerably reduces the risk of a deep downturn, and potentially also a technical recession. Jobs (Tuesday): Hiring demand is falling, though recent data and surveys have suggested that the worker shortages plaguing the jobs market have only improved slightly over recent months. The announcement of an energy price cap for businesses should help limit what otherwise could have been a more immediate rise in redundancies as firms’ costs increased. We expect the unemployment rate to remain stable next week, but we’ll also be watching closely for signs of a more pronounced return of inactive workers to the jobs market. Inflation (Wednesday): A 6% fall in petrol/diesel prices through August will drag headline inflation slightly lower. That doesn’t mean we’re past the peak, though the introduction of the energy price cap means inflation is less likely to materially surpass 11% in the autumn. Without the cap, we’d forecast inflation would go to 16% or above in January. This is a double-edged sword for the BoE. On one hand, the reduced the peak in headline inflation should ease concerns about consumer inflation expectations becoming even less anchored. That points to another 50bp rate hike when the BoE meets later in September, despite the Fed and ECB going more aggressively. The BoE has shown in past meetings that it isn’t pressured to follow those other central banks, albeit the hawks will be worried about the recent slide in sterling. They will also argue that the government’s action increases the risk of inflation staying elevated in the medium-term, given the reduced risk of recession, Some members are therefore likely to vote for a 75bp hike at the next meeting. But ultimately with a lot already priced into markets for the BoE, policymakers will be wary about adding fuel to the fire. As we saw with the ECB on Thursday, the decision to go with a 75bp hike saw markets price that as the default move at the next meeting. Key events in developed markets next week Source: Refinitiv, ING This article is part of Our view on next week’s key events View 3 articles   TagsUS Bank of England   Read this article on ING Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more    
FX: The Gap Versus The FX spot Rate In Poland Is Already The Largest In The CEE Region

Czech Republic's Energy Prices, Russia's Rate And Inflation In Poland

ING Economics ING Economics 11.09.2022 09:34
We are anticipating a 25-50bp cut at the Central Bank of Russia meeting next Friday, as there's still growing inflationary pressure led by uncertainties around fiscal policies and the recovery in lending activities. For the Czech Republic, we are expecting the lowest month-on-month inflation rate this year at 0.6%, due to a drop in fuel and food prices In this article Russia: Rate cut cycle to continue Poland: exports deteriorate and inflationary pressure continues Czech Republic: Energy prices remain the main uncertainty for the CPI Source:Shutterstock Russia: Rate cut cycle to continue The current inflation trends seem to be tracing the lower border of the Central Bank of Russia’s (CBR's) forecast range for 2022 (12.0-15.0%) and 2023 (5.0-7.0%). This inflation trajectory, according to the CBR’s recent medium-term forecast, corresponds to an average key rate of 7.4% for August-December 2022 and 6.5% for 2023. Following this guidance, the key rate, currently at 8.0%, could be cut by 100bp until year-end, and by another 100bp next year. Our base case for the 16 September meeting is a restrained 25-50bp cut, reflecting growing seasonally-adjusted inflationary pressures, persistent elevated inflationary expectations by households, some recovery in lending activity, and ongoing uncertainties surrounding future fiscal policy (prospects of stimulus). At the same time, a more decisive 75-100bp cut, though less likely, is also not excluded – signalling the monetary authority's confidence in achieving longer-term inflationary targets. Poland: exports deteriorate and inflationary pressure continues Current account balance: We project that the current account deficit widened to some €2.6bn in July as the trade deficit increased towards €1.6bn amid easing exports and robust imports boosted by high prices of energy commodities. On a 12-month cumulative basis, the external imbalance increased above 4% of GDP and is expected to stabilise around 5% of GDP later this year as the outlook for European manufacturing and hence Polish exports deteriorate. CPI: The August flash estimate of 16.1% year-on-year is expected to be confirmed. Inflationary pressures continue and price growth is broad-based. Monthly increases in food and energy prices turned out higher than expected. What is more, core inflation, excluding food and energy prices, accelerated towards 10%YoY from 9.3%YoY in July. In the wake of the new 2022 CPI inflation high, the National Bank of Poland will continue its rate hikes in the short term. Czech Republic: Energy prices remain the main uncertainty for the CPI July inflation surprised with the lowest energy price rise this year despite the biggest price hike for households being announced. Further energy price rises are announced for August, however, the ratio of fix-float contracts and the approach of the CZSO remains unclear. Even so, we believe that energy price hikes will be reflected to some extent sooner or later. On the other hand, the massive 10% month-on-month drop in fuel prices, as well as the first food price decline this year indicated by surveys, are working to the downside. Overall, we expect the lowest month-on-month inflation rate this year at 0.6% from 1.3% last year, which should keep the annual rate steady at 17.5% YoY. However, this does not mean we have peaked. On the contrary, the effect of the drop in fuel is rather a one-off effect and energy prices should pass through to CPI in the coming months. The risk for this month is that energy prices from July will be reflected in August's number and inflation will surprise with a significant jump upwards. Key events in EMEA next week Source: Refinitiv, ING TagsRussia central bank Poland inflation Czech Repulbic   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The EUR/USD Cross-Currency Pair Rises For The Fourth Consecutive Day

Can Prices Of The EUR/USD And The GBP/USD Pairs Stay Steady?

InstaForex Analysis InstaForex Analysis 13.09.2022 10:10
The only thing investors are worried about right now is the extent of the European Central Bank and Federal Reserve's rate hikes. That was the reason for the noticeable growth of the euro, which, due to its scale, pulled up other currencies as well—firstly, the pound. The reason for this was the words of ECB Vice President Luis de Guindos, who almost directly stated that the refinancing rate will be raised again by 75 basis points at the next board meeting. The reason for such aggressive actions of the European Central Bank is the growing inflation. Most likely, the dollar will continue to lose its positions today. The reason for this will be inflation. According to forecasts, US inflation should slow down from 8.5% to 8.1%. That is, inflation is slowing down for the second month in a row, which gives the Fed a reason to reduce the rate of interest rate growth. So there may be a situation where interest rates are rising quite strongly in Europe but much slower in the United States, if the American regulator does not stop this process at all. Just a few months ago, the situation was diametrically opposite, and it was the Fed that was actively raising the rate, and the ECB was only considering the possibility of tightening monetary policy. And this led to a serious rise in the dollar. Now it is quite possible to talk about a U-turn. Inflation (United States): The EURUSD currency pair locally jumped to 1.0200 during an intense upward movement. This move resulted in overheating of long positions in the short term, resulting in a technical pullback in the market. A stable holding of the price above 1.0150 allows the subsequent growth of the euro with a breakout of 1.0200. The GBPUSD currency pair has a similar dynamics, where the quote has firmly fixed above the level of 1.1650. With the upward mood on the market, a subsequent increase in the value of the pound sterling in the direction of 1.1800 is not excluded, where stagnation/pullback is already possible.   Relevance up to 20:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/321509
Poland: Rapidly Rising Core Inflation Confirms That The Impulse From Energy Shock Is Strong

Podcast: Discussion On Market Sentiment, Silver And Inflation And More

Saxo Bank Saxo Bank 13.09.2022 10:29
Summary:  Today we discuss the extension of momentum in equities as the market is clearly positioning itself for a weaker than expected US August inflation figure later today. The risk-on sentiment is seen across many markets including the USD which continues to weaken against the EUR which might have got some tailwinds lately from the war success in Ukraine. We also talk about Silver, but more importantly the ongoing European energy crisis that has eased a bit lately with lower energy prices across the board. Finally, we go through stocks to watch with a focus on Ocado's horrible revenue miss and Inditex's earnings tomorrow, ending with a quick rundown of today's macro calendar. Today's pod features Peter Garnry on equities and Ole S. Hansen on commodities. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.     Source: https://www.home.saxo/content/articles/podcast/podcast-sep-13-2022-13092022
U.S. Treasury Bond Yields Rose On Friday,  Crude Oil Started The Week With Gains

As A Result Of The Fight Against Inflation, The Appetite For Risk Has Decreased

InstaForex Analysis InstaForex Analysis 14.09.2022 11:59
Euro and pound collapsed as inflationary pressure in the US jumped again. Risk appetite noticeably fell because the Federal Reserve is likely to continue its aggressive increase of interest rates in order to curb inflation. This may occur as early as next week, during the September meeting of the central bank. In fact, in the most recent speech of Fed Chairman Jerome Powell, another 75 basis point rate hike is said to be possible, following the increases in June and July. He said the decision will depend on the data collected. Chicago Fed chief Charles Evans, who in the past has been dovish, also noted that a soft landing could be achieved for the economy without triggering a recession. He reasoned that unemployment is now 3.7%, so the central bank will be able to meet the targets and keep it at about 4.5% by the time the fight against high inflation is finished. He added that the danger of excessive tightening of policy will increase only when rates reach 3.5%. Of course, rising inflation is not only a concern for the Federal Reserve, but also for the Biden administration as his Democratic Party moves closer to the midterm congressional elections. High gas and food prices earlier in the year have seriously undermined the president's popularity and the Democrats' prospects for maintaining control of Congress. Talking about the forex market, a collapse was seen in EUR/USD, which forces buyers to cling to 1.0010. Only its breakdown will lead to a rise towards 1.0040 and 1.0090, or to 1.0120. In case of a further decline, sellers will become more active in the market, which will result in a price decrease towards 0.9880 and 0.9810. In terms of GBP/USD, quotes fell below the 15th figure, indicating the sellers'persistence to return to the September lows. Only the return to 1.1560 will prompt a rebound towards 1.1610 and 1.1660, or possibly 1.1720. If pressure continues, the pair will drop below 1.1460 and head towards 1.1405.     Relevance up to 09:00 2022-09-15 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/321656
The Recent Rally Of Bitcoin Had Been Capped, The Digital Yuan (eCNY) Has Received Upgrades

Litecoin Remained Stable And Bitcoin Continues Downward Trend

InstaForex Analysis InstaForex Analysis 14.09.2022 13:16
Contrary to many expectations, Bitcoin successfully spent the second part of last week. The asset managed to defend the $18.5k–$19k level and resume its upward movement. The formation of the largest green candle in the last three months gave hope for a strong bullish momentum. Along with Bitcoin, stock indices grew, including the S&P 500 and NASDAQ. The US dollar index corrected after reaching another high, which gave high-risk assets time to rise. Analysts at State Street report that institutional investors remain confident in the prospects and value of cryptocurrencies. Their main focus is on Ethereum before the merger, which is why Bitcoin falls out of the investment agenda. According to Santiment, the local undervaluation of BTC provoked a strong rebound to the $22k level. The publication of CPI and the reaction of the crypto market Most factors indicated a high probability of BTC reaching a local high at $25k. The publication of the dynamics of the consumer price index put a bold dot on market expectations. The indicator decreased from 8.5% to 8.3%, with a forecast of a fall to 8.1%. The rate of decline in the inflation rate was below forecasts. The cryptocurrency market and Bitcoin reacted sharply negatively. As of September 14, of the top 30 cryptocurrencies, only Litecoin managed to maintain stability. The capitalization of the industry fell by 6.6% to $900 billion, and Bitcoin lost 9% in a few hours. As of 08:00 UTC, BTC/USD has consolidated near the $20.2k support level. Stock indices also fell, with the S&P 500 down 4.3% overnight, the biggest drop since June 2020. BTC/USD Technical analysis In technical terms, the cryptocurrency has reached a local support zone in the $19.8k–$20.2k area. Following the results of the past 24 hours, Bitcoin has formed a bearish engulfing pattern, which indicates a continuation of the downward trend. Selling volumes continue to grow, but technical metrics signal a local reversal. The RSI and Stochastics bounced off the 35–45 area and are starting to move flat, which indicates consolidation. Bullish scenario Bitcoin needs to hold above the $20k level in order to maintain the opportunity to resume the upward movement. If the round mark is maintained, the price of BTC will rush to the $20.4k–$20.9k resistance area. Successful passage of this segment and consolidation above $21k opens up prospects for movement to $22k before the cryptocurrency. Bitcoin will most likely be in the consolidation stage in the coming days after the negative news. Bearish scenario The shock state of the market will be replaced by awareness of the difficulties of fighting inflation. Most likely, this will lead to a decrease in investment activity in the cryptocurrency market and a reorientation of investors to USD products. In the shorter term, this will be reflected in the price movement towards the key support area of $19.5k–$19.9k. Given the effect of the ETH update, it can be assumed that this zone will be the final one before the reversal. But in case of aggravation of the bearish movement by additional negative factors, the price will meet support at the final level of $18.5k–$19k. Results Summing up the results of the CPI publication, we can say that the situation with liquidity and tightening of monetary policy will not change in the coming months. Powell stated that the Fed's actions would depend on the fact, which turned out to be undervalued alarming. Inflation is falling, but very slowly, and therefore an increase in the key rate by 75 basis points in September is a settled issue. In the coming weeks, the market will prepare for a rate hike, as well as adapt its investment strategy to the deterioration of the financial environment. Earn on cryptocurrency rate changes with InstaForex Download MetaTrader 4 and open your first trade Relevance up to 10:00 2022-09-15 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/321668
The UK Markets Remain Volatile, Possible Contraction Of The Eurozone Economy

United Kingdom: Inflation Is Expected To Hit 11% As Energy Price Cap Is Set To Be Applied

ING Economics ING Economics 14.09.2022 13:37
Headline inflation will rise a little further having eased back below 10% in August, and it's likely to stay around 11% into early next year before falling back more dramatically. However, the Bank of England is watching wage growth more closely, as the hawks worry that worker shortages could lead to core inflation staying more persistently above target The introduction of a government cap on household energy prices means that we should now be fairly close to the peak in these headline figures The absence of another upside surprise to UK inflation this month takes a bit of pressure off the Bank of England to move even more aggressively when it meets next week. Headline CPI came in a touch lower than both consensus and last month’s level, at 9.9%, and that’s largely because of a near-7% fall in petrol/diesel prices during August. We expect another 2% decline in next month’s figures. The introduction of a government cap on household energy prices means that we should now be fairly close to the peak in these headline figures. The fact that electricity/gas bills won’t be rising by around 80% in October and a further 30-40% in January means that the peak in CPI should be around 5 percentage points lower. With the government due to cap the average household energy bill at £2500, up from around £2000 now, we expect a peak in the region of 11% in October. That's compared to 16% in January which is what we’d forecasted before the support was announced. UK inflation now set to peak at around 11% after energy price support Source: Macrobond, ING forecasts   We’d expect inflation to stay around there until early next year, before cooling more quickly as energy base effects kick-in. We think it could be more-or-less back to the Bank of England’s 2% target by the end of next year, crazy as that currently seems. But what policymakers are more interested in is core inflation – or to put it more accurately, the more persistent parts of the inflation basket. Here the news is mixed. On a month-on-month price basis, the increases we saw in August do seem fairly broad-based. However, there are signs that ‘core goods’ inflation is easing off, linked perhaps to the rise in retailer inventory levels relative to sales. That’s a function of supply chains beginning to improve, and in some cases commodity prices having fallen, which is coinciding with reduced demand for goods. Higher inventories and lower sales reducing pressure on goods prices Source: Macrobond, ING   However, the Bank is more focused on wage growth, and as we noted yesterday, the worker shortages that have plagued the jobs market for several months now don’t appear to be resolving themselves very quickly. The BoE’s hawks are concerned that this will translate into persistent pressure on wage growth. We aren’t totally convinced this will be enough to swing the pendulum in favour of a 75 basis-point rate hike next week, despite both the ECB and Federal Reserve going down this path. It’s a pretty close call, not least because the hawks will be worried about the recent slide in sterling, and markets are closer to pricing a 75bp move than a 50. But for now, we think another 50bp move next week is the most likely outcome, followed by another such move in November. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Yesterday's Economic Data From The US Eased Fears Of Recession

Headline Consumer Price Index- Summary Of The US Inflation Report

TeleTrade Comments TeleTrade Comments 15.09.2022 12:52
UOB Group’s Senior Economist Alvin Liew and Rates Strategist Victor Yong review the latest release of US inflation figures. Key Takeaways “US headline consumer price index (CPI) inflation was off from recent highs but still elevated at 8.3% y/y (from 8.5% y/y in Jul), above Bloomberg estimates of 8.1% (but in line with our forecast). On a m/m basis, the headline CPI picked up pace, increasing 0.1% m/m  (versus flat at 0% in Jul) and faster against Bloomberg estimate of a decline by -0.1% m/m.” “A bigger concern was the core CPI inflation (which excludes food and energy) which raced higher sequentially, reflecting unabating underlying momentum for price pressures. On a m/m basis, core inflation rose by a faster 0.6% in Aug (up from 0.3% in Jul, and above Bloomberg estimate of 0.3%). Compared to a year ago, it rose to 6.3% y/y in Aug, from 5.9% in Jul, and above Bloomberg estimate for 6.1%.” “Goods inflation eased further, coming in at -0.8% m/m, 12.1% y/y in Jul (from -0.5% m/m, 12.1% y/y in Jul), but services inflation – a bigger and thus more important component of CPI – continued to increase and the pace re-accelerated, up by 0.7% m/m, 6.8% y/y (from 0.3% m/m, 6.2% y/y in Jul), matching the previous high of Oct 1982 (6.76% y/y). The sustained increase in services inflation in recent months is a clear indication that wage growth is having a meaningful transmission to price pressures.” “While the latest US headline inflation was below the 9.1% recorded in Jun, this reflected mainly the decline in gasoline prices but the cost of living is still materially high as shown by the persistent rise of food and shelter costs and services inflation is getting hotter amidst strengthening demand. We maintain our headline CPI inflation forecast to average 8.5% and our core CPI inflation forecast at 6.5% for 2022. Subsequently, we still expect both headline and core inflation to ease in 2023, but it will likely average higher at 3.0% (from previous forecast of 2.5%). The balance of risk on inflation remains on the upside.”    
Binance Academy summarise year 2022 featuring The Merge, FTX and more

US Inflation Report And Its Impact On The Cryptocurrency Market

InstaForex Analysis InstaForex Analysis 15.09.2022 13:03
While the whole world is discussing the Ethereum Merge update, it is important to finally deal with the consequences of slowing down the rate of decline in the inflation rate. CPI reporting had a negative impact on the crypto market and caused a reduction in total capitalization to the level of $998 billion. However, this is only an impulsive reaction of investors to bad news. The consequences of this process in the medium term may be more disastrous. Inflation, the position of the Fed and the crypto market In the summer, Fed Chairman Jerome Powell said that the agency was changing its strategy for raising the key rate. The regulator abandoned the predictive indicator planning model and decided to focus on actual data. The Fed also said that it plans to end the current year with a neutral rate. Powell's statements removed the element of surprise, made Fed policy more transparent and gave investors hope. Markets took the theses of the head of the Fed as a transitional moment to the gradual easing of monetary policy. The peak of such sentiments occurred at the beginning of August, when the inflation rate fell above expectations. A glimmer of hope amid the endless fog of the liquidity crisis provoked other positive rumors. One of the initiators of the positive statements was Arthur Hayes, who believes that as we approach the November Senate elections, the markets will pump up the money supply. The slowdown in the rate of decline in the inflation rate put a bold dot on the likelihood of a change or easing of the Fed's current policy. After the publication of the CPI for August, an increase in the key rate by 75 basis points in September is a settled issue. In addition, the current order of movement of the price of Bitcoin and other financial instruments remains. New Rules for Bitcoin Price Movement Insufficient rates of inflation reduction are forcing the Fed to maintain the current level of influence on world markets. The withdrawal of liquidity and the increase in the key rate to strengthen the USD will continue. Considering this index, DXY remains the main financial instrument for the coming months. Bitcoin continues to maintain a close correlation with stock indices. Considering the macroeconomic situation, high-risk assets remain a single category of low-value investments at this stage. It follows that with active trading of BTC/USD, other cryptocurrencies and stock indices, the rule of mandatory DXY analysis remains. With a high degree of probability, when the US dollar index rises, Bitcoin and other cryptocurrencies go down or move flat. The publication of CPI reports caused opposite reactions from BTC and DXY. The inverse correlation of the two assets is obvious and should be a key element of active BTC/USD trading. BTC/USD Technical analysis Bitcoin managed to hold on to the $20.1k–$20.2k support area. The cryptocurrency successfully defended the $19.1k line following the results of yesterday's trading day, and moved to the stage of consolidation. In the coming days, we should expect a stabilization movement in the BTC/USD price without significant impulse movements. Technical metrics confirm this scenario. On the daily chart, the RSI index and the stochastic oscillator made a sharp reversal to the side. The MACD indicator has also completed an upward spurt and started moving in a flat direction. The publication of the CPI had a significant negative impact in both the short and medium term. Given the successful upgrade of Ethereum, we can soon expect a decrease in investment activity and a drop in the level of Bitcoin dominance. The main focus of the market will be on the altcoin, which may cause BTC to be undervalued. Demand and scarcity After a short consolidation, Bitcoin may resume its upward movement due to its growing scarcity in the market. Long-term investors continue to actively buy up BTC coins, reducing their volumes in the public domain. In addition, Bitcoin mining difficulty peaked at 32.045 trillion hashes. This means that mining a BTC block has never been so difficult. Accordingly, in the coming weeks, we can expect a local upward movement of Bitcoin to the $24k–$25k area due to its underestimation and growing scarcity. Medium-term prospects for Bitcoin Despite the rising inflation, the situation will begin to improve closer to winter. Most likely, the reason for this will be a significant reduction in liquidity and the aggravation of recession in the US economy. The combination of these factors will force the Fed to resume filling the markets with money, which will positively affect Bitcoin. Earn on cryptocurrency rate changes with InstaForex Download MetaTrader 4 and open your first trade   Relevance up to 10:00 2022-09-16 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/321796
FX: The Gap Versus The FX spot Rate In Poland Is Already The Largest In The CEE Region

Poland: Final August CPI Print And Prediction For The Rest Of 2022

ING Economics ING Economics 16.09.2022 13:25
Core inflation in Poland rose again last month due to pressure from the weak zloty, rising wages, and high energy prices   According to the Central Statistical Office of Poland's final estimate, CPI inflation rose to 16.1% year-on-year in August from 15.6% YoY in July, in line with the flash reading. The year-on-year growth in both the CPI and core continue to rise. CPI in year-on-year terms accelerated, as increases in the prices of food (+1.6% month-on-month), energy carriers (+3.8%MoM) and core (+0.8%MoM) overshadowed a significant fall in transport fuel prices (-8.3%MoM). The large increase in food prices is not only due to the jump in sugar prices but also in other categories (meat, bread, dairy). There was also no typical seasonal drop in the total food price (-0.8%MoM average in the last decade). In August, food and beverages grew 1.6%MoM, as discounts for fruit and vegetables were dominated by growth in other categories. The large jump in energy prices was mainly driven by heating fuel (+12%MoM) – making it the largest single contribution to the August CPI increase – and municipal heating. Both increases have come earlier than usual from a seasonal perspective, and show the impact of the energy shock and the shortage of coal for domestic purposes of households. The details of August inflation show price pressures in many categories of goods and services. This is the effect of rising wages, high gas and electricity prices (as shown by jumps in categories such as paper, chemicals, and cosmetics), and the weak zloty. The strong holiday season has pushed up the prices of tourist and catering services, compared to last year. CPI drop in the coming months seems unlikely We are less optimistic than the National Bank of Poland (NBP) about the evolution of inflation in the coming months. It will be difficult to see a decline in the year-on-year CPI before the end of the year. The economy still has to absorb the energy shock over the next few months. We expect price rises in categories that escape regulation (such as fuel, bottled gas etc), but also await new price lists for the turn of 2022-23, which will determine what level inflation will peak at in February 2023. We also note that the annual inflation rate (CPI, %YoY) may fall over the course of 2023, on base effects, among other things, or thanks to large-scale measures to rein in energy prices. However, our models show persistent high core inflation, which is more domestic in nature. We see very high inflation expectations of firms and households, which are triggering strong second-round effects (firms are passing most of the new costs on to retail prices, and this effect will be seen in the coming months because the slowdown in domestic demand is too small). In turn, a significant increase in the minimum wage acts as a wage-price spiral. There may be no more interest rate hikes However, the cycle of interest rate hikes is coming to an end. Recent comments show that the NBP is rather targeting a decline in annual CPI (possibly by the end of 2023) and a 'soft landing' of the economy, while a “de jure” target of CPI at 2.5% YoY is seemingly forgotten. An important factor that reduces the effectiveness of the rate hikes is fiscal expansion. Currently, the total policy mix is only slightly restrictive despite inflation at 16.1% YoY. With such a definition of NBP targets, we can envisage rate cuts in 2023. With that in place, we should face another cycle of rate rises in 2024. The way to fight inflation differs from the approach of other countries, where central banks and governments communicate that what is needed is to cool down the economy, and the labour market, with slower wage growth than the rate of inflation. All of this is to avoid a repeat of the 1970s scenario in the US when it took three cycles of interest rate hikes to fight inflation. The ultimate cost of this fight was much greater than the cost of cooling the economy at the start of a period of high inflation. Read this article on THINK TagsPoland inflation National Bank of Poland Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The US Has Again Benefited From Military Conflicts In Other Parts Of The World, The Capital From Europe And Other Regions Goes To The US

The Fed Is Ready To Sacrifice Growth And Employment To Bring Inflation Back To Its Target

ING Economics ING Economics 24.09.2022 08:51
US housing numbers will be the main focus next week. The Federal Reserve's aggressive hiking cycle has already sent the market into recession and more pain lies ahead. In the eurozone, we expect higher inflation at 9.6% while unemployment should remain unchanged In this article US: Housing numbers in focus after Fed's 75bp hike Eurozone: Higher inflation and unemployment rate expect to remain at 6.6% Source: Shutterstock US: Housing numbers in focus after Fed's 75bp hike After the Federal Reserve's 75bp rate hike this week and Jerome Powell's commentary that the Fed is prepared to sacrifice growth and jobs to ensure inflation comes back to target, we will be hearing from many more officials over the coming week. Given the strong clustering of near-term forecasts for rates and the economy, the hawkish comments hinting at another 75bp hike in November are likely to come thick and fast. The data calendar is fairly light with housing numbers the main focus. With mortgage rates now firmly above 6%, more pain is coming in the housing market where a recession is already underway. Eurozone: Higher inflation and unemployment rate expect to remain at 6.6% Inflation figures will be the main focus in the eurozone. Expect higher prices partly due to Germany's decision to end cheap public transport tickets as of 31 August. The key will be to see how much other categories have continued to rise. Separately, unemployment data is out on Friday. We expect the labour market to have remained very tight with the unemployment rate stable at a historic low of 6.6% despite business hiring expectations sliding in recent months. Key events in developed markets next week Source: Refinitiv, ING This article is part of Our view on next week’s key events   View 3 articles TagsFederal Reseve Eurozone   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
All EU Members Move To Establish The EU Armed Forces Before 2028

Market Focus Will Likely Be On Putin’s Warnings To The West, Nike (NKE) Reported Slightly Better Revenues And More

Saxo Bank Saxo Bank 30.09.2022 08:37
Summary:  Fresh lows return in US equities with more hawkish Fed comments and fear of earnings downgrades picking up as the Q3 earnings season draws closer. Cable extended its rally despite UK PM’s commitment to fiscal plan and weakening BOE hike expectations, while the EUR gained strength on the back of hot German CPI and uptick in ECB rate hike expectations. Talks of OPEC+ production cuts are gaining momentum, and focus today will be on China PMIs. Also watch for Eurozone CPI, US PCE data as well as Putin’s speech in the day ahead. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) fall to 22-month lows US stocks sank to their lowest levels since November 2020 after another round of Fed speakers continued with hawkish remarks, while oil maintained gains on expectations of OPEC+ cuts. Nasdaq 100 was down almost 4% at one point, but trimmed the losses before closing 2.9% lower, while the broader S&P500 met a similar fate nearing 3,600 before ending 2.1% down. All 11 sectors of the S&P 500 dropped, with Utilities falling the most and followed by Consumer Discretionary. Retail favorites Tesla (TSLA) and Apple  (AAPL)  led the declines falling 6.8% and 4.9% while chip makers followed with AMD (AMD) down 6.2% with PC demand falling away. On the upside, oil stocks like Devon Energy (DVN), and Diamondback Energy (FANG) and Occidental (OXY) moved higher. Separately the European Commission announced an eight package of sanctions that would include a price cap on Russia’s oil exports. U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) climbed again After plunging sharply the day before on the Bank of England move, yields of U.S. treasury securities rose, with the 10-year note yields rising 6bps to 3.79% on Thursday.  Yields initially crept higher on bounces of U.K. Gilt yields and higher German regional CPI data, but paring their rise in the afternoon.  Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland equity markets opened higher on Thursday and pared the gain through the day and settled moderately lower, with the Hang Seng Index down by 0.5%, and CSI300 little changed. The news of the imposition of a 3-day mandatory PCR test in the financial district, Lujiazui in Shanghai due to one new Covid-19 case triggered some fears among investors. In spite of PBoC’s supportive statement coming out from its quarterly monetary meeting saying that the central bank will expand its special lending program to ensure the delivery of delayed housing projects, Chinese developers declined, with Country Garden (02007:xhkg) plunging 11.6%, Longfor (00960:xhkg) down by 7.5%, and CIFI (00884:xhkg) tumbling 16.3%.  Chinese EV maker, Zhejian Leapmotor (09863:xhkg), tumbled 33.5% in its first day of trading after an IPO priced at the bottom of a guided range.  XPeng (09868:xhkg) dropped 5.3%.  Trading in the China Internet space was mixed with Alibaba outperforming (+2.9%). Australia’s ASX200 (ASXSP200.1) likely to follow Wall Street lower: futures suggest a 0.3% fall today, aluminum stocks to be bright spark As above, on the ASX today, it’s worth keeping an eye on aluminum related stocks on the ASX including Rio Tinto (RIO) and Alumina (AWC). Meanwhile, diversified miners including the major retail favorites, like BHP (BHP) are worth watching after the Iron Ore (SCOA) price remains supported with China ramping up housing support. This morning the iron ore price (SCOA, SCOV2) pushed up ~1.1% to US$96.50. In NY BHP closed 0.6% higher, implying the ASX primary listing of BHP will likely move up, especially after the aluminum and iron ore prices rose. Cable stays bid and Euro follows The US 10-year yields as well as the dollar could not catch a strong bid on Thursday, which helped other G10 currencies gain some ground. Sterling was the strongest on the G10 board, with GBPUSD now testing 1.12 in early Asian hours. BOE’s emergency bond-buying measures however hints at a push lower in gilt yields, and GBP will likely come back under pressure if the surge in global yield resumes. This will need a focus shift back on Fed tightening as we think there is still some room for upward repricing of terminal rate Fed expectations and higher-for-longer rates. Meanwhile, expectations for an ultra-aggressive BOE hike in November cooled slightly. EURUSD also surged above 0.98 with ECB rate hike expectations for October meeting picking up after the hot German inflation, and with the ECB downplaying the chance of an emergency move to prop up Italian bonds. EURGBP was however lower from 0.8950 to 0.88. Aluminum and aluminum stocks on watch It’s worth watching aluminium related shares across the Asian-Pacific region today after the record jump in Aluminum price on the LME after Bloomberg reported plans to discuss a potential ban on new Russian metal supplies. The metal jumped 8.5% (its biggest intraday jump in record) before paring back. Crude oil (CLU2 & LCOV2) prices maintain gains Crude oil prices maintained the momentum with OPEC+ production cuts becoming a key factor going into the next week’s meeting. OPEC+ commenced discussions around an output cut with one saying it a cut is “likely”, according to Reuters sources. This comes after previous reports that Russia will likely propose OPEC+ reduces output by around 1mln BPD. Demand conditions are likely to weaken as global tightening race heats up, and this has prompted expectations for a supply cut as well. Brent futures touched $90/barrel mark but reversed slightly later, while WTI futures rose to $83/barrel before some decline later in the session.   What to consider? German inflation sparks EZ inflation fears German inflation touched double digits, as it came above consensus at 10.9% YoY for September from 8.8% YoY previously. Germany is also preparing to borrow an additional €200 billion to finance a plan to limit the impact of soaring energy costs, which could keep consumption high even as shortages loom. Up today will be the September eurozone inflation print. Expect a new record which will increase the pressure on the European Central Bank to hike interest rates by at least 75 basis points in October. The economist consensus expects that the headline harmonized index of consumer prices (HICP) will reach 9.7% YoY against 9.1% in August. The core rate is expected to climb to 5.6% YoY against 5.5% previously. The spread between the headline and the core inflation figures is mostly explained by a decrease in oil and natural gas prices in recent months. However, this is clear that inflation is becoming broad-based, including in the services sector. This means that inflation is here to stay for long. The HICP is likely to continue increasing in the coming months. A peak in inflation in the eurozone is possible in the first quarter of 2023, in our view. This is much later than in the United States. Fed speakers push for more hikes Loretta Mester remains more hawkish than the Fed’s median dot plot, and said that rate are not in restrictive territory yet and more rate hikes will be needed. No signs of concern on economy or dollar strength were noted, while inflation remained the key point of concern for her. James Bullard also made some key comments on ‘bad idea to mess’ with the inflation target while the labor market conditions remain tight and recession is only a risk. Mary Daly was more cautious, saying officials should work to avoid "inducing a deep recession." However, she still raised the bar on expectations on the Fed funds rate saying that she is comfortable with median Fed rate path projection of 4%-4.5% by year end, 4.5%-5% in 2023 (pointing to upside risks as the dot plot suggested 4.6%, or 4.5-4.75% if we talk in ranges). US initial claims come in strong again Initial claims came in lower than expected at 193k with last week’s also revised lower to 209k from 213k. Continued claims cooled to 1.347mln from 1.376mln despite the expected rise to 1.388mln. The data shows how tight the labour market is in the US and Fed's Bullard labelled today's claims metric as "super low". Meanwhile, the third estimate of Q2 GDP was confirmed to decline 0.6%, notably with consumer spending revised higher to 2% from 1.5% previously. Australian inflation rose 7% in the year to July, based on new monthly CPI At this rate it doesn’t appear CPI will peak at just shy of the 8% the RBA forecasts, given price pressures have resumed this month from the largest inflation contributors. Based on the ABS’s new monthly CPI print, some of the largest price jumps year-on-year to July were in fuel (+29.2%) and fruit & vegetables (+14.5%). The concern is that, with La Nina set to hit Australia and population growth continuing, food and housing (rent) prices will continue to rise apace. In September alone, contributors to food prices have risen markedly, as the global supply outlook has weakened amid poor crop conditions. This could tilt the RBA back toward a more hawkish stance. Australian rents to drive higher, adding to inflation woes Australia’s population growth resumed after borders reopened and business employment remains strong for the time being, at 50-year highs. New office and residential supply is expected be subdued in 2023 as interest rates rise; which supports the notion of falling vacancy rates. According to Colliers and the ABS, Sydney CBD rents rose 3.6% to $5.22 per square foot in the June quarter, driven by competition for top-quality office space. China’s manufacturing PMIs are expected to stay in the contractionary territory China’s September official NBS Manufacturing PMI and Non-manufacturing PMI as well as the Caixin China Manufacturing PMI are scheduled to release today. The median forecast of, economists surveyed by Bloomberg for the NBS Manufacturing PMI is 49.7 for September, a modest improvement from August’s 49.4 but remains in contraction territory.  Economists cite the lockdown of Chengdu and restrictive measures in some other cities during most part of the month and the weak EPMI released earlier as reasons for expecting the NBS Manufacturing PMI to stay below 50.  The Caixin Manufacturing PMI, which has a larger weight in coastal cities in the eastern region, is expected to remain at 49.5 as export-related manufacturing activities and container throughput were weak.  The consensus estimate for the NBS Non-manufacturing PMI is 52.4, staying in the expansionary territory, supported by infrastructure construction but slowing slightly in September from August’s 52.6 due to weakness in the housing sector.  On the other hand, steel production and demand data in September suggest the PMIs may potentially surprise the upside. Buying activity up in food and Agricultural instruments, stocks and ETFs Food prices are supported higher as the global crop outlook dampens for 4 reasons; concern lingers over Ukraine’s exports being cut off, South America has been hit by rains and frosts, the US has been plagued by drought and dry conditions and as Hurricane Ian made landfall in the, US conditions are likely to go from bad to worse. And lastly - La Nina is expected to hit Australia for the third year in a row. So we are seeing clients buy into Wheat and Corn. Both prices are up 20% off their lows. Secondly, buying has been picking up in agricultural stocks like General Mills (GIS) and GrainCorp (GNC). And lastly, clients are biting into agricultural ETFs like Invesco DB Agriculture Fund (DBA) and iShares MSCI Agricultural Producers ETF (VEGI). Fed preferred inflation measure, US PCE, on the radar today The Fed’s preferred inflation measure, the PCE is due today, and it will likely echo the same message as given by the last strong CPI number which has made the Fed even more hawkish in the last few weeks since the Jackson Hole. Headline numbers may be lower due to the decline in gasoline prices, but the price pressure on services side will likely broaden further. Last week, the Fed also raised its forecasts for inflation, with the central bank now seeing core PCE at 4.5% by the end of this year (it previously projected 4.3%), moderating to 3.1% next year and at 2.1% at the end of its forecast horizon in 2025, but thinks that headline PCE prices will be at its 2% target by then. Putin's speech due today after Russia annexed parts of Ukraine Vladimir Putin will address legislators after Russia signs treaties today to absorb four occupied regions, with Ukrainian forces threatening to encircle a pocket of the Donbas region. There is also growing resistance to Putin’s decision to call up 300,000 reservists. Market focus will likely be on Putin’s warnings to the West about any potential threats of using nuclear weapons, which may mean risk aversion getting another leg up. Nike sank on concerns about inventory build-up and margins Nike (NKE) reported slightly better than expected revenues and inline earnings but below expectation gross margins and a 65% surge in inventories for the North American market.  In the earnings call, the company’s CFO pledged to take “decisive action to clear excess inventory” and such efforts will have “a transitory impact on gross margins this fiscal year”.  Investors took note of the implication on demand and profitability and sold stock to more than 9% lower in the extended hour trading. Apple fell on analyst downgrade After being sold on the company’s announcement to back off plans to increase iPhone production this year on the day before, Apple’s shares fell another 4.9% yesterday after an analyst downgrade from a U.S. investment bank.  In this Market Daily Insights piece yesterday, we mentioned the warnings from Peter Garnry, Saxo’s Head of Equity Strategy, about the likelihood that Apple’s revenue could slip into negative growth for the current quarter ending Sep 30 and you can find more details of his analysis from here. In his note, Peter also warns that analysts may be way off in their estimates for the S&P 500 for Q3 and it is highly probable that there will be significant misses to the downside followed by gloomy comments from company management about the outlook on margins.     For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: https://www.home.saxo/content/articles/equities/market-insights-today-30-sept-30092022
Inflation Rising Again In The Eurozone, Positive GDP In The Great Britain

Inflation Rising Again In The Eurozone, Positive GDP In The Great Britain

Craig Erlam Craig Erlam 30.09.2022 14:17
Stock markets are bouncing back on Friday, although I don’t think anyone is getting excited by the moves which pale in comparison to the losses that preceded them. This looks like nothing more than a dead cat bounce after a steep decline over the last couple of weeks as investors have been forced to once again accept that interest rates are going to rise further and faster than hoped. Double-digit eurozone inflation Inflation in the eurozone hit 10% in September ahead of schedule, with markets expecting a jump to 9.7% from 9.1% in August. In normal circumstances that may have triggered a reaction but these are anything but normal. Markets are still pricing in a more than 70% chance of a 75 basis point rate hike from the ECB next month with an outside chance of 1%. The euro is slightly lower following the release which also showed core inflation rising a little higher than expected to 4.8%. Sterling recovers as the UK is revised out of a potential recession We’re seeing the third day of gains for the pound which has now recovered the bulk of the losses sustained after the “mini-budget” a week ago. This is not a sign of investors coming around the new Chancellor’s unfunded tax-cutting, but rather a reflection of the work done since to calm the market reaction. That includes the emergency intervention from the BoE, talk of measures to balance the cost of the tax cuts, reported discussions with the OBR and rumoured unrest within the Tory party. We’ll have to see what that amounts to and sterling could certainly react negatively again to inaction or the wrong action. GDP data this morning brought some good news, although as far as positive updates go, this is surely towards the more insignificant end. The UK is not in recession after the second quarter GDP was revised up from -0.1% to +0.2%. While all positive revisions are welcome, the technical recession wasn’t really significant in the first place. The important thing was that the UK is struggling to grow and facing a probable deeper recession down the road and today’s revision doesn’t change that. ​ Disappointing Chinese surveys China’s PMIs highlighted the widening gulf between the performance of state-owned firms versus their private competition. It goes without saying that being backed by the state in uncertain times like this carries certain advantages and that has been evident for some time. Private firms have been more sensitive to Covid restrictions and have therefore been heavily hampered this year. Still, even with those state-backed benefits, the headline PMI was far from encouraging rising to 50.1 and barely in growth territory. With the non-manufacturing PMI also slipping from 52.6 to 50.6, it’s clear that the economy still faces enormous headwinds and the global economy stalling around it will only add to them. BoJ ramps up bond purchases amid higher yields The Bank of Japan ramped up bond purchases overnight as it continues to defend its yield curve control thresholds in volatile market conditions. Rising global yields have forced the central bank to repeatedly purchase JGBs in order to maintain its target. There has been a growing expectation that the BoJ could tweak its 0% target or widen the band it allows fluctuations between in order to ease the pressure on the currency but that’s not been forthcoming, with the MoF instead intervening in the markets for the first time since 1998. The intervention doom loop continues. RBI rate hike and credit line The Reserve Bank of India hiked the repo rate by 50bps to 5.9% on Friday, in what will likely be one of its final tightening measures in the fight against inflation. The decision was widely expected and followed shortly after by guidance to state-run refiners to reduce dollar buying in spot markets through the use of a $9 billion credit line. The strength of the dollar is posing a risk to countries around the world, as we’ve seen very clearly in recent weeks as mentioned above, and measures like this will seek to alleviate those pressures. Much more will be needed to make any significant difference though. A period of stability is what bitcoin needs It’s been a very choppy week in bitcoin which has failed to make a sustainable run in either direction despite attempts at both. Perhaps we are seeing a floor forming a little shy of the early summer lows around $17,500, although that will very much depend on risk appetite not plummeting once more which it very much has the potential to do. I keep using the word resilience when discussing bitcoin and that has very much remained the case. It did also struggle to build on the rally earlier this week, even hold it into the end of the day, so perhaps a period of stability is what it needs. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Asia Market: Optimistic Headlines From Regional Leaders China And Japan

Data From Asia And Australia Will Be In Focus For The Coming Week

ING Economics ING Economics 01.10.2022 08:42
A key central bank meeting and regional inflation and trade figures are in focus next week In this article The week ahead RBA meets to discuss policy Most regional inflation readings to accelerate Korea and Taiwan trade data PMI readings from Indonesia, Philippines and Singapore All about reserves Source: Shutterstock The week ahead In the coming week, we'll get readings on inflation, trade and PMI reports from the region. Also, with FX markets battered, data on dollar reserves will be in focus. Lastly, the Reserve Bank of Australia (RBA) meets to discuss policy, with the chance of a 50bp hike increasing.  RBA meets to discuss policy Following some reasonable August labour market data, and stronger-than-expected retail sales figures, recent hints from the Reserve Bank of Australia that it may soon start to tighten rates at a slower pace are looking a bit less credible right now. With a strong and unified hawkish chorus from US Fed officials, the apparent ruling out by the US White House of a plaza-style currency agreement, and a further sliding of the Australian dollar, the odds are swinging back towards another 50bp RBA move at the coming meeting. Most regional inflation readings to accelerate Price pressures are likely to kick into high gear for both the Philippines and Indonesia which should keep their respective central banks on notice.   Indonesia's inflation has remained relatively subdued of late, but a recent price hike for subsidised fuel should push headline inflation past 6% year-on-year. Philippine inflation should also edge higher after a brief pause.   Meanwhile, the sharp depreciation of the Japanese yen should add pressure to inflation, with Tokyo CPI inflation expected to rise to 2.9%YoY in September. Inflation in Korea will also likely move higher, up 5.7%. Gasoline prices may have declined but food prices climbed quite sharply for the month. Lastly, Taiwan's inflation should have a strong correlation with its trade data. Our outlook is for a slowdown in trade due to fading purchasing power for US and European markets. The weakness in the trade sector suggests softer demand in Taiwan given its dependence on external trade. Thus we expect lower CPI and WPI inflation for Taiwan. Korea and Taiwan trade data Korea's September trade data will also be in focus for the coming week. Set for release over the weekend, we expect export growth to slow to 2%YoY given the unfavourable calendar day effect. Semiconductors exports should rebound marginally after a sudden drop in August, but automobile exports are likely to turn negative as suggested by a recent industry report. Import growth is also expected to decelerate as the drop in oil prices overwhelms the weak Korean won.   Taiwan will also release trade figures in the coming days. Both exports and imports should be softer than in August, as high inflation in the US and Europe has led to a fall in purchasing power and thus weaker demand for Taiwan's exports.  PMI readings from Indonesia, Philippines and Singapore Next week will feature the latest readings for PMI manufacturing. We can expect declines in PMI indices for both the Philippines and Singapore due to slower export demand although both indices are likely to remain in expansion. Indonesia on the other hand should see a modest improvement in activity tracking surging exports.   All about reserves The ongoing rout in currency markets has central banks dipping into reserves to slow the depreciation of their currencies. Reserve levels are likely to fall in the coming months and both the Philippines and Indonesia could see lower levels given depreciation pressure for their respective currencies.   Asia Economic Calendar Source: Refinitiv, ING TagsTaiwan Reserve Bank of Australia Indonesia Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Turkish Central Bank Cut Its Policy Rate by150bp | Credit Suisse Outflows Benefit UBS

Expectations Of Another Rise In Inflation In Turkey

ING Economics ING Economics 01.10.2022 08:52
Turkish inflation is expected to increase to 83.5% in September due to significant price hikes in electricity and natural gas fees. In Hungary, we see the manufacturing PMI jumping to 58.2, as order books remain filled and supply chain issues have gradually recovered In this article Turkey: Annual inflation to increase further Hungary: Retail sales to slow, industrial production to jump Source: Shutterstock Turkey: Annual inflation to increase further In September, we expect annual inflation to increase to 83.5% (3.1% on monthly basis) from 80.2% a month ago, given significant administrative price hikes in electricity and natural gas fees. Pricing pressures will likely remain broad-based on the back of a largely supportive policy framework along with a less supportive global backdrop leading to currency weakness. Hungary: Retail sales to slow, industrial production to jump The calendar for Hungary contains some activity data from August. We see retail sales slowing as prices rise quickly and households are increasingly conscious about their spending. On the other hand, industrial production will jump as the month of August this year contained two more working days than in the last year, boosting the unadjusted growth figure. When it comes to the September outlook for industry, the manufacturing PMI will give us some clues and we expect this to suggest expansion as orders books remain filled and supply chain issues have become less severe. Key events in EMEA next week Source: Refinitiv, ING TagsTurkey Hungary   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
A Softer Labour Market In Australia And Its Possible Consequences

Will The RBA To Raise Rates Again And How Many Percentage Points This Time?

Kamila Szypuła Kamila Szypuła 01.10.2022 11:48
Inflation is expected to peak later this year and then decline back towards the 2–3 per cent range. The expected moderation in inflation reflects the ongoing resolution of global supply-side problems, recent declines in some commodity prices and the impact of rising interest rates. The outlook for global economic The path to achieving this balance is a narrow one and clouded in uncertainty, not least because of global developments. The outlook for global economic growth has deteriorated due to pressures on real incomes from high inflation, the tightening of monetary policy in most countries, Russia's invasion of Ukraine, and the COVID containment measures and other policy challenges in China. The outlook for global economic growth has worsened and represents a key uncertainty. Central banks in several major advanced economies have expressed continued determination to tighten monetary policy to prevent the consolidation of high inflation, which would likely trigger a period of much lower growth. High inflation also put pressure on real incomes, especially in Europe, as the impact on energy markets worsened following Russia's invasion of Ukraine. The last decision Inflation in Australia is the highest it has been since the early 1990s and is expected to increase further over the months ahead. The Board is committed to returning inflation to the 2–3 per cent range over time. At its last meeting, the Board decided to increase the cash rate target by 50 basis points to 2.35 per cent. It also increased the interest rate on Exchange Settlement balances by 50 basis points to 2.25 per cent. The expectations The Council expects a further increase in interest rates in the coming months, but it is not on a predetermined path given the uncertainty about the outlook for inflation and growth. The behavior of household spending remains a significant source of uncertainty. Higher inflation and higher interest rates put pressure on household budgets. The RBA started its rate rise cycle in May during the federal election campaign. The market may expect the RBA to raise rates again. The question remains only by how many percentage points this time? The Reserve Bank of Australia (RBA) will be deciding between a 0.25 and a 0.50 percentage point hike. Some experts expect the Australian central bank to raise interest rates another half a point in its most aggressive tightening cycle to contain red-hot inflation. As at 30 September, the ASX 30 Day Interbank Cash Rate Futures October 2022 contract was trading at 97.305, indicating a 79% expectation of an interest rate increase to 2.85% at the next RBA Board meeting. Although many well-known economists such as Ben Jarman, the chief economist of JPMorgan, swear that on Tuesday the central bank will decide on the fifth consecutive "undersized" increase by 50 bp, the chances are that the RBA will decide to tighten monetary policy more slightly by 25 bp. The official decision will be announced on Tuesday, October 4. The rates market is even more hawkish. The Board is still resolute in the need to ensure inflation returned to target, but mindful that the path to achieve this needed to account for the risks to growth and employment. The Board is seeking to return inflation to target while keeping the economy on an even keel. The path to achieving this balance remains a narrow one and clouded in uncertainty. The size and timing of future interest rate increases will still depend on the incoming economic data and the assessment of the outlook for inflation and the labor market.
Poland: Rapidly Rising Core Inflation Confirms That The Impulse From Energy Shock Is Strong

A Gloomy Outlook For The Global Economy, Do We Have To Prepare For The Worst?

InstaForex Analysis InstaForex Analysis 03.10.2022 11:20
Key reports published in both US and Europe show that inflation continues to spiral and is at staggering levels. This prompted Credit Suisse to issue a gloomy outlook for the global economy, saying the worst is yet to come. The Department of Commerce released the latest inflation data, indicating that core PCE jumped 0.6% in August. This suggests that inflation is still intense and increasing, and may even be higher in the next months. Core labor costs, which excludes food and energy costs, also rose 4.9%, up 4.7% from forecasts. In Europe, inflation hit a new record high of 10% in September. CPI for the Eurozone differs from that of the US as year-on-year energy prices in the region were up 40.8%. In the US, there is a slight decline from 8.5% to 8.3%. To address inflation, the Fed has implemented five consecutive interest rate hikes, but from last week's report, it is obvious that the aggressive measure is yet to bring inflation down. Vice Chairman Lael Brainard said the risk of additional inflationary shocks cannot be ruled out, so the central bank is trying to avoid a premature retreat. "Monetary policy should be tight for some time to be sure that inflation returns to its target level," she stated.   Relevance up to 10:00 2022-10-05 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/323234
Asia Market: The Philippines 4Q GDP Growth Is Expected To Expand

Inflation In Philippines Is Expected To Break Above 7.0% In October

TeleTrade Comments TeleTrade Comments 07.10.2022 09:41
UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the recently published inflation figures in Philippines. Key Takeaways “Headline inflation reverted higher to 6.9% y/y in Sep, affirming our view that the blip in Aug (at 6.3% vs 6.4% in Jul) was temporary. It marked the highest reading since Oct 2018, in line with our estimate (7.0%) and Bloomberg consensus (6.9%). Costlier food, electricity bills, passenger transport services and housing rental were key factors pushing up headline inflation amid a sharp depreciation in Peso (PHP) and higher interest rates during the month.” “We expect the national consumer price pressures to intensify further and surpass the 7.0% level in Oct as a result of an approved fare hike for public transports from 3 Oct and persistent weakness in PHP. Based on the current global commodity price and currency outlook, the Philippines’ headline inflation is also expected to remain above 7.0% for Nov and Dec this year before gradually inching down back to the BSP’s 2.0%-4.0% medium-term target range in 2H23. This will result in a full-year inflation rate of 5.5% for 2022 (BSP est: 5.6%) and 4.5% for 2023 (BSP est: 4.10%), in our projection.” “Given that BSP’s primary goal is to achieve a target-consistent inflation path amid an even faster pace of Fed tightening, we stick to the view that BSP will roll up its sleeves to hike again at the two remaining monetary policy meetings this year. We project the overnight reverse repurchase (RRP) rate to be raised by another 50bps in Nov and 25bps in Dec, bringing the RRP rate to 5.00% by year-end. Thereafter, we expect the BSP to press the rate pause button at 5.00% through 2023 unless the global and domestic landscape warrants a change.”
Escalating Tansions With Russia | This Week Focus On The Fed, RBA And The Bank Of England Decisions

What Would Be The Best Cocktail Of US Job Data Today That Investors Wish For

Swissquote Bank Swissquote Bank 07.10.2022 10:21
Equities retreated, the US yields and the US dollar rebounded as more Federal Reserve (Fed) members threw hawkish comments to defend their fight against inflation. Shell warns of weak Q3 The S&P500 closed 1% lower, while Nasdaq slid 0.68% despite being more sensitive to rate hikes. The US short-term yields rose, and the dollar index gained. Gold eased, while oil extended gains. Yet the rising oil prices fuel inflation and Fed expectations and certainly don’t do good to the overall market mood. Also, Shell warned investors that the Q3 results won’t be as breathtaking as the Q2, as the weaker gas trading and weaker refining will be reflected in the latest quarter earnings. Today, the US will announce its latest jobs data in a tense and volatile environment of energy crisis, persistent inflation, Fed members insisting that what they are doing is right, and markets crying that what they are doing is maybe a bit too much.   A mix of soft data Investors will be watching three main elements. The NFP data, the unemployment and participation rates, and the wages growth. Expectation for today is a NFP read of around 250K, unemployment rate at 3.7%, and wages growth of around 0.3% over the month. A mix of soft data will likely see a bullish kneejerk reaction, as investors are turning more concerned about the aggressive Fed tightening and are ready to bet that the rate hikes would slow down in the next few meetings and even stop, while a strong data could trigger a further selloff, as it would fail to keep the aggressive Fed hawks at bay. Watch the full episode to find out more! 0:00 Intro 0:34 Market update 2:00 Shell warns of weak Q3 2:54 Twitter jitters weigh on Tesla, but… 4:06 What’s the tasty mix of US jobs data look like? 9:03 BoFA thinks S&P500 valuations remain high 10:12 And the rising sovereign debt levels? Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #US #jobs #data #NFP #unemployment #wages #Fed #USD #Gold #XAU #crude #oil #Shell #XOM #OccidentalPetroleum #Twitter #Tesla #ElonMusk #GBP #UK #gilt #LizTruss #BoE #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Analysis Of The Scenario Of The US Dollar Index

Podcast: Eyes On US Job Report, US Treasury Yields Rose And The US Dollar (USD) Roared Back Higher

Saxo Bank Saxo Bank 07.10.2022 12:46
Summary:  Today we note a fresh weakening in sentiment as US treasury yields rose and the US dollar roared back higher, particularly against the smaller currencies. Also, a look at today's US jobs report and whether it can move the needle much, given the drumbeat of Fed rhetoric staying on the unified tightening-and-not-pivoting message, which will likely require many months of weakening inflation and a weakening jobs market to drive a shift. That means the surprise side is a very strong jobs and earnings report today. Discussion of AMD's shock revenue miss for Q3 reported after hours yesterday, the week ahead in earnings as earnings season get under way, the macro calendar points of note next week and more also on today's pod, which features Peter Garnry on equities, with John J. Hardy hosting and on FX. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean engraver If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com. Source: https://www.home.saxo/content/articles/podcast/podcast-oct-7-2022-07102022
BoJ Core CPI Has Now Accelerated And Challenging The Bank Of Japan’s Stance

Asia's Economic Calendar Is Full Of Reports And Another Decisions To Raise Rates

ING Economics ING Economics 08.10.2022 13:20
Inflation is in the spotlight in Asia next week while the Bank of Korea considers another rate hike In this article The week ahead Inflation readings from India and China Bank of Korea to hike another 50bp China and Philippine trade reports Japan and India’s industrial data Other important data reports: China loan data and Singapore’s GDP Source: Shutterstock The week ahead In the coming week, several regional economies will report their inflation figures while the Bank of Korea meets to discuss policy. On top of prices and central bank decisions, we also get trade data from China and the Philippines. Inflation readings from India and China India’s September inflation numbers are likely to be lifted by higher food prices, in particular, tomatoes, which jumped to almost INR44/kg in September from INR35/kg in August. That will help push food prices up by about 1.7% from the previous month and take the headline inflation rate to 7.8% year-on-year from its current rate of 7.0%. There is some seasonality at work in these price increases, and the effects of this price spike on inflation will likely dissipate quickly, taking inflation back to the low 7s by the following month, enabling the Reserve Bank of India to adopt a more gradual tightening path at its December meeting. Meanwhile, China’s inflation should see a slight pick-up to 2.7%YoY in September (2.5%YoY previous) as the economy gradually recovers. Bank of Korea to hike another 50bp The Bank of Korea (BoK) holds a meeting next Wednesday to discuss policy. We expect the BoK to raise interest rates by 50bp, given the faster-than-expected rate hike by the Fed coupled with persistently high domestic inflation. China and Philippine trade reports The coming week also features trade data from China. External demand for China’s exports has been weaker due to elevated global inflation and therefore we should only expect mild growth for both exports and imports. In the Philippines, recent trends in trade activity will likely continue. Exports will likely manage only a modest gain while imports are expected to post another month of double-digit gains. The trade deficit should test historic lows once again and put pressure on the Philippine peso in the near term. Japan and India’s industrial data Industrial production data is also on the data calendar although India’s industrial production data for August is a bit lagged. In Japan, machinery orders data will be released and we expect a continuous recovery thanks to manufacturers catching up with previously unmet existing vehicle orders and the economic reopening. Other important data reports: China loan data and Singapore’s GDP China will release loan data next week that should show another strong month of loan growth which is unusual towards the end of the year. The strong performance is likely due to more lending to SMEs and the agricultural sector. We do not expect any change for the 1Y Medium Term Lending Facility rate (currently at 2.75%). The central bank has stated several times that the current interest rate level is about the neutral level.    Lastly, growth in Singapore may settle at 3.0% YoY with quarter-on-quarter growth almost flat. Retail sales have held up decently in the quarter as have non-oil domestic exports.  Asia Economic Calendar   Source: Refinitiv, ING TagsAsia week ahead Asia Pacific Asia Markets Asia Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
US Inflation Is Cooling, Japan Headline CPI Ticked Up To 3.8% Y/Y

Inflation Report Ahead, What Might It Look Like In The United States (U.S. CPI)?

Kamila Szypuła Kamila Szypuła 08.10.2022 15:52
Recently, we have been watching prices rise every month. Inflation has also hit the US economy. How this time the change in the price of goods and services from the perspective of the consumer can and what it looked like with the last reading. Forecast In August, the Consumer Price Index (CPI) for All Urban Consumers increased 0.1 percent, seasonally adjusted, and rose 8.3 percent over the last 12 months, not seasonally adjusted. The annual inflation rate in the US eased for a second straight month in August of 2022, the lowest in 4 months, from 8.5% in July but above market forecasts of 8.1%. Forecasts for September are the same as for August, ie 8.1%. On Wednesday, September 12, we will know the official results. We can expect that also in September food and energy will become more expensive. Source: investing.com The data presented above shows a general picture, while the division into selected categories is presented in the table below. 12-month percentage change, Consumer Price Index, selected categories, August 2022, not seasonally adjusted Source: https://www.bls.gov/cpi/ Source: U.S Bureau Of Labor Statistics Energy It may be noted that energy prices in August 2022, compared to the same month last year, increased by 23.8%. It was the highest increase among the categories. Crude oil and natural gas prices were already high entering 2022 as rebounding global demand for energy commodities occurred faster than supplies have been able to keep up. But on Feb. 24, prices spiked further following Russia’s invasion of Ukraine. Russia is a major producer and exporter of crude oil and natural gas for Europe. Subsequent sanctions against Russia drove energy prices higher as countries looked elsewhere to purchase their crude oil. In the U.S., crude oil accounts for about 54% of the cost of gasoline at the pump, according to Energy Information Administration data (EIA). The limited supply of this commodity thus drove up the national average for gasoline in the U.S. to over $4/gallon, according to EIA data. This situation mainly affects European consumers, but also American consumers bear costs such as the costs of distillation and transportation. Moreover, it may affect the results of the economic growth of the American economy. Food Compared to August 2021, food prices increased significantly in August this year. For many of us, going to the grocery store is where we really feel this crushing inflation. We see a big price for our groceries lining up at the checkout and then do some calculations in our heads to determine what other things we can sacrifice financially as we have just been hit by a high food bill. For lower-income Americans, the situation is particularly worrying. Soaring food prices are regressive and particularly damaging to them, as they spend more of their after-tax income on food compared to higher-income Americans. In such a situation, they will decide to buy more modest groceries and may not even go to the cinema or not go out to dinner in the city, which may have worse consequences for such people, for example not going to the doctor or not turning on the air conditioning. The increase in prices not only negatively affects consumers, but also manufacturers and entrepreneurs. Food prices also exacerbate labor shortages and government interventions that discourage work and increase labor costs. Summary This is a difficult time for all Americans. The current inflation is acting like a tax on all of us and is damaging our quality of life. Policy makers at all levels of government should be focused on eliminating the many government interventions that drive up prices, including food prices. Instead of fueling inflation, policymakers must remove the policies that contribute to it.
Rates Daily: The Turn In Inflation Sentiment Has Been Nothing Short Of Spectacular

News For A Potential Slowdown In US Inflation

ING Economics ING Economics 09.10.2022 09:39
This has been a disappointing year for the US economy with two consecutive quarters of falling output. It will be worse in 2023. Consumer spending and business capital expenditure look set to fall and unemployment will rise in response to the rapidly tightening financial conditions caused by dollar strength, rising rates and widening credit spreads In this article Tougher conditions ahead for consumers and businesses Housing market set for sustained weakness Labour market shows signs of softening Inflation will soon turn lower Fed rate hikes to give way to cuts in the second half of 2023 Source: Shutterstock Tougher conditions ahead for consumers and businesses The Federal Reserve’s delayed response to the obvious inflation threat means it is playing catch-up and raising interest rates faster than at any time since the late 1980s. This is contributing to considerable dollar strength while prompting rapid rises in borrowing costs throughout the economy. This significant tightening of financial conditions is a clear headwind to growth and comes at a time when consumer and business confidence is already under immense pressure from the rising cost of living and falling equity, bond and real estate prices. Housing market set for sustained weakness Unfortunately, our worst fears about falling transactions and the prospect of sharp price falls in the US residential property market appear to be coming true. Mortgage rates have doubled since the start of the year leading to a 44% collapse in mortgage applications for home purchases while the supply of new and existing homes is up 64% and 50% from their respective lows. Ratio of US existing home prices to median household income ratios (1999-2022) Source: Macrobond, ING   This rapidly changing dynamic means the 45% jump in home prices since the start of the pandemic looks unsustainable. After all, the median house price-to-income ratio is more stretched than at the peak of the 2005/06 housing bubble. Consequently, July’s first monthly price fall in more than 10 years looks set to be the start of many with even Fed Chair Jerome Powell publicly acknowledging the need for a correction. This will be bad news for construction activity as well as spending on furniture, furnishings, electronics and building supplies. Labour market shows signs of softening Consumer weakness is already spreading beyond the property market. We had hoped the plunge in gasoline prices would free up cash that would translate into stronger consumer activity elsewhere. There was a temporary lift to restaurant dining numbers, air passenger traffic and google mobility data, but it hasn’t shown up in consumer spending more broadly. On top of this, we are seeing a growing number of firms freeze hiring plans with job vacancies falling by more than one million in August. The one consolation is that most firms are experiencing labour shortages so there will be a reluctance to fire staff. The Fed is predicting a 0.9ppt rise in the unemployment rate over the next year, which would work out as 1.2 million people losing their jobs assuming the labour supply remains unchanged. Inflation will soon turn lower While core inflation rates have been moving higher recently, we are increasingly confident in our call that we could see inflation head towards 2% by the end of 2023 as recessionary forces erode corporate pricing power. The chart below of the National Federation of Independent Businesses’ price plan series is already offering very encouraging news for a potential slowdown in US inflation with fewer firms anticipating price hikes due to weakening sales growth and rising inventories. Corporate pricing power appears to be weakening: NFIB price plans and the core PCE deflator inflation measure Source: Macrobond, ING   Moreover, weightings for shelter costs and vehicle prices are far, far higher in the US inflation calculation than in Europe – a combined 40% for the US basket of goods and services versus 12% for Europe. With the US housing rent components lagging house price changes by around 12-14 months, we expect to see shelter go from contributing more than 2ppt to the headline inflation rate to contributing nothing next year. Meanwhile, auction prices for used cars are down 15% from their peak and are set to fall sharply as the supply of new vehicles ramps up now as supply chain strains are easing. Fed rate hikes to give way to cuts in the second half of 2023 We are forecasting that the Federal Reserve will raise the policy rate by another 75bp in November, but the intensifying economic headwinds look set to result in a more modest 50bp hike in December which will mark the peak at 4.25-4.5%. This would mean real interest rates turning positive in the second quarter based on our inflation forecast – a key metric that the Fed wants to achieve. Once the Fed has hit the pause button on rate hikes the market will swiftly move to anticipate rate cuts. We expect them to start coming through from the third quarter of 2023 as the Fed seeks to prevent a more prolonged downturn that could result in inflation falling well below 2% over the medium term. Robust household balance sheets and a still-tight labour market offer hope that once lower borrowing costs materialise and risk assets stabilise, the recovery can come relatively quickly and vigorously. TagsUS Recession Housing Federal Reserve   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Due To Situation Of USD And Oil, Markets Believe Peak Inflation To Be Over

Illusory ECB's Assessment That Households Will Reduce Their Savings

ING Economics ING Economics 09.10.2022 09:48
After a deceleration in economic growth over the summer months, eurozone indicators strongly deteriorated in September, suggesting the start of a recession. Meanwhile, inflation has reached double-digit figures, setting the European Central Bank on a more aggressive tightening path In this article Headwinds intensify Negative growth in 2023 Double-digit inflation A more hawkish ECB Headwinds intensify The challenges that the eurozone economy has been facing over the last few months have not disappeared. If anything, they have got worse. The war in Ukraine seems to be far from over with Russia deciding on a partial mobilisation after a rather successful Ukrainian counter-offensive. Natural gas exports from Russia to the European Union have been cut further and the sabotage of the Nord Stream 1 and 2 pipelines has created some fears regarding the safety of the gas pipelines from Norway. Unfortunately, according to the latest weather analyses, the risk of a cold winter has risen. We continue to expect very tight natural gas markets over the winter months, keeping prices at uncomfortably high levels. Moreover, because of the lack of natural gas imports from Russia, prices are not likely to fall significantly in 2023. This will hurt the supply side of the economy, with a growing number of European companies reducing production. And while governments have stepped up their support for households and businesses, we still believe that consumption will contract. At the same time, increasingly tight financial conditions are another headwind for growth. European natural gas prices are likely to remain at historically high levels   Source: Refinitiv Datastream Negative growth in 2023 While the deceleration of economic activity seemed to be limited during the holiday season, the September data now clearly screams recession. The Composite PMI indicator stood at 48.2 in September, clearly below the 50 boom-or-bust-level. With inventories building on the back of slowing sales, eurozone manufacturers reduced their purchases of inputs for the third month in a row. Consumer confidence fell in September to the lowest level since the survey started, with households especially worried about their financial situation over the next 12 months. The ECB’s assessment that households will reduce their savings to maintain their level of consumption looks illusory to us, as European consumers tend to save more in times of great uncertainty. The Eurocoin indicator, a gauge of the underlying growth pace, perfectly illustrates the strong deterioration of the economic environment in September: it fell from 0.23% to -0.73%. We therefore stand with our forecast of a small negative growth figure for the third quarter of 2022 and a deeper downturn over the winter months. With the ECB in a tightening mode, we also anticipate a more subdued recovery over the course of 2023. For next year, we now anticipate a 0.8% GDP contraction, after a 2.9% expansion in 2022. Eurozone consumer confidence falls to a very low level Source: Refinitiv Datastream Double-digit inflation Meanwhile, the inflation rate has hit double-digit figures: it rose to 10% in September. Energy prices remain the main culprit, but core inflation also rose to 4.8%. However, according to the models of the national central banks, the indirect effects of higher energy costs are currently contributing around one-third to core inflation. This means that once energy prices stabilise, core inflation will also come down. That said, this is likely to be a very gradual process. We still expect 5.6% headline inflation for 2023 and we believe it will take until the second half of 2024 before inflation reaches the ECB’s 2% target.   Falling real wages will weigh on aggregate demand, says @Isabel_Schnabel at @ForoLaToja. But today’s crisis is damaging potential output, and firms’ efforts to protect their profit margins imply that inflationary pressures may remain high.Read the speech https://t.co/gvHhkWGhwW pic.twitter.com/doBkug1TqX — European Central Bank (@ecb) September 30, 2022 A more hawkish ECB Since the Jackson Hole conference in August, the ECB has become more aggressive. As it seems to have lost confidence in its medium-term inflation forecast, it is now focusing much more on current inflation. Quite a change! That explains why the bank now wants to get rates back to neutral as fast as possible and is even willing to go a bit further, as long as the recession is not creating too much unemployment. We therefore see a 75bp hike in October, followed by 50bp in December and 25bp in February 2023, bringing the deposit rate to 2.25%. The ECB might also decide to stop the reinvestment of its asset purchase programme (APP) portfolio somewhere in the first half of next year. However, the pandemic emergency purchase programme (PEPP) portfolio is likely to be reinvested until the end of 2024. As for bond yields, some further limited upward potential is still on the cards, but around the turn of the year, the yield curve is very likely to invert in the wake of the significant economic downturn. TagsInflation GDP Eurozone ECB   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Analysis Of Tesla: A Temporary Corrective Rally Should Not Come As A Surprise

Tesla's China Sales Hit Record And Selloff In Treasuries Continue

Swissquote Bank Swissquote Bank 11.10.2022 11:42
Risk sentiment is morose this week with the escalating tensions in Ukraine, rising Covid cases in China, mounting tensions between US and China, the selloff in US and other treasuries, the relentless appreciation in the US dollar and the drop in safe haven currencies. Situation on forex market The Swiss franc lost ground against the greenback and the USDCHF rose above parity. The Japanese yen continued its historic fall as well, the dollar yen advanced to 145.80. Gold fell for the fifth day to $1660 per ounce, and is set to dive deeper toward the $1600 level on the back of a relentless rise in the US yields and the dollar. And the US yields press higher on the back of hawkish Federal Reserve (Fed) pricing, despite a couple of less hawkish comments from some Fed members at the start of the week. Marcoeconomy events The US 2-year yield advanced to 4.35%, and activity on Fed funds futures price 77.5% chance for a 75bp hike at next FOMC meeting. Even the UK yields shot higher despite the Bank of England’s (BoE) announcement of more measures to calm down the Truss-hit gilt market. At least, the avalanche of bad global news has been successful in pulling oil prices lower yesterday. The barrel of American crude eased to $90 this morning, after having flirted with $94 a barrel on Monday. US earnings season kicks off in a dark and depressed environment. According to data from FactSet, the EPS growth of the S&P500 companies should fall by 2.6% to below 10% in the Q3. Watch the full episode to find out more! 0:00 Intro 0:34 Ukraine war, rising Chinese Covid cases & US-China tensions 1:48 Chip stocks do poorly 2:33 Even safe havens are not safe 4:22 And selloff in Treasuries continue at full speed 5:50 Oil bounced lower 6:51 Earnings probably grew slower in Q3 7:32 BoE tries hard, but Truss govt is just… a disaster 9:10 Tesla's China sales hit record! Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Ukraine #Russia #war #China #Covid #chip #stocks #Nvidia #AMD #Tesla #earnings #season #Fed #BoE #USD #GBP #gilt #intervention #Gold #XAU #CHF #JPY #crude #oil #Bitcoin #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Inflation Data Will Be An Additional Stimulus For The Fed To Further Raise Interest Rates

Inflation Data Will Be An Additional Stimulus For The Fed To Further Raise Interest Rates

InstaForex Analysis InstaForex Analysis 11.10.2022 12:49
Analysts at Goldman Sachs say it is too early to assess a dovish turn in Fed policy as the economic outlook is not bad enough yet and the rate markets remain too volatile. They added that significant rate fluctuations mean that expectations of higher stock returns over relatively safer assets are likely to be lowered. Speculation that the Fed's policy would become more equity-friendly has led to the S&P 500 rising from time to time over the past 12 months. But those rallies have all been sold out and the indicator hit new lows each time. The central bank also appears to be on track to fulfill its fourth straight 75 bp rise at its November meeting. Now, the US stock market is just a few points away from closing at its lowest level since November 2020. It has already fallen 24% this year. Tighter financial conditions, a potential escalation in geopolitical risks, and the current mix of economic growth and inflation have increased downside risk for the stock. Meanwhile, 2-year Treasury yields rose to 4.35% on Tuesday, its highest level since 2007. The reason is fears that US inflation data this week will add more incentive for the Fed to keep raising interest rates. There is also a possible government split in the US midterm elections, but this could lead to stocks performing well after the event as political uncertainty subsides.   Relevance up to 09:00 2022-10-12 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/323963
The New Disney Drama: Disney Is Opposing Activist-Investor Nelson Peltz

Cheaper Netflix Is Here!| Jim Cramer Comments On The Shares

Kamila Szypuła Kamila Szypuła 14.10.2022 10:02
Today we take a look at real estate risk in UBS the 2022 Global Real Estate Bubble Index, the ecosystem situation and other news. We will also look at the expert commentary Head of Global Thematic and Public Policy Research Michael Zezas and U.S. Equity Strategist Michelle Weaver.  In this article: Companies' stocks rising Biodiversity Situation 2022 Global Real Estate Bubble Index Thoughts by Jim Cramer New Netflix's plan Post-pandemic problems of companies Morgan Stanley tweets about companies' inventory rising. The discussion was attended by Head of Global Thematic and Public Policy Research Michael Zezas and U.S. Equity Strategist Michelle Weaver.   As consumption of goods slows post COVID, companies are experiencing a build up in inventory that could have far reaching implications. Head of Global Thematic and Public Policy Research Michael Zezas and U.S. Equity Strategist Michelle Weaver discuss. https://t.co/cYXO15cG0n pic.twitter.com/XZbanoplvX — Morgan Stanley (@MorganStanley) October 13, 2022 The pandemic situation negatively affected many industries, individuals and the entire economy. Also, the current post-pademic situation is not positive. Currently, the global problem is blowing inflation, which negatively affects the situation of companies. Another problem is the increase in inventories in warehouses. Product stored for a long time may lose its substance, and the inability to travel causes a reduction in production. Firms will begin to struggle with higher maintenance costs, which can result in job cuts and, in the worst case, even closings. Eyes on biodiversity Credit Suisse in its last tweet addresses the topic of the poor condition of the biosphere.   Biodiversity is being increasingly threatened, with up to one million species at risk of extinction. The reasons include climate change, pollution and deforestation. Read more about why climate change matters for biodiversity: https://t.co/C1UDMqGsap pic.twitter.com/2CNYsuypox — Credit Suisse (@CreditSuisse) October 13, 2022 Biodiversity is important to the entire ecosystem. This ensures that the float chain is in balance and that the ecosystem situation is also stable. We have been struggling with a significant climate change for several decades, many species are already extinct. Humanity that has caused this must take action to prevent an ecological catastrophe. Raising awareness about this is very important, because making individuals aware that action, even small, can save the ecosystem. Which cities may be at risk of a real estate bubble UBS in its tweet informs about the 2022 Global Real Estate Bubble Index.   Our 2022 Global Real Estate Bubble Index is out. Read the full report and find out if your city is at risk of a property bubble. https://t.co/b4s39M0nGz #GREBI #ShareUBS pic.twitter.com/g6hINxpLPI — UBS (@UBS) October 13, 2022 The economic situation in the world is tense. Inflation causes economies to lighten or fall into recession. The staggering state of economies affects individual industries, sectors including the real estate sector. Indeed, the property market has long been supported by central banks. Ultra-low financing conditions and demand outpacing construction have led to increasingly optimistic price expectations among buyers. Current rise of Interest rates—and in turn, financing costs—have climbed in recent months to combat elevated inflation. Consequently, the willingness to pay for owner-occupied homes is likely to take a hit. In its report, UBS makes it possible to get acquainted with the situation on the real estate market in individual cities. Expert opinion on several shares Mad Money On CNBC tweets Jim Cramer's thoughts on Tellurian, Zoetis, and more.   .@JimCramer also gave his thoughts on Tellurian, Zoetis and more. https://t.co/vpuGg6Y6vq — Mad Money On CNBC (@MadMoneyOnCNBC) October 13, 2022 The expert looks at the shares of several companies and expresses his opinions. Knowing an expert's opinion on share prices is important for investors in the current climate. This allows you to give a fresh perspective on these companies. Netflix's plan with ad FXMAG on its Twitter feed informs about CNBC's comment about the ad-powered Netflix's plan.   @CNBC has just commented on the “ad-powered” $6.99/mo @netflix’s plan #StockMarkets https://t.co/fMTV5tigCF — FXMAG.com (@FXMAG24) October 13, 2022 Netflix is very popular. It offers three possible plans. Recently, he announced that there will be a plan powered by advertisements. This plan may turn out to be cheaper. The question arises whether it will enjoy popularity, whether people will opt for the cheaper version of the ad, and whether they prefer to pay more to avoid advertising. Doing so can also be a trick for subscribers to decide to pay more for ad-free viewing comfort, but it can also be an option for people who prefer to save money and watch their favorite games on a platform.
CPI In The US Slowed Down Further, Falling To 6.5% y/y  With Expectations

The US Inflation Has Once Again "Upturned The Markets" | US Dollar (USD) Will Continue To Strengthen

InstaForex Analysis InstaForex Analysis 14.10.2022 11:58
Euro and US Dollar The US currency showed a powerful breakthrough after the release of impressive data on inflation in the US. Later, however, the greenback "slowed down" a bit, evaluating the results. This took advantage of the euro, which grew slightly. However, in the future, the chances of the EUR faded away, as the USD rallied again. A new round of upward  A new round of the greenback's upward spiral was recorded after the release of strong US inflation reports. On Thursday, October 13, the US Department of Labor released data on the Consumer Price Index (CPI) for September. Note that this indicator increased by 0.4% m/m, although it was expected to increase by only 0.2% m/m. At the same time, consumer prices in America soared by 8.2% in September, exceeding the forecast by 8.1%. The increase in consumer prices reflects the rising cost of housing, food and medical care, experts emphasize. At the same time, the increase in this indicator is partially offset by the fall in gasoline prices. US inflation data According to the report, the core consumer price index (Core CPI) in the US, excluding the cost of food and energy, rose by 0.6% in September. At the same time, analysts expected it to increase by 0.5% m/m. Note that the annual growth rate of Core CPI rose to 6.6%. An increase in the base CPI demonstrates an increase in the cost of housing, cars and medical care, as well as an increase in education fees. The US Department of Labor report focuses on the spread of high inflation in all areas of the national economy. In this situation, the standard of living of Americans plunged sharply. Against this background, citizens have to use their savings and credit cards to make ends meet. At the same time, experts expect a slowdown in consumer prices in the US. However, the current situation is unlikely to affect the Federal Reserve's plans for a further increase in the key rate. Following strong US inflation data, USD and Treasury yields surged, while US stock futures plummeted. Against this backdrop, expectations of another increase in the Fed's interest rate intensified. At the moment, the central bank is pursuing a hawkish strategy aimed at combating galloping inflation. At the same time, despite the slowdown in the US labor market, the department intends to continue to raise interest rates. At this rate, according to Commerzbank analysts, in the first quarter of 2023, the Fed rate will peak at 5%. EUR/USD Against this background, the dollar is confidently leading, habitually pushing the euro away from key positions. According to DBS Bank economists, the greenback will continue its upward trend until the end of 2022, and by 2023 it will reach the level of consolidation. The dollar is supported by a long-term increase in Fed rates, the bank emphasizes. As a result, on Friday, October 14, the EUR/USD pair was trading near 0.9784. Against this background, the greenback remained calm, and the euro tried to gain a foothold in the conquered positions. At the same time, the pair remained within the current range. Earlier, Credit Suisse economists believed that after strong US inflation data, the EUR/USD pair would test the 0.9500 mark, but this did not happen. Fed's reaction to inflation According to analysts' estimates, the current inflation in the US has once again "upturned the markets", threatening a new wave of tightening of the Fed's rhetoric. In the current situation, traders and investors expect the next rate hikes, as high inflationary inflation rates do not give a respite to the Fed. As a result, the central bank is forced to be "in an aggressive tightening mode," experts emphasize. According to analysts at Oxford Economics, by the end of 2022, the Fed will raise rates "by at least 125 bps". Most analysts (98%) are convinced that the central bank will raise the rate by 75 bps in November, up to 3.75-4% per annum. Recall that such an increase in rates could be the sixth in a row. Earlier, after three meetings of the Fed, it was raised by an additional 75 bps. At the same time, many investors are confident that core inflation will soon fall, and the Fed will soften its rhetoric a bit. However, this is unlikely, experts say. Against this background, the US currency is stabilizing, reacting to a short-term surge in risk sentiment, recorded at the end of the week. At the same time, large hedge funds still bet on the further growth of the USD. Geopolitical turmoil and fears of an economic downturn have further strengthened the greenback, prompting investors to abandon European assets. Many of them still consider the dollar the safest asset to protect their savings. According to analysts at Citigroup Global Markets Inc, the US currency will continue to strengthen until the global economic slowdown stops. If its growth accelerates, the dollar will give up its positions, experts are certain. However, now this is far away, and the benefits of owning USD outweigh the current risks, Citigroup notes.   Relevance up to 09:00 2022-10-17 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/324316
The Bank Of England Is Likely To See One Or Two More Rate Hikes In The First Half Of The Year

What CPI Reading In Great Britain Can We Expect This Time?

Kamila Szypuła Kamila Szypuła 15.10.2022 08:07
Throughout all the months of this year, inflation remains in the candlestick. Every month we notice a change in the consumer price index (CPI), which informs about the annual or monthly change the price of a weighted average market basket of consumer goods and services purchased by households. Why are prices rising so fast? Once again our eyes will be on the UK reports. Other countries are also experiencing a cost of living squeeze. Many of the reasons are the same: increased energy costs, shortages of goods and materials and the fallout from Covid. According to the Governor of the Bank of England Andrew Bailey, the cause of inflation in the UK is "a shock in Russia" After all, as stated by the Governor of the Bank of England, there are many other factors, such as: energy bills that have risen sharply due to high oil and gas prices. gasoline and diesel prices, partly because the war in Ukraine has increased the price of crude oil. food prices as the war in Ukraine reduces grain production and costs increased drastically Not all prices behave the same way. The cost of some other goods and services have increased only slightly or stayed the same. What inflation looked like and what can it look like in the UK? As we can see from the horse of last year, inflation in Great Britain continues the upward trend. There was a sharp increase in April as it rose from 2%, from 7.0% to 9.0%. In the collections it grew slowly, only by a tenth of a percent. In July, it exceeded the 10% threshold, amounting to 10.1%. Then it unexpectedly fell to 9.9% in August. It is projected to rise from this level to 10.0% in September. Investment bank Goldman Sachs now says inflation could peak at 10.8% in October, and slow to 2.4% by December 2023. Lower inflation does not mean prices will go down. It just means they will stop rising at their recent faster pace. Source: investing.com Inflation in the last reading depending on the sector The annual inflation rate for transport was 12.4% in August 2022, down from 15.1% in July. Food and non-alcoholic beverage prices rose by 13.1% in the 12 months to August 2022, up from 12.7% in July. The annual rate for the miscellaneous goods and services category was 4.6% in August 2022, up from 4.0% in July. The rate is the highest recorded since September 2005. The annual rate for clothing and footwear was 7.6% in the year to August 2022, up from 6.6% in July. And this time, in the September post office, we can expect growth in these sectors. The actions of the British central bank in the fight against inflation The Bank is under pressure to put rates up because it has a target to keep inflation at 2%, but prices are currently rising at about five times that level. The Bank of England's traditional response, as other cental banks, to rising inflation is to raise interest rates. On 22 September, the Bank of England raised rates by 0.5 percentage points to 2.25% - the highest level for 14 years. This can encourage people to save, but means some people with mortgages see their monthly payments go up. How it affects ? When interest rates rise, about two million people on tracker and variable rate deals see an immediate increase in their monthly payments. Their monthly payments may not change immediately, but with lenders now anticipating higher rates, any new deals will be more expensive. That means new house buyers - or anyone seeking to remortgage - will also have to pay more. Raising interest rates also makes borrowing more expensive and - it is hoped - people have less money to spend. As a result, they will buy fewer things and prices will stop rising as fast. Bank of England interest rates also influence the interest charged on things like credit cards, bank loans and car loans It also has negative effects on savings because the value of cash savings is falling in real terms. Source: investing.com, ons.gov.uk
BoJ Core CPI Has Now Accelerated And Challenging The Bank Of Japan’s Stance

Inflation Stabilized In Japan | Another Decision Of The Bank Of Indonesia About Interest Rates Is Ahead

ING Economics ING Economics 17.10.2022 11:41
China’s 20th Party Congress is the main event in the region in the coming week, followed by China’s GDP report In this article The week ahead China data and 20th Party Congress in focus Trade reports from India and Indonesia Australia’s jobs figures Japan’s inflation to stabilise at 2.7% Bank Indonesia to stay hawkish, but will we see another surprise? Source: Shutterstock The week ahead In the coming week, we get a relatively limited number of reports from the region, although we have a flurry of data from China and the much-anticipated 20th Party Congress will be held on 16 October. There should be a lot of buzz and market talk following the congress meeting. China data and 20th Party Congress in focus The major event in the coming week will be the 20th Party Congress to be held this Sunday. There will be a lot to talk about this event in the market. Meanwhile, China will release its 3Q22 GDP report and activity data for September on Tuesday. We expect improvements in GDP growth from 0.4% year-on-year to 4.4%YoY given that fewer lockdowns were implemented in the third quarter.  Retail sales, industrial production and fixed assets investments should grow slightly faster in September compared to a month ago. However, property investments and home prices should continue to be in a dire situation with buyers still adopting a wait-and-see approach, although we did note more home transactions by the first week of October. We expect policy rates for the Medium-term Lending Facility (MLF) to be released on Monday and the Loan Prime Rate (LPR) on Thursday. We expect both rates to stay the same as the People's Bank of China seems to be injecting funds into policy banks rather than into commercial banks to help local governments address problems associated with uncompleted residential projects. Traditional monetary policy accommodation of interest rate cuts may not the best solution for now. Trade reports from India and Indonesia In India, September trade figures will have benefited from the drop in crude prices that saw brent crude falling below $90/bbl at times in the month. The US$28bn trade deficit for August will probably fall to something closer to $26bn. Meanwhile, Indonesia reports August trade numbers next week. We expect both exports and imports will sustain double-digit gains. Exports will continue to benefit from elevated commodity prices while imports should rise further on improving domestic demand. The overall trade surplus will remain substantial, settling at around $5.5bn for the month.  Australia’s jobs figures Australia releases September labour market data. The August figures were pretty solid apart from a small uptick in the unemployment rate to 3.5%, and firm labour data will make it awkward for the Reserve Bank of Australia, which scaled back the pace of its rate hikes at the October meeting – though this may be even tougher after third-quarter inflation is released a week later on 26 October. Japan’s inflation to stabilise at 2.7% Consumer inflation in Japan is expected to stabilise to 2.7% YoY in September (vs 3.0% in August) and the monthly gain should have slowed mainly due to the decline in global oil prices. Also, we expect the trade deficit to narrow in September with imports growth slowing at a faster pace than exports. Bank Indonesia to stay hawkish, but will we see another surprise? Bank Indonesia meets next week and will likely tighten monetary policy again. Accelerating inflation and depreciation pressure on the Indonesian rupiah will likely convince Governor Perry Warjiyo to hike aggressively and increase policy rates by 50bp. Asia Economic Calendar   Source: Refinitiv, ING TagsAsia week ahead Asia Pacific Asia Markets Asia Economics
CPI In The US Slowed Down Further, Falling To 6.5% y/y  With Expectations

The Worrying Lack Of A Signal About Weakening Inflation

InstaForex Analysis InstaForex Analysis 17.10.2022 11:50
Latest data The release of the CPI inflation report last week showed that inflation rose 0.4% for September, according to the Bureau of Labor Statistics. The report also showed that the consumer price index in September tanked 0.1% at 8.2% YoY from the previous month's 8.3% YoY. However, the main CPI attracted the most attention. The core consumer price index increased from 6.3% in August to 6.6% in September. Interest rate Interest rate hikes are lagging behind to have any real impact on inflation, and the underlying inflation rate is the preferred data that the Federal Reserve uses to shape its monetary policy. At the same time, the surge in core inflation after the Fed aggressively raised interest rates from almost zero to 300–325 basis points during the last five FOMC meetings this year, including three consecutive rate hikes of 75 basis points each: in June, July and September, clearly shows that the recent rate hike has a nominal the impact on reducing inflation. However, they had a strong impact on the growth of US debt yields. The yield on the 10-year Treasury passed 4% on Friday, and with Friday's gain of 1.68%, it is currently 4.02%. The 30-year US bond yield is not far behind the 3.997% yield. The simple truth is that inflation is showing no signs of easing, and this is worrisome as expectations rise in financial markets that the Fed will raise its domestic federal funds rate to 5% or higher by March next year. According to the CME FedWatch tool, there is a 96.7% chance that the Fed will make another 75 bps rate hike in November and a 66.7% chance they will raise another 75 bps in December, leading to a federal funds rates by the end of 2022 to 450–475 basis points. The aftermath of the recent series of rate hikes has caused extreme volatility in the markets and rising bonds. The speed with which the Fed is trying to catch up is the main mistake of not raising rates in 2021. Inflation in 2021 started at 1.4% in January and was 7% by December, and the Federal Reserve did nothing to curb inflation until March 2022. It is clear that if the regulator implemented a small rate hike in 2021, inflation would be far from its current level. The Federal Reserve has painted itself into a corner, forcing them to reconsider the extremely aggressive rate hikes we are currently experiencing. According to the vast majority of economists, a federal funds rate of 5% or higher will have a devastating effect on the economy. This would have a negative impact on stocks and earnings and lead to more bond sell-offs. In effect, this can make it impossible to make loans from individual loans, such as mortgages or loans to corporations. Even more worrying is that some economists expect federal funds rates to rise to 6% at some point. The consequences could easily exacerbate and accelerate a global recession scenario, causing a severe disruption to the global economy. The sad truth is that this scenario could have been avoided had the Federal Reserve acted in response to rising inflation in 2021. They are certainly not responsible for the pandemic that led to the recession, but they are fully responsible for not acting in a timely and sensible way when it was clear in 2021 that inflation was starting to spiral out of control.     Relevance up to 09:00 2022-10-22 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/324465
The Bank Of England Is Anticipated To Hike Rates By 50 bp As A Result Of A Wealth Of Data

Some Excessive Rate Hikes Are Looming In The United Kingdom

Kenny Fisher Kenny Fisher 19.10.2022 12:32
GBP/USD is in negative territory today. In the European session, the pound is trading at 1.1261, down 0.48%. Inflation rises to double-digits UK inflation rose to 10.1% in September, up from 9.9% in August and above the consensus of 10.0%. It was a similar story from Core CPI, which edged up to 6.5%, up from 6.4% and higher than the forecast of 6.3%. A return to double-digit inflation is certainly not something the Bank of England wanted to see. Inflation is not showing any signs of peaking, which leaves no doubt that the BoE will have to continue to raise interest rates. The cash rate remains relatively low at 2.25% in comparison with the Federal Reserve (3.25%) and other major central banks. The cash rate will likely hit 4% or even higher by mid-2023, which means some oversize rate hikes are on the way. The BoE meets next on November 3rd and policy makers will need to deliver a hike of 0.75% or a full point in order to maintain credibility. The recent political maelstrom, in which Chancellor Hunt has abolished most of the planned tax cuts and signalled spending cuts instead, means that the BoE may not have to act as aggressively as anticipated just a few weeks ago. A key point in the fiscal U-turn provided by Hunt is the energy cap plan. The cap, which was supposed to remain in place for two years, has been scaled down to just six months. Higher energy bills for households will mean higher inflation unless energy falls substantially in the winter. The economic outlook for the UK does not look all that bright, which will likely be reflected in a weaker British pound. Goldman Sachs has downgraded its UK growth outlook, with the economy expected to decline by 1% in 2023, worse than the previous estimate of -0.4%. . GBP/USD Technical GBP/USD faces resistance at 1.1373 and 1.1455 There is support at 1.1214 and 1.1085 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
At The Close Of The New York Stock Exchange 728 Securities Closed In The Red

Netflix's Results Will Be A Hit On The Wall Street | The Bank Of England (BoE) Will Have To Be Very Aggressive

Craig Erlam Craig Erlam 19.10.2022 14:34
Trading is mixed in Europe on Wednesday, with Wall Street eyeing a slightly stronger open amid bumper Netflix earnings. Netflix is a hit Netflix results are expected to be a hit on Wall Street when the bell rings on Wednesday, with pre-markets pointing to a more than 13% rally in the stock. The streaming company reported revenues and earnings that comfortably surpassed expectations, while subscriber growth more than doubled forecasts. That was largely driven by the Asia-Pacific region which will become increasingly important for growth in the coming years. The company will continue to crack down on password sharing going forward, while the ad-supported plan will hope to draw in additional subscribers. After a tough year, things may be looking up for Netflix. UK inflation back in double-digits Inflation in the UK surpassed 10% again in September, slightly beating market expectations and further fueling concerns about the cost of living crisis and the role of the Bank of England in reining in rapid price increases. Naturally, all of this has been complicated by the political soap opera over the past few weeks, something the new Chancellor, Jeremy Hunt, has sought to calm by abandoning almost the entire controversial mini-budget. But inflation is still a problem, regardless, and the BoE will have to be very aggressive at upcoming meetings in order to try and get a grip of it. Markets are now undecided between a 75 and 100 basis point hike on 3 November but are quite confident that Bank Rate will end the year at 4% either way. With inflation now broad-based and fuel even offsetting some of the larger price increases, the worry is that these forecasts may prove too optimistic. ​ Intervention talk ramps up as USDJPY nears 150 Japan remains in focus as the dollar closes in on 150 against the yen. The threats of intervention have been coming thick and fast and many are wondering if 150 could be the point at which the Ministry of Finance pushes back once more. The last intervention wasn’t particularly successful, with the benefits unwinding in a matter of days. The question now is when they’ll jump back in and how forceful they’ll be. The message is clearly falling on deaf ears at the moment. Continuing to fluctuate Bitcoin continues to consolidate, with the recent rebound failing once more around $20,000. That level was once believed to be hugely significant as support but the reality is that it has simply become the point at which the price fluctuates around. That will change eventually but we’re now two months into that broadly being the case so there’s little to suggest it’s imminent. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The Bank Of England Is Forced To Act Aggressively

There Is Nothing Stopping The Bank Of England From Hitting The Rate Sharply

InstaForex Analysis InstaForex Analysis 20.10.2022 11:34
Deputies quarrel, ministers are leaving, Truss' chair is shaking, inflation is rising. The pound has started a black streak again, although the presence of a white one can be questioned. The burden of problems hangs over the British currency and it does not get better, on the contrary, there are new reasons to think about the potential achievement of parity for the GBP/USD pair. The dollar gaining strength, the equally rapidly growing inflation in the UK, which the Bank of England continues to ignore, the specter of a recession. All this is happening during a possible change of power in Britain. The new prime minister has not had time to settle in the chair, as MPs want to send her after Boris Johnson. The government's twists and turns are not at the right time, but apparently there is no other way out. Inflation The pound fell for a moment after the release of inflation data. The new indicator turned out to be disappointing, the price index in the UK continued to accelerate, reflecting, among other things, the passivity of the local central bank. In September, inflation moved to double digits, increasing from 9.9% to 10.1% against the consensus of economists of 10%. More importantly, the core inflation rate rose just as quickly, amounting to 6.5% compared to 6.3% in the previous month. The highest figure in four decades, but succeeding figures are expected to be higher. "The overall inflation rate will rise to almost 11% in October, primarily due to a 27% increase in energy prices. But in the first quarter, the overall figure should decrease to 9%, since the peak of growth in food and motor fuel prices has probably been reached," Pantheon Macroeconomics economists comment. High inflation could be made an argument for strengthening the pound due to the aggressive rhetoric of the BoE, which, in theory, should have followed after another record price increase. Now nothing is keeping the central bank from raising the rate sharply at the November meeting, which was raised to 2.25% in September and is expected to rise to about 4% by the first months of the new year. In practice, things may be different. However, some economists say this may now be less likely after recent scenes in the government. Most of the September budget plan was canceled this week in favor of a return to "austerity." This leaves the economy on the path to a barely mitigated recession, which, according to the August monetary policy report, could last for about a quarter. Everything is too complicated, and the authors of this confusion are British politicians. Downing Street The inflationary picture in the UK has been erased by reports of new layoffs in the ranks of high-ranking political officials. Following the sudden departure of former Chancellor Kwasi Kwarteng, who was forced to resign on October 14, Interior Minister Sewelluella Braverman left her post. The pound tried to grow amid large-scale losses on Wednesday. This movement, apparently, was a reaction to the departure of another high-ranking member of the government, followed by a decline in the yield of UK government bonds, which did not correspond to the internal inflationary picture. Braverman was replaced by Grant Shapps, whom the prime minister had previously pushed to the back of the government. Who's next? What other reshuffles are waiting for Britain and will this save the country from collapse? Anyway, the pound likes what is happening with the change of the main characters. The drop in yields on Wednesday did not correspond to the global background against which US bond yields were pushing other countries higher. Dollar Government reshuffles have a short-term impact on the pound. The reality is that the British currency lags behind not only the strong dollar, but also the weak euro. The pound continued its downward trend, despite extremely high inflation and the rates of the financial markets on the increase in US bond yields after even more hawkish comments from the Federal Reserve representatives. The pound's illogical reaction to the consumer price index data highlights that the currency is "trading in a structural, not cyclical way. In a cyclical world, higher inflation will be accompanied by higher yields and a stronger currency," HSBC noted. When markets are most concerned about structural risks, "higher inflation and higher yields are seen as symptoms of a broader problem," the economists explain. The pound is likely to continue trading structurally until the country's authorities make more efforts to contain the domestic budget deficit or until inflation reaches a peak. In this case, stabilization of the bond market and the pound is possible. In the meantime, the downward trend is the main one. Sterling is waiting for a difficult few months, during which the GBP/USD exchange rate risks falling to 1.0800 and below. The dollar rally, fueled by even more aggressive Fed rhetoric, will put more pressure on the lifeless pound. Traders are revisiting US interest rate hikes closer to 5%. In November, the rate can be raised immediately by 100 bps. The dollar rally in the middle of the week followed statements from Minneapolis Fed chief Neel Kashkari. The official signaled that he had "very little confidence in what inflation will be in six months" and argued that the central bank should keep raising rates until there was "convincing evidence" that the inflationary peak had passed. As for rates, September forecasts suggested an upper limit of 4.5% by the end of the year. Concerns were also raised about a rise to 4.75% early next year. Core inflation rose from 6.3% to 6.6% y/y in September, while the official or headline inflation rate remained stubbornly elevated at 8.2%. After the reversal of the dollar index, expectations about reaching new highs again became more active. The current range is 112.00-114.00. These notes will remain relevant until the next FOMC meeting. If bulls manage to break above 114.00, gains will accelerate to a 2022 peak at 114.80.   Relevance up to 09:00 2022-10-21 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/324821
Despite A Slowing Economy, Dividend Growth Remain Confident

Deutsche Bank Continues To Grow | A Look At The US Public Debt

Kamila Szypuła Kamila Szypuła 21.10.2022 11:37
Inflation is the main topic not only in reports, but also in tweets. It affects the cost of living, the situation of economies and even the statements of famous people.So could Elon Musk be right about the recession? In this article: Household spending The US public debt Online payment The impact of the family environment Elon Musk comment economic situation Growing household spending JP Morgan tweets about the impact of inflation on household spending.   Inflation is running red-hot and putting pressure on household budgets. J.P. Morgan Research explores how rising costs are impacting spending on consumer staples. — J.P. Morgan (@jpmorgan) October 19, 2022 There is no doubt that the cost of living has increased recently due to high inflation. Households are particularly affected. Everyone wanted to know how much this situation affects the basket of goods and services of an average person. JP Moegan took a closer look at this topic and shared the results on a tweeter, among others. Why and how public debt metters Morgan Stanley in his tweet discusses the subject of the US public debt.   As U.S. Public Debt continues to break records, should investors be concerned by the amount debt has risen? Or are there other, more influential factors at play?Read more about this episode: https://t.co/LBpeoHRz8s pic.twitter.com/ZLJKEtbqLl — Morgan Stanley (@MorganStanley) October 19, 2022 Public debt is important for investors because it includes the total amount of debt of the public finance sector, which includes the general government sector. Growing public debt, regardless of its amount, must be controlled and skillfully managed. After exceeding a certain threshold, there is a greater risk of a financial crisis, the consequence of which may be increasing unemployment, lower wages or reducing the amount and scope of social benefits. High public debt also affects investors. How it affects and why it is important is presented by the author of the tweet. Online payments is important for Deutsche Bank Deutsche Bank informs in its tweet about cooperation with Smart with online payment.   Deutsche Bank and @smart_worldwide are cooperating on online payment for the new smart #1 https://t.co/YXudU16uRn pic.twitter.com/JGtvuK1s2K — Deutsche Bank (@DeutscheBank) October 17, 2022 The development of online payments is important not only for customers, but especially for banks that offer such services. Competition in the market is high and the continuous development of measures in this direction is of great importance to banks. Deutsche Bank is continuing its strategy of establishing itself as a comprehensive financial service provider for digital marketplaces. Sharing such information has a positive impact on the image. The environment we live in is important In its tweet, UBS raises the topic of the impact of the environment, including family environment, on an individual and its development.   A family’s customs, values and ethics shape its identity. And influence the next generation. Having the right resources and guidance can make all the difference when building and communicating a shared view of enduring success. #SuccessToSuccession #shareUBS pic.twitter.com/lUrgd4krDD — UBS (@UBS) October 20, 2022 The family is the basic unit of human life. In it he grows and develops. As a basic environment, it has a significant impact on the shaping of the individual. Family values ​​or ethnic affiliation have a great influence on the worldview and decision-making. Raising awareness on this topic will help to understand that a properly shaped environment will help an individual to achieve some success and thus allow the entire society to develop. How long can take place the recession Reuters Business quotes Elon Musk's words on the recession.   Musk says recession could last until 2024 https://t.co/g7htSUI4IX pic.twitter.com/aKFHCABQMn — Reuters Business (@ReutersBiz) October 21, 2022 Economies around the world are realizing that they are facing a severe recession. The fight against inflation does not bring about the expected reforms, and on the contrary, the situation seems to be almost the same. According to Elon Musk, such a situation may last even until 2024. After the recent statements of the businessman, many people may be skeptical about it, and others may entrust this argument.
Podcast: Craig Erlam And Jonny Hart Discussed The Bank of Japan Decision And UK Inflation

The Depreciation Of The Japanese Yen Will Not Cause Any Changes In The Policy Of The Bank Of Japan

ING Economics ING Economics 22.10.2022 08:35
The coming week features several inflation readings, a Bank of Japan meeting, and Korea's third-quarter GDP report In this article Inflation reports out from Australia, Singapore and Japan Korea’s growth to decelerate while sentiment indices point to challenging outlook The BoJ to keep rates unchanged despite JPY weakness Taiwan industrial production likely stable Source: Shutterstock Inflation reports out from Australia, Singapore and Japan Australia is expected to release its 3Q22 CPI inflation data next week.  We don’t think the 6.1% inflation reading in 2Q22 was the peak, and look for the inflation rate to increase to 6.4%YoY, following a 1.0% QoQ increase.  The Reserve Bank of Australia has already stated that it expects inflation to rise further, so this doesn’t necessarily imply any deviation from their recent slower pace of tightening at forthcoming meetings, or for that matter, the outlook for the AUD. Singapore's inflation will be reported on Tuesday and we expect both headline and core inflation to heat up further.  Headline inflation could hit 7.6% while core inflation will likely accelerate to 5.2% which should keep pressure on the Monetary Authority of Singapore (MAS) to stay hawkish in the near term.  In Japan, CPI inflation excluding fresh food is expected to climb to 3% in October as the weak JPY translates to domestic inflation.  Unlike other major economies, Japan’s PMI and labour market report are expected to show continued recovery, aided by the reopening boost and government stimulus packages. Korea’s growth to decelerate while sentiment indices point to challenging outlook We expect 3Q22 GDP in Korea to decelerate to 0.1%QoQ sa (vs 0.7% in 2Q). The trade component should contribute negatively to growth for 3Q, mainly due to high commodity prices, while private consumption likely lost its steam after purchasing power faded.   Meanwhile, the consumer and business sentiment surveys will provide a bleaker outlook for the current and coming quarters. Weakness in asset markets, such as housing and equity, likely hurt consumer sentiment while businesses should be cautious given the slowdown in global demand and the weak KRW. The BoJ to keep rates unchanged despite JPY weakness Next week also features the Bank of Japan policy meeting and we expect them to stand pat despite the recent JPY weakness. Governor Kuroda could however warn that the recent currency movements would have a negative impact on the nation’s economy but we doubt the JPY depreciation will trigger any changes in the BoJ’s policy stance. Taiwan industrial production likely stable Taiwan industrial production growth should be fairly stable at around 3.5%. Further weakness of demand for semiconductors might not have reflected in this data but we might see weaker growth later in the year. Asia Economic Calendar Source: Refinitiv, ING This article is part of Our view on next week’s key events   TagsAsia week ahead Asia Pacific Asia Markets Asia Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
John Hardy to FXMAG: The UK economy faces significant head-winds from supply side limitations

We Know The Successor Of Liz Truss | Asia's Economy Is Plummeting Into Public Debt

Kamila Szypuła Kamila Szypuła 25.10.2022 11:12
UPS reports its positive results. Negative news is pouring in from Asia. And also we met the new UK prime minister. In this article: The next UK prime minister Summary of Q3 Electric-vehicle market Asia’s economic outlook FedEx problems Rishi Sunak to become the next UK prime minister CNBC Now tweets about the new prime minister of UK BREAKING: Rishi Sunak set to be Britain's new prime minister as rival Penny Mordaunt drops out https://t.co/sNXCUoAvtq — CNBC Now (@CNBCnow) October 24, 2022 Rishi Sunak is set to become Britain’s new prime minister, succeeding Liz Truss who resigned Thursday. Liz Truss was the shortest reigning prime minister in the UK, the current situation has surpassed her. After Liz Truss' resignation, there were voices that Boris Johnson would again take over the British government. But as we know, these were only false guesses. Current information that Sunak will take over this position. He will not become prime minister immediately because, according to the ritual, the outgoing prime minister, in this case Truss, must first resign in favor of King Charles. After that, the king will appoint another prime minister, Sunak, in the coming days. The question is whether the new prime minister will cope with the challenges that await him and restore stability to the British economy? UBS results UBS in its tweets shares the results for the third quarter. Particularly noteworthy is the tweet with the statement by CEO Ralph Hamers. Hear from our CEO Ralph Hamers on the progress we made over the third quarter as well as the trends we saw for client activity. pic.twitter.com/OjEAeb5WeV — UBS (@UBS) October 25, 2022 UBS Group AG, as an international investment bank and financial services company, enjoys popularity and high profits. Along with the end of a certain period, in this case of the third quarter, the company summed up its achievements. The situation on the markets is diversified, and the observation of new trends may prove very helpful for the functioning of the instance. In the author's post, you can find out about the situation of UBS, which can affect its prominence and positions in financial services. Toyota and electric-vehicle Reuters Business tweets about electric-vehicle. On @Breakingviews: Toyota is mulling its third electric-vehicle reboot in 13 months. Frequent rejigs can mean bigwigs are flailing for ideas. But its latest overhaul implies boss Akio Toyoda is addressing missteps with more speed, says @AntonyMCurrie https://t.co/ayxtHq1ZAC pic.twitter.com/OuHPhkGTLQ — Reuters Business (@ReutersBiz) October 25, 2022 There is no doubt that electronic vehicles have become something desirable. Many car manufacturing companies try to modernize their products. One of them is Toyota, which is trying to match the giant in the production of electronic cars, Tesla. Some people may take away from trying to look for new ideas, and for some it means growing their business. Public debt in Asia has increased The IMF in its post addresses the topic of economic problems in Asia. Amid Asia’s dimming economic outlook and rising inflation, public debt has risen substantially in Asia over the past 15 years—particularly in the advanced economies and China. https://t.co/gDWrrRU0uD pic.twitter.com/YvJDzyAM7c — IMF (@IMFNews) October 25, 2022 Economies around the world struggle with the problems of rising inflation and its negative impact on the functioning of economies. China as Asia's largest economy is also struggling. Despite yesterday's positive results (Read more : Growth In China's Trade Balance. Significant Declines In Major Sectors Of Europe And Great Britain| FXMAG.COM), there is a bigger problem of public debt. Public debt is growing rapidly, which means that the governments of Asian countries are indebted to power. Despite positive reports, such a situation may have negative consequences for the economy. This may mean that a financial crisis is approaching, and as we know from history, dealing with this problem can be laborious and very expensive. Companies face problems Bloomberg Terminal tweets about the market loses of the FedEx shipping company. FedEx lost $11 billion in market value last month, wiping out two years of stock gains, after it pulled its forecast, feeding into fears of a global demand slowdown.https://t.co/OthLH3tipw — Bloomberg Terminal (@TheTerminal) October 24, 2022 The economic slowdown and rising inflation affect the situation of shipping companies. The prognosis is not very good. FedEx and UPS expect to see dramatic drops in US and global shipments. Which will have a negative impact on the financial result of these companies, and thus may cause a reduction in employment.
It Is Quite Possible That The Australian Dollar Is Tired Of Growth

The Australian Government Does Not Expect Significant Changes In Inflation Forecasts

InstaForex Analysis InstaForex Analysis 26.10.2022 13:54
The Australian dollar, paired with the US currency, is storming the 64th figure, reacting to the release of data on inflation in the country. The report turned out to be "unipolar": all components came out in the green zone, surpassing even the most daring expectations of experts. At the same time, the greenback is still under pressure: the US dollar index fell to the 110th mark, amid increased interest in risky assets. In other words, the situation is in favor of the upward scenario in AUD/USD, at least in the context of a large-scale correction. To confirm their ambitions, buyers of the pair will have to consolidate above the intermediate resistance level of 0.6450, which corresponds to the Kijun-sen line on the daily chart. But the main target is slightly higher—at 0.6540, which is the upper line of the Bollinger Bands indicator on the same timeframe. Above this target, Aussie rose for the last time at the end of September, so this price barrier has a psychologically important significance. But back to Australian inflation. According to published data, the consumer price index in the third quarter jumped to 7.3% YoY (with a forecast of growth to 7.0% and the previous value of 6.1%). In quarterly terms, the indicator rose to 1.8% with a growth forecast of up to 1.6%. On a monthly basis, the CPI also came out in the green zone, reaching 7.3%. Again—all components of today's report exceeded the expectations of most analysts. On the one hand, this fundamental factor really supported the Australian dollar, and not only paired with the US currency, such crosses as AUD/JPY and AUD/NZD demonstrate upward dynamics. But on the other hand, the published inflation report is unlikely to be able to keep buyers of the AUD/USD pair in good shape for a long time. As soon as the first emotions settle down, Aussie will again focus on the dynamics of the greenback. Indeed, by and large, today's release, despite its "green color," has not changed anything significantly. Representatives of the RBA may, to some extent, toughen their rhetoric, but at the same time, the regulator will continue to raise the interest rate in 25-point increments. Yes, inflation is growing at a faster pace, but it should be remembered that, according to the forecasts of the RBA, the CPI by the end of the year will be 7.8%. Therefore, the current growth of the index may be caused by "excessive concern" among RBA members, but no more. Australian Treasurer Jim Chalmers said that the government does not expect a significant change in the inflation forecast. According to him, the Treasury expects inflation to peak at the same level at the end of the year (that is, at around 7.8%). It is also worth recalling the comments of RBA Governor Philip Lowe, who, following the results of the October meeting, made it clear that members of the central bank are afraid of the negative consequences of aggressive tightening of financial conditions for consumer spending. According to him, the simultaneous increase in inflation and an increase in the rate "put a lot of pressure on consumers' budgets." In addition, members of the Reserve Bank were concerned about the state of affairs in the labor market. Whereas the latest "Australian Nonfarm" were quite contradictory – for example, the indicator of the increase in the number of employed came out at around 0.9k with a forecast of growth of 25k. Therefore, in my opinion, the positive effect of today's inflation release will be short-term. In the medium term, the Aussie will move in the wake of the US currency, which is weakening ahead of the November Fed meeting and against the backdrop of weak macroeconomic reports. In particular, the consumer confidence index dropped to 102 points, and the index of manufacturing activity from the Federal Reserve Bank of Richmond to -10 points. Such weak results have increased traders' concern about the Fed's next steps. Rumors have spread in the market that the Fed would demonstrate a less hawkish attitude at the November meeting against the background of further signs of economic weakness in the United States. It is noteworthy that experts are discussing the possible results of the December meeting, and not the November one (at which the Fed is 97% likely to raise the rate by 75 points). The probability of a 75-point rate hike in December is gradually decreasing, and this fact puts pressure on the US currency. Thus, the AUD/USD pair retains the potential for further corrective growth, but rather due to a temporary weakening of the greenback. Australian statistics supported the Aussie "at the moment," but this fundamental factor will not be able to keep the AUD/USD pair afloat if dollar bulls strengthen their positions again. The first and so far the main target of corrective growth is the mark of 0.6540—this is the upper line of the Bollinger Bands indicator on the D1 timeframe. Overcoming this target will open the way for buyers to the 66th figure, but it is too early to talk about it. Indeed, to date, the RBA has already slowed down the pace of tightening monetary policy, while the Fed is guaranteed to raise the rate by 75 points at least in November. All other assumptions are still speculation and cannot serve as a basis for a steady growth of AUD/USD.   Relevance up to 10:00 2022-10-27 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/325371
In Italy Private Investment Should Remain A Positive Growth Driver In 2023

Energy Prices Fueled The Rise In Inflation In Italy

ING Economics ING Economics 28.10.2022 14:49
The energy component was the driver of the surprisingly strong leap in headline inflation. Possible government interventions could increase volatility in inflation numbers over the rest of the year In this article Highest inflation reading since June 1983 An energy driven inflation acceleration More inflationary volatility ahead and the government may intervene Highest inflation reading since June 1983 According to preliminary Istat data, Italy's headline inflation figure shot up to 11.9% (from 8.9% in September), widely beating expectations, and marking the highest level since June 1983. The harmonised measure reached 12.8% (from 9.4% in September). An energy driven inflation acceleration The upwards surprise was mainly due to the energy component (+73% in October from +44% in September), with both the regulated and non-regulated components shooting up. The transmission to electricity bills of past gas increases went well beyond expectations. Beyond energy, the other inflation driver was food (+13.1% from 11.4% in September), which confirmed its recent trend. Interestingly, we note a widening gap between goods inflation (+17.2% from 12.5% in September) and services inflation (+3.7% from 3.9% in September), and that looks to be some evidence of the re-opening/tourism effect finally ending. The energy bias is confirmed by the contained increase in core inflation to 5.3% (from 5% in September). Core inflation remains a reason for concern, but its deceleration is tentatively encouraging and will have to be assessed over the coming months. On the one hand, it is possible that demand concerns will limit the scope for future accelerations; on the other, there remains ample scope for pass-through in the pipeline. This is confirmed by September producer price data, also released earlier today, which also points to inflation increases in the non-energy component.   In the October business confidence survey, businesses (with the exception of manufacturers) revealed non-declining expectations of future prices, again suggesting that the pass-through might not be over. All this will very much determine the degree of stickiness of inflation as the energy peak is passed. More inflationary volatility ahead and the government may intervene Looking ahead, conditions don't seem to be there yet to call the inflation peak. What we will likely see is more volatility in headline numbers over the next few months. Recent declines in gas prices might already be partially reflected in the November inflation release, possibly bringing about a softer inflation print. Furthermore, after such a shocking inflation release, the Italian government will likely feel compelled to speed up the launch of a new package of dedicated compensating measures. We tentatively expect inflation to average 8.1% in 2022, and upgrade our forecast for 2023 to 6.3% on the back of a higher statistical carryover.   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The German Economy Will Still Have To Cope With The Delayed Impacts Of Last Year’s Crises

The Peak Of German Inflation Will Probably Come At The Turn Of The Year

ING Economics ING Economics 28.10.2022 14:57
German inflation increased once again in October. We are still a few months away from the peak  The German inflation shocker has entered the next round as headline inflation just came in at 10.4% year-on-year in October, from 10.0% YoY in September. The HICP measure increased to 11.6% YoY, from 10.9% YoY in September. The fact that monthly inflation (0.9% month-on-month) is still far above the historical average for October illustrates how inflation is spreading across the German economy. Peak not reached, yet The available regional data suggest that the increase in headline inflation was not only driven by higher food, energy and commodity prices. Inflationary pressure is actually spreading across the entire economy with prices for clothing and other apparel, and leisure and packaged holidays further increasing. Looking ahead, the peak of German inflation will probably come at the turn of the year but it will take until next spring before inflation drops into single-digit territory again. The recent drop in wholesale gas prices will hardly affect the short-term inflation outlook and may only bring relief later in 2023. Today’s German inflation data once again underlines that no central bank in the world can bring down actual inflation. This is why the ECB’s own narrative will increasingly shift toward inflation expectations and longer-term inflation outlooks. With this in mind, after yesterday’s jumbo rate hike, the December meeting could indeed deliver a dovish pivot. ECB president Christine Lagarde was more vocal than ever regarding a looming recession yesterday and the ECB’s staff projections in December will very likely show inflation structurally coming down to 2% during 2024 and 2025. Enough to stop the rate hiking cycle at the latest in February and shift from rate hikes to gradual quantitative tightening at the start of the second quarter of 2023. TagsMonetary policy Inflation Germany Eurozone ECB   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Two Small Caps Listed On Euronext Paris Have Faced Severe Financial Difficulties, The Q4 GDP Will Be Released In The US Today

The New Czech National Bank (CNB) Leadership Meeting Ahead | Inflation In Poland And In Turkey Continued Trending Upward

ING Economics ING Economics 29.10.2022 08:21
The third monetary policy meeting under the new Czech National bank will take place next Thursday. We believe interest rates will remain unchanged, as inflation is expected to be revised downward. On the other hand, Turkish and Polish inflation has continued to trend upward, and we see no signs of it levelling off soon In this article Turkey: Annual inflation expected to increase further Poland: No signs of polish inflation levelling off soon Czech Republic: CNB rates set to remain unchanged, again Source: Shutterstock Turkey: Annual inflation expected to increase further In October, we expect annual inflation to further increase to 86.2% (4.1% on a monthly basis) from 83.5% a month ago, given continuing broad-based pricing pressures on the back of a largely supportive policy framework along with less gradual currency weakness weighing on TRY-denominated import prices. Poland: No signs of polish inflation levelling off soon October CPI: 18.1% year-on-year Our forecasts indicate that CPI inflation increased further in October and probably slightly exceeded 18% year-on-year on the back of a sharp monthly increase in petroleum prices and further growth of energy and food prices. At the same time, we expect that core inflation continued trending upward. There are no signs of inflation levelling off soon and the momentum of core inflation remains high. October Manufacturing PMI: 42.2 percentage points Following a surprising upswing in manufacturing PMI in September, we expect the assessment of conditions in the domestic industry by purchasing managers to deteriorate again in October. Although supply-side bottlenecks eased recently and the energy outlook for the European industry is less challenging, elevated prices and softer global demand (decline in new orders) are projected to continue weighing on manufacturing activity in the coming quarters.  Czech Republic: CNB rates set to remain unchanged, again The third monetary policy meeting under the new Czech National Bank (CNB) leadership will take place on Thursday. We expect interest rates to remain unchanged. Thus, the central bank's new forecast will be the main focus. Compared to the August forecast, we see the biggest deviation in inflation, which surprised to the downside. In September, this deviation came in at 2.4 percentage points. Therefore, here we can expect the biggest downward revision in the new forecast. Nevertheless, the interest rate forecast can be expected to remain roughly similar to the CNB's summer version, indicating a rate cut in the next quarter due to the nature of the central bank's model. On the FX side, we don't expect much change in the forecast weakening trajectory of the koruna under the pressure of the declining interest rate differential. However, we don't see much implication for FX interventions, which are fully decoupled from the CNB forecast and depend only on the discretionary decision of the board. But, at the moment, we see the CNB in a comfortable position with no reason to change anything about the current regime. In the long run, we do not expect any further CNB rate hikes. Despite the board's highlighting of the wage-inflation risk, we believe that the stability or decline in annual inflation combined with a weaker economy will be enough in the coming months for the CNB to confirm the end of the rate hike cycle at future meetings. Read our full CNB preview here. Key events in EMEA next week Source: Refinitiv, ING TagsTurkey Poland PMI Czech Repulbic   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
The Fed Will Most Likely Be More Deliberate In Its Decisions

The Fed Would Follow Other Central Banks And Rein In Their Aggressiveness

ING Economics ING Economics 30.10.2022 11:02
The Fed's favoured measure of inflation is heading higher, rather than lower while employment costs continue to rise at double the rate experienced over the past 15 years. The market is probably right to expect the Fed to slow the pace of rate hikes from December, but this is by no means guaranteed In this article Underlying inflation still heading higher Labour costs still running hot Better spending momentum, but GDP growth is still likely to slow in the fourth quarter 5.1% Annual rate of core inflation   Underlying inflation still heading higher US market interest rate hike expectations have been scaled back in recent days as caution on the economic and market outlook have heightened expectations that the Fed would follow other central banks and rein in their aggressiveness. Yet, while we may well get a “step down” in the pace of tightening from December onwards it is clear that inflation is far from defeated and the risks are that rate hikes could continue for longer. That view has been backed up by today’s data which show the Fed’s favoured measure of inflation rose 0.5% month-on-month in September, the same as in August (although it was revised downwards from 0.6%). This leaves the year-on-year up at 5.1% versus 4.9% previously. Remember that to get the annual rate of inflation trending back down to the 2% target we need to see MoM figures closer to 0.2%, so there is little sign of us heading in that direction yet. Nonetheless we are hopeful that it will slow next year. The chart below shows the relationship between the National Federation for Independent Business’ data series on price plans – the proportion of companies looking to raise their prices in the next three month and the core PCE deflator. It hints that weakening demand, the deteriorating economic outlook and rising inventory levels are making businesses more cautious and suggests pricing power is waning. If so this indicates inflation could slow rapidly through the first half of the year. Core PCE deflatior and the NFIB survey of corporate price plans   Source: Macrobond, ING Labour costs still running hot That said, the Fed appears focused on the here and now with another of their favourite indicators highlighting the strength in near-term inflation pressures. The Employment Cost Index showed that labour market inflation pressures remain strong, rising 1.2% quarter-on-quarter in the third quarter after a 1.3% increase in the second quarter. This is double the 0.6% QoQ average over the past 15 years, indicating that this is still going to be an issue for the Fed given its increase prominence in how the central bank is assessing the risks. Wages rose 1.3% while benefits increased 1% with government labour cost increases outstripping private sector costs for the first time in several years – government wages rose 2.1% QoQ versus 1.2% in private industry. Better spending momentum, but GDP growth is still likely to slow in the fourth quarter Meanwhile, the personal spending numbers have seen some quite big revisions so that after a contraction in real consumer spending in July we got some pretty firm figures for August and September with 0.3% MoM growth. As such this positive momentum heading into the fourth quarter makes us a little more optimistic on fourth quarter GDP than we had been. But even so the intensifying headwinds from the downturn in the housing market, high borrowing costs and the strong dollar mean that we think it will slow to something around the 1.5% mark. TagsUS Inflation Federal Reserve Board Federal Reserve   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Today’s US Inflation Report Becomes Ever More Important

Inflation In Eurozone Higher Than Forecast | Retail Sales Reports

Kamila Szypuła Kamila Szypuła 31.10.2022 11:15
We start the beginning of the new week with data on inflation in the European Union. Apart from important data from Strego Kontunet, the market does not expect important data from America. Japan Industrial Production In Japan, despite the positive results in August, Industrial Production fell below zero to -1.6%. The decline was expected but not that low. The result was forecast at -1.0%. Such a situation means weakening demand in this sector. For investors, this means a significant slowdown and is not beneficial for the image of the Japanese currency or its entire economy. Japan Retail Sales Another important report for the Japanese economy is the report on retail sales. The result turned out to be positive. The 4.1% level was expected to hold this time as well, but the reading was higher. The current level of retail sales in Japan is 4.5%. Since the fall in July, sales in Japan started a new pattern trend, which, as we can observe, continues. Retail sales are seen as a stand-in for consumer spending and its growth can be considered positive for the development of the Japanese economy. Source: investing.com Austrailan Retail Sales Australia also shared the results on retail sales. The result was neither positive nor negative. The positive fact is that it has met expectations and has not fallen. This is the third reading in a row when the retail sales level is 0.6%. According to this indicator, the Australian economy is stagnating. China Manufacturing PMI The China Manufacturing Purchasing Managers Index fell below 50 again. The current reading shows that the index reached the level of 49.2 against the previous one (50.1), it is a negative reading. Also, this reading did not meet the forecast level (50.0) The China Non-Manufacturing Purchasing Managers Index (PMI) also fell. The spatula trend continues. The gauge has dropped from level 50.6 to level 48.7. The current value and movements of the PMI and its components can provide useful information for business decision makers, market analysts and investors .We can expect that poor performance in both sectors will have negative effects on market decisions. Important economic data from Europe The core CPI reached the level of 5.0% against the forecasted 4.8%. On the other hand, the overall CPI reached the level of 10.7% and was higher by 0.5% than forecasted. As we can see, the situation in the euro zone has not changed despite the actions of the ECB. Read more: Forecasts Of The Situation In The Eurozone Are Not Very Good| FXMAG.COM ECB’s member is set to speak After today's important economic data from the Eurozone, a speech by Philip R. Lane, member of the Executive Board of the European Central Bank will take place at 16:00 CET. The speech that will take place after important reports will be helpful for investors in taking further decisions and thus contain indications on the future possible direction of monetary policy. Summary Despite the fact that only the European Union released data important for the markets, during the week there will be more reports that will have a significant impact on the market situation. This week we should focus on next decisions of central banks regarding interest rates (Fed, RBA, Bank Of England). 0:50 CET Japan Industrial Production (MoM) (Sep) 0:50 CET Japan Retail Sales (YoY) (Sep) 1:30 CET Austrailan Retail Sales (MoM) (Sep) 2:30 CET China Manufacturing PMI (Oct) 11:00 CET EU CPI 11:00 CET EU GDP 11:00 CET EU Core CPI 12:25 CET BCB Focus Market Readout 16:00 CET ECB's Lane Speaks Source: https://www.investing.com/economic-calendar/
The Fed Doesn’t Want To Be Responsible For A Needlessly Sharp Downturn

A Rate Hike By Fed By 75 bp Seems To Be Well Expected

Saxo Bank Saxo Bank 01.11.2022 09:35
Summary:  While a 75bps rate hike is baked in for the November meeting, it’s the pivot expectations that need to get a make-or-break acknowledgement from the Fed. This means focus will be on whether the Fed keeps the door open for another 75bps rate hike at the December meeting (hawkish), pushing out of Rate cut expectations from next year (hawkish) or concerns from global financial stability (dovish). The US dollar has reversed 3-4% lower from its cycle highs, suggesting room for gains if we see a hawkish surprise. The bar isn’t too high. Market participants are looking beyond the November rate decision for this week’s FOMC policy meeting. A fourth consecutive 75bps rate hike seems to be well expected, but the hopes of a pivot have seen markets rally in October and is really the key debated issue this week. There have been hopes that the Fed will signal smaller hikes from December and prepare the ground for rates to peak and pause at 4.5-5.0% in 1Q23. Reasons behind this include some softening of stance from other global central banks such as the Reserve Bank of Australia (RBA), Bank of Canada (BOC) and the European Central Bank (ECB). Liquidity stress emerging in the Treasury market has also been touted as one of the reasons for the expectations. The US Treasury Department plans to issue USD550bn in debt in 4Q22, more than the USD400bn estimated in August. We think the following key points will be key at the November policy meeting from a markets perspective: December rate hike talk Dovish expectations that have been set in currently include Powell clearly guiding for a 50bps rate hike in December rather than a 75bps. We believe this will be premature, and at best what we can get is Fed to become data-dependent. Anything that even keeps the possibility of another 75bps rate hike open at the December meeting will be a hawkish surprise. Terminal rate projections Terminal rate forecasts are currently the largest driver of US yields. As expectations of terminal rates surged above 5% at one point in October, 10Y US yields tested cycle highs. That probably was a trigger for the Fed to use the whisperer and convey peak hawkishness in an October 24 WSJ article which first mentioned the idea of the Fed downshifting to a path of smaller rate hikes. But easing of financial conditions since then has possibly again made the central bank uneasy. This gives us a sense that the Fed is uncomfortable with an over 5% terminal rate being priced in, and we are still close to that level at 4.96% currently. But we still have more than two full rate cuts priced in by the markets for 2023, and that is where the Fed can still push back. If the Fed makes a clear case of rates staying at the peak until late 2023, that will be considered hawkish in our view, and result in risk off again. Concerns around financial stability With the economy still holding up well, there is little concern yet that Fed’s rate hikes will break anything in the domestic US economy. Instead, any risk of breaking things is still in the global financial markets. Too much focus on financial stability also risks shifting expectations to a Fed pause, and may be considered dovish. Inflation and unemployment There would be no update to the dot plot at the November meeting. It is right to consider that the Fed will have to slow the pace of rate hikes at some point. But is a softer inflation a necessary condition to reach that stage? Or we need to just wait for inflation to stop getting worse, even if it takes time to actually go lower. The core CPI and PCE data reported recently continues to show that inflation remains uncomfortably high, and any indication of commitment to still bring that down to much below 3% might potentially require a much higher unemployment rate and possibly much more pain in the financial markets. Market impact The US dollar is 3-4% off its highs amid these Fed pivot expectations. With dovish expectations having set in, there is potentially room for the USD to surprise on the upside. That would mean EURUSD back below 0.98 and USDJPY taking another go at 150. USDCNY also would be poised for a move to 7.40 unless these rumours of China considering an exit from its Zero Covid policy by March 2023 prove to be true. However, if these dovish expectations were to materialize, we could see EURUSD heading to 1.02 and USDJPY down at sub-145 levels. While the Japanese yen may sustain these gains as yield differential pressures start to ease, EUR may have a tougher time holding on to the recovery as room for ECB rate hikes is also decreasing and the energy crisis can only get worse from where we are in this winter. The most ideal reaction for the equity markets will be to stay in a sideways trend. With markets eager for any bullish trends, the risk of a technical rally remains if the Fed clearly closes doors for any more 75bps rate hikes from here. However, if the markets rally too hard on any Fed communication, we will likely see a host of Fed speakers in the coming weeks trying to clarify and assert that the Fed maintains a hawkish stance, as easing of financial conditions isn’t what the Fed wants right now. The market moves need to remain orderly for the Fed to achieve its inflation goal, else any hopes of a Fed pivot will continue to be smashed.     Source: https://www.home.saxo/content/articles/macro/fomc-november-meeting-preview-markets-holding-their-breath-for-a-fed-pivot-01112022
Two Small Caps Listed On Euronext Paris Have Faced Severe Financial Difficulties, The Q4 GDP Will Be Released In The US Today

The Euro Bloc Economy Lost Its Growth Momentum

InstaForex Analysis InstaForex Analysis 01.11.2022 11:20
The US currency has once again bypassed the European one, which is seriously puzzled by a new batch of news about inflation. At the same time, the dollar draws confidence in the Federal Reserve's actions, which allows the completion of the current cycle of rate hikes. The greenback significantly strengthened at the beginning of this week, restoring some of the positions lost over the past month. This was largely facilitated by the expectation of another interest rate hike from the Fed, whose two-day meeting is scheduled for November 1-2. According to preliminary calculations, on Wednesday, November 2, the central bank will raise the key rate by 75 bps, to 3.75-4.00%. This will be the fourth step on the Fed's part in raising rates. However, many analysts and market participants doubt the continuation of the Fed's harsh rhetoric. According to experts, after the fourth rate hike by 75 bps, the central bank will take a less aggressive position on this issue. Michael Wilson, currency strategist at Morgan Stanley, is sure of this. He believes that the Fed's rate hike cycle is nearing completion. In support of his words, Wilson cites the inversion of the yield curve of ten-year and three-month US Treasury bonds. Recall that this is one of the key indicators indicating the need for a reversal of the central bank's tight monetary policy to a softer one. However, some experts do not share the optimism of the Morgan Stanley representative. Currency strategists at UBS Global Wealth Management are confident that a reversal in the Fed's policy is unlikely, since the inflation rate in the US remains high. Against this background, the central bank will have to raise the rate until inflation recedes, the bank emphasizes. The current situation puts pressure on the dollar, which, despite the current tension, is gradually strengthening. Against this background, the EUR/USD pair has been declining for the third consecutive day, continuing to struggle with the pull of the downward trend. On the morning of Tuesday, November 1, the EUR/USD pair was cruising near 0.9911. This is a difficult situation for the euro since it has to resist negative macro data. Recall that reports on inflation in the eurozone were published on the evening of Monday, October 31, which again demonstrated its sharp rise. As a result, the inflation rate in the region soared to a new historical high, and the euro bloc economy lost its growth momentum. According to analysts, consumer prices in the EU rose by 10.7% in October 2022 compared to October 2021, exceeding forecasts. In the third quarter of this year, the volume of production in the eurozone decreased to 0.2% compared to the same period last year. According to experts, the current situation is aggravated by a sharp increase in the European Central Bank's interest rates. At the same time, many analysts believe that the central bank should continue to actively fight inflation, which includes raising rates. It is possible that after the recent rate hike, the ECB will raise it again by 75 bps at the next meeting, which is scheduled for December 15. However, such a scenario is still in question, as well as a possible pause in the process of raising rates by the Fed. Some analysts do not expect dovish decisions from the US central bank, although the current situation requires revision. According to experts, the aggressive tightening of the monetary policy contributes to the early onset of a recession in the United States, as well as a large-scale drop in treasury state bonds and stocks over the past few years. Take note that as rates rose and the economic downturn that followed the tightening of the monetary policy, the markets were gripped by a crisis. It was followed by an increase in the number of defaults, which seriously hit investors. In the current situation, the leading central banks will have to solve the issues that provoked such problems. The current situation significantly affected the dynamics of the EUR/USD pair, provoking a correction at the end of September. However, the pair is gradually returning to a relatively stable course. According to experts, a new round of risk appetite in the markets will save the EUR/USD pair from further decline. At the same time, experts expect a New Year rally on the US stock market and the growth of risky assets in the near future.   Relevance up to 07:00 2022-11-03 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/325874
The Saxo 2023 Outrageous Predictions For 2023 In Special Edition Of The Podcast

Economic Indicators - ZEW, PPI And Central Banks' Minutes Explained By FXMAG.COM

Kamila Szypuła Kamila Szypuła 22.10.2022 11:54
The market is full of reports on various macroeconomic indicators and we can hear from experts how they affect the economic situation. But how exactly are they calculated and what do they represent? This article will help you understand ZEW Indicator of Economic Sentiment and Producer Price Index (PPI) better. In addition, we will find out what central bank's minutes are and why they are important to the markets.     Central bank’s minutes Decisions on monetary policy are taken by central banks. Recently, the decision on interest rates has been largely heard. Such decisions are made at meetings of bank members. The market, if you want to know the details, can use the central bank minutes. By definition, this is summarise the bank's current outlook on the economy and explain the reasoning behind its chosen actions. In the publication, we get acquainted with the course of the meeting. Consequently, with the topics discussed, the discussion and the decisions that were made. The decisions made there affect borrowing, spending, and savings rates. One of the practical advantages is that the publication of minutes helped markets to predict the monetary policy decisions of the bank.   ZEW Indicator of Economic Sentiment On Tuesday, we were able to see the current data on the ZEW economic sentiment in Germany and in Europe. ZEW stands for Zentrum für Europäische Wirtschaftsforschung, which translates to the Center for European Economic Research. The indicator focuses on exploring the future of Germany. Economic sentiment indicators are a popular way to measure and forecast trends in an economy. This indicator examines the sentiment of 350 economists and analysts. These experts come from the banks, insurance companies and financial departments of selected corporations. They are asked about their expectations for the coming six months regarding the economy in general, inflation rates, interest rates, stock markets, exchange rates and oil prices.   How to calculate it? It is the difference between the percentage share of analysts that are optimistic and the share of analysts that are pessimistic for the German economy in six months. For example: If 45% of participants expect the economic situation in Germany to improve in the next six months, 20%expect no change, and 35% expect the economic situation to worsen, the index will be 10. A positive number means that the share of optimists outweighs involving pessimists and vice versa. The ZEW Indicator of Economic Sentiment is calculated from the results of the ZEW Financial Market Survey. These two reports were discussed in a practical example in the my previous article: The Economic Outlook In Euroland And Germany Is Getting Worse| FXMAG.COM   What is Producer Price Index (PPI)? The PPI is somewhat similar to the CPI except that it looks at price increases from the producer's rather than the consumer perspective. The PPI determines the change in output prices faced by producers. Sometimes it is omitted when assessing the pace of price changes. As stated in the definition and practice the index can be measured on raw (iron ore, aluminum scrap, soybeans and wheat), intermediate (leather, paper and basic chemicals) and finished products. When calculating the base PPI, variable items such as energy and food prices are excluded from the base calculation. Calculating the PPI is done in the same way as the CPI, but from the producer's basket side i.e. Current price of basket/Base price of basket. Tracking the PPI is just as important as the CPI because it allows you to identify the cause of changes in the CPI. For example, if the CPI is rising much faster than the PPI, this may indicate that factors other than inflation may be causing retailers to increase prices. Read more about US PPI: Great Britain’s CPI Lower Than The Expected, Eyes On US PPI| FXMAG.COM Source: zew.de,investopedia.com
The Bank of Korea Is Likely To Respond With A Rate Cut In The Second Half Of 2023

The Bank Of Korea (BoK) Will Continue To Hint At Further Fightening

ING Economics ING Economics 02.11.2022 11:22
Headline inflation picked up again in October due mainly to increases in the price of city gas and electricity, but stayed below the recent peak. Despite upside risk factors such as the weak KRW and rebounding food prices, we expect inflation to decelerate from now on, though we still think that the Bank of Korea (BoK) will raise rates 25bp in November Source: shutterstock.com 5.7% CPI inflation %YoY  As expected Headline inflation is expected to decline from now on, but core inflation has more room to rise Consumer price inflation rose 5.7% YoY in October (vs 5.6% in September), in line with the market consensus. As city gas and electricity rates began to rise from October, utility prices (power, gas, and water) jumped 23.1%. This also pushed up core inflation excluding agricultural and oil products to 4.8% (vs 4.5% in September).   We believe that headline inflation will decelerate from now on. Ahead of the winter kimchi-making season in November, fresh vegetable prices, including cabagge (-31.2% MoM nsa), declined sharply (-13.1% MoM nsa) with better harvests than expected. Gasoline prices are expected to stabilize a bit more by the end of the year. Rent prices have stayed on the rise so far but market-observed rent prices began to drop from mid-year, which will soon be reflected in the CPI.  To be clear, there are still several upside risks to inflation in the near future. First, utility prices are expected to rise again next year as utility service providers respond to their operating deficits. And the recent credit crunch will also make it harder for such firms to issue additional corporate bonds in the near future. Second, global commodity prices have rebounded recently as unstable supply conditions have continued. And lastly, the weak KRW is likely to broaden inflationary pressure on other goods prices.   Considering both down and upside factors, we expect headline inflation will decelerate but will remain above 5% until early next year. If our current projections are right, then we will see inflation at around 4% in February next year, followed by a more rapid deceleration until the end of next year.  Inflation rose in October mainly due to higher utility prices Source: CEIC Market observed rental prices declined since May Source: CEIC The BoK outlook The Bank of Korea will hold its last policy-rate decision meeting of the year on 24 November. And although inflation rose again in October, we think the BoK will pay more attention to the fact that inflation is down from its peak. The BoK will continue to hint at further tightening and inflation risks in its forward guidance. But, as the signs of a recession are becoming more evident - weak activity data, declining housing prices, and volatile financial market conditions - we believe that the BoK will slow the pace of additional rate hikes. Thus, we maintain our view that the BoK will return to its more usual 25bp hike pace in November.  TagsCPI inflation Core inflation Bank of Korea   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Today’s US Inflation Report Becomes Ever More Important

FXMAG.COM Explains Consumer Price Index (CPI), Core CPI And Unemployment Rate

Kamila Szypuła Kamila Szypuła 22.10.2022 16:30
Indicators help us determine the state of the economy, find out the scope and scale of problems, and whether we have sufficient resources to solve the problem. Thanks to the indicators, we can learn whether the economy is making progress or just the opposite. This year, the most important indicator on which markets, economies and ordinary people focus is the indicator of inflation. In economics, inflation is a general increase in the prices of goods and services in an economy. And what is it measured? And how indicator can it affect?     CPI The previous article talked about the Producer Price Index (PPI), which is ignored when indicating the level of inflation. Key indicator in this situation is the Consumer Price Index (CPI). According to the definition, the indicator measures the change in the price of a weighted average market basket of consumer goods and services purchased by households. The main categories of the basket of goods and services are: housing, raw materials, food, energy, healthcare, transport, education and other expenses CPI can be calculated for a given month or for an annual period. For example, the annual change is calculated using the formula: This indicator has many uses. The most important application is to measure inflation. It is also an important factor that central banks use to adjust their monetary policies, for example to set interest rates. Moreover, since the CPI measures the change in consumers' purchasing power, it is often a key factor in wage negotiations. It also helps consumers to make informed economic decisions. We recently looked at the CPI reports mentioned in another article. While the CPI is a convenient way of calculating the cost of living and the relative price level over time, it does not provide a completely accurate estimate of the cost of living. Three problems with CPI deserve attention: substitution error, introduction of new items and quality changes. The first problem can be explained simply by saying that since the prices of goods and services fluctuate from year to year, not all of them fluctuate by the same amount. As time passes, new items are added to the basket of goods and services purchased by the average consumer. CPI only uses a fixed basket of goods, the introduction of a new product cannot be reflected. A third problem with CPI is that changes in the quality of goods and services are not well handled. When an item in the fixed basket of goods used to calculate the CPI increases or decreases in quality, the value and attractiveness of the item changes. Read next: Economic Indicators - ZEW, PPI And Central Banks' Minutes Explained By FXMAG.COM | FXMAG.COM Core CPI Another indicator is the Core CPI. The main difference between Core CPI and CPI is that Core in its basket of goods and services does not include the food and energy sectors. Food and energy prices are excluded from this calculation because their prices may be too volatile or subject to sharp fluctuations. Food and energy are basic commodities, which means that the demand for them doesn't fluctuate much even as prices go up.   Unemployment rate The relationship between inflation and unemployment has traditionally been an inverse correlation. This means that when inflation rises, unemployment drops. However, this relationship is more complicated than it appears at first glance. The definition of the unemployment rate says that she measures the percentage of the total labor force that is unemployed. Despite the fact that this group is unemployed, it must meet the condition of people actively looking for a job or they express such a desire, it measn that they have taken specific steps to find work. The unemployment rate is one of the primary economic indicators used to measure the health of an economy. Investors and the general public use the unemployment rate to understand the state of the economy and as a measure of how well the government manages the country. The high unemployment rate makes the economy unable to generate enough jobs for jobseekers. High unemployment not only causes deeper social problems, but also reduces the attractiveness of the country. However, policymakers and central banks are wondering how much unemployment has risen during a particular recession in order to assess the impact of the recession on the economy and decide how to adjust fiscal and monetary policy to mitigate its negative effects. Source: investopedia.com, A Dictionary of Economics
Conflict Over Taiwan Would Trigger A Huge Global economic Shock

Inflation In Both China And Taiwan Is Expected To Slow

ING Economics ING Economics 05.11.2022 08:17
In the coming week, we'll get trade data from China and Taiwan which should indicate that global trade is slowing In this article China and Taiwan reports could highlight slowing global trade Third-quarter GDP from Indonesia and Philippines India’s industrial production China’s loan data Other important releases: Korea’s employment figures and price data from China and Taiwan Source: Shutterstock China and Taiwan reports could highlight slowing global trade China and Taiwan will release trade data next week. We expect both to report slower export growth with Taiwan possibly even posting a contraction. Import growth should however slow even faster than exports resulting in larger trade surpluses, which would help GDP growth. Third-quarter GDP from Indonesia and Philippines Indonesia and the Philippines report third-quarter GDP figures next week. Indonesia is expected to post a 5.5% year-on-year expansion, helped by strong exports and robust manufacturing activity.  In the Philippines, third-quarter GDP will likely settle at 5.2%YoY, a slowdown from the previous quarter after the boost from the May presidential election fades. Surging inflation likely capped household spending although the recent pickup in bank lending could offset the consumption slowdown.  India’s industrial production India’s September industrial production figure should show some improvement from the -0.8%YoY pace registered in August, as manufacturing PMI indices point to a modest improvement in output from the previous month, which should translate into about a 2%YoY increase. China’s loan data China will release loan data sometime next week. After the unexpectedly strong growth posted in September, overall lending could show a smaller monthly increase. This should still be strong compared to the previous years’ fourth-quarter loan growth as the Chinese government urges banks to support the economy. Other important releases: Korea’s employment figures and price data from China and Taiwan Korea will release the latest job numbers with expectations for the jobless rate to rise with health/social work jobs declining, coupled with potential job cuts stemming from sluggish manufacturing activity. Meanwhile, inflation in both China and Taiwan is expected to slow. The PPI inflation report from China could be a market mover as it could post a contraction, reflecting the weakness of the economy. Asia Economic Calendar Source: Refinitiv, ING TagsAsia week ahead Asia Pacific Asia Markets Asia Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Hungary: The Fuel Trade Was The Only Sector That Did Not Have A Poor Trading Record

Hungary Is Expecting A Significant Surplus |The Romanian National Bank (NBR) Will Announce Its Rate Decision

ING Economics ING Economics 05.11.2022 08:22
Two central bank meetings will take place next week. For the National Bank of Poland, we see a 25bp hike to 7%, however it is a close call between that and there being no change in the policy rate. For the Romanian National Bank, we expect a reduction in the tightening pace, taking the key rate to 6.75% with a 50bp hike In this article Czech Republic: Inflation accelerates due to fuel prices, while energy remains uncertain Poland: Baseline scenario is a 25bp hike to 7.00% Romania: End of the tightening cycle is close Hungary: Slowdown, adjustment and rationalisation Source: Shutterstock Czech Republic: Inflation accelerates due to fuel prices, while energy remains uncertain We expect inflation to accelerate again in October from 0.8% to 1.3% month-on-month, which translates into an acceleration in the annual rate from 18.0% to 18.2% year-on-year. The main reason for this is the significant increase in fuel prices in October (5.0% MoM) and food prices. On the other hand, we see a seasonal downward movement in clothing prices. The main issue as always in recent months is energy prices. These were largely behind September's surprise, but the main question in October may be the impact of the saving tariff as a government measure that should affect household prices throughout the fourth quarter. As in previous months, the statistical office’s approach is unclear and therefore inflation could surprise either way. Poland: Baseline scenario is a 25bp hike to 7.00% The November Monetary Policy Council (MPC) decision will be a close call between 25bp and no change in the National Bank of Poland (NBP) policy rate. On the one hand, headline inflation continues to trend upward and is increasingly broad-based, as indicated by rising core inflation. The peak is still ahead and bringing inflation back to the NBP target in the foreseeable future will require additional policy tightening. On the other hand, the Polish zloty firmed recently and the majority of the Council is increasingly eager to refrain from further rate hikes as it claims that monetary policy has almost reached its limits in containing demand factors. Our baseline scenario is a 25bp rate hike, but we do not rule out a scenario where rates remain unchanged. The Council will receive new macroeconomic projections and some policymakers indicated that the mid-term outlook for CPI inflation may trigger additional fine-tuning with respect to interest rates. Romania: End of the tightening cycle is close The Romanian National Bank (NBR) will announce its latest policy rate decision on Tuesday. We expect a reduction of the tightening pace to 50bp, taking the key rate to 6.75%. An open-end press release leaving the door open for another hike in January is to be expected. The NBR will also approve its latest inflation report and we should see another upwardly revised inflation forecast. The year-end estimate could flirt with the 17.0% area, though our own estimate currently sits closer to the 16.0% handle. Nevertheless, upside surprises in inflation prints versus estimates are still persistent, and forecasts should be taken – as usual lately – with a lot more than a pinch of salt. Perhaps more important than the rate hike itself will be any hint of an alteration in the tight liquidity management stance. We see little to no chance of this being changed for now. Read our full preview here. Hungary: Slowdown, adjustment and rationalisation Next week will be extremely busy in Hungary. We start the week with September economic activity data with an expectation of a general weakening in businesses. Retail sector growth will be limited by rising inflation thus decreasing real wage growth. Industrial production is a bit of a black box now with the wildly volatile manufacturing PMI, but we think we will see a slowdown here as well as adjustment and rationalisation continue as manufacturers face rising energy bills. The October inflation readings might draw a lot of interest, too. Our calls are higher readings in headline and core inflation. The common drivers here will be rising processed food and services prices with some extra pressure coming from durables as well as the forint hitting its weakest level versus all the majors during October. We might see a bit better trade balance data as energy prices have been moving lower in general, supporting the reduction of the monthly deficit via the energy-related goods balance. Speaking of balances, we are about to see the October budget balance as well. Here we are expecting a significant surplus, thanks to the revenue side as a huge chunk of windfall tax payments were first due in October. Key events in EMEA next week   Source:  Refinitiv, ING TagsNational Bank of Poland Hungary   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Two Small Caps Listed On Euronext Paris Have Faced Severe Financial Difficulties, The Q4 GDP Will Be Released In The US Today

Tentative Signs By Central Bankers On Both Sides Of The Atlantic Ocean

ING Economics ING Economics 05.11.2022 08:26
There are tentative signs that central bankers on both sides of the Atlantic are considering a pivot to more modest interest rate hikes. But this could be months away In this article A difficult road ahead Signs of a slowdown Central banks: A waiting game Share    Download article as PDF   As we approach the end of the year, many of us are waiting. Waiting for the end of the war, waiting for inflation to finally peak, waiting for the Christmas holiday season to begin. For financial markets, the wait is on central banks and whether they will pivot. “Pivot” is probably not the correct term to use as a pivot would imply a real turning point in central bank policies, while what markets - and we - are actually looking for are signs of a slowdown and an eventual end to the current rate hike cycles. A difficult road ahead Getting to this pivotal moment is easier said than done. Major central banks are still facing high and, in some cases, increasing inflation, while signs of economic slowdowns and recessions are growing. It will be too little too late for central banks to simply bet that weaker demand will break down inflation and inflation expectations, as long as inflation largely remains a supply-side issue. Admittedly, given the importance housing costs play in the US inflation measure, the Federal Reserve is in a better position to bring down inflation (via higher mortgage rates depressing the costs of shelter) than, for example, the European Central Bank. What complicates central bankers’ decisions is the fact that they have now rushed so much toward policy normalisation that they cannot see the full impact of their decisions yet. It typically takes at least six to nine months before monetary policy changes have found their full way into the real economy. This time lag increases the risk of overshooting. At the same time, however, the stickiness of inflation over the last two years has also increased the risk that a too-premature end to tighter monetary policy will be insufficient in returning the inflation genie to the bottle. It’s not easy being a central banker these days. Signs of a slowdown Still, we have seen tentative signs by central bankers on both sides of the Atlantic Ocean suggesting that a slowdown, or even an end to rate hikes, is being considered an option. It will not necessarily be an explicit end to hikes but rather conveyed as a "taking stock pause". As the looming economic slowdowns and recessions will be more visible in December, we expect major central banks to slow down their tightening efforts and eventually end them in the first quarter of next year. Don’t forget that balance sheet deleveraging can easily be a substitute to rate hikes in 2023. In Europe, in particular, the inflation shock will dominate next year’s headlines. While government price caps can limit inflationary pressure in the short run, they will push up headline inflation immediately when they are lifted again. Government subsidies which offset the negative effects of higher energy prices on households and consumers do actually extend inflationary pressures. Also, the energy crisis won't disappear after this winter but will last until the winter of 2023/24 as national gas reserves will start the next year at lower levels than in the spring of 2022, putting upward pressure on the demand for natural gas. Whether they like it or not, the worsening economic backdrop has brought many central bankers closer to the moment of slowing tightening efforts, and eventually even pausing rate hikes. Financial markets waiting for the pivot might not be like waiting for Godot, but for a real pivot, headline and core inflation will first need to come down significantly. This is a scenario we definitely do not foresee before next summer. TagsInflation Central banks
CPI In The US Slowed Down Further, Falling To 6.5% y/y  With Expectations

Inflation In The USA Has A Chance Of Cooler

Kamila Szypuła Kamila Szypuła 05.11.2022 11:05
Inflation is at the top of the world worry list in 2022. The situation in the United States proves that inflation is a global problem. Although the local market is in better shape than, for example, the European one, the level of inflation in the US has not been so high for over 40 years. Undoubtedly, the most anticipated macroeconomic data in the world will be those on the behavior of the CPI and the "base" (core) version of this indicator that does not take into account energy and food prices in the USA. Previous reading Data provided by the Bureau of Labor Statistics (BLS)show that inflation in the country is now 8.2% according to the latest publication. The CPI data were perhaps not that bad, although economists expected a drop to 8.1%. but it was the third consecutive month of decline in this indicator. Core inflation (CPI) in September 2022 was 6.6%. y/y versus 6.3% in August and forecasts at 6.5 percent. Month-on-month was 0.6%, against the forecast of 0.5%. Expectations Inflation data, especially on core inflation, are to be of key importance when it comes to the next decisions of the US central bank concerning interest rate hikes. CPI data are scheduled to be released on November 10, 2022. Inflation is expected to reach 8.0% y/y against the previous reading of 8.2%. This may mean that the Fed's actions are paying off. The monthly CPI change is forecast to be 0.7%. However, if it turned out to be higher, the market could take it very badly. It would be a strong argument for the Fed to continue to aggressively tighten monetary policy. Source: investing.com Core inflation also expects a decline of 0.1% from 6.6% to 6.5%. This inflation is of particular importance as it does not take into account price changes excluding food and energy, which are the main factors influencing the overall CPI. Fed's fight with inflation and its price For the past year and a half, consumer inflation in the world's largest economy has been spinning out of the control of central bankers. The Fed is trying at all costs to bring inflation back to a stable 2% level. The Fed started a cycle of interest rate hikes in March, raising the cost of money by 25 bp to 0.25-0.5%. In April, FOMC members decided to move by 50 bp. up. At subsequent meetings it is already by 75bp. With today's rate increase, the benchmark federal funds rate is a range of 3.75% to 4%. Rates are expected to peak at 4.5% to 4.75% in 2023, according to the U.S. central bank's own projections. In simple terms, the Fed's approach can be described as an attempt to destroy demand while encouraging businesses and individuals to save. At every opportunity, business owners will cut back on their expenses, which can result in the employment rate stagnating, leaving workers' wages unchanged and discouraging them from spending more. Inflation in the USA is a major problem for the markets The more the American central bank tightens its monetary policy in 2022, the more the dollar strengthens, and this is painfully felt by other currencies in the world, e.g. the euro (EUR), the Japanese yen (JPY) or the British pound (GBP). The rate hikes cycle in the US turned out to be a difficult period for assets. The main indices of American stock exchanges, as well as markets practically all over the world, have been recording drastic drops since the end of 2021. In the bond market, for the first time in 40 years, we have a bearish market, and cryptocurrency rates were losing by 50 to 90 percent in the first half of 2022. your worth. On the other hand, assets like gold have gained significant importance as a hedge against inflation. Cryptocurrency has also proved to be an ideal option compared to gold as an investment against severe inflation. Source: investing.com, www.federalreserve.gov/data.htm, www.bls.gov/cpi/
The China’s Covid Containment Continued To Negatively Impact The Output At The End Of 2022

China Is The Biggest Consumer Of Such Commodities

Saxo Bank Saxo Bank 07.11.2022 09:04
Summary:  The October US CPI release this week will be key to watch after Fed’s hawkish shift last week. Market pricing for December’s Fed rate hike is closer to 50bps for now, but a stronger than expected core print could move that towards another 75bps expectation. Midterm elections could also cause some volatility given the risk of policy paralysis if Democrats lose control of the Congress. More economic data is due, from UK’s Q3 GDP to China’s credit update and inflation, but a key driver of volatility will likely be further developments on China’s reopening story. In the commodities space, this means industrial metals, iron ore, copper, gold, energy and cotton are key to watch. The earnings calendar cools down, but keep Walt Disney and Adidas on your radar. components Bloomberg consensus expects US October CPI to drop below the 8% mark and come in at 7.9% YoY from 8.2% previously, but still higher at 0.6% MoM from 0.4% in September. The core measure is also expected to ease slightly to 6.5% YoY, 0.5% MoM (prev. 6.6% YoY, 0.6% MoM) but still remain elevated compared to historical levels. Key to watch also will be the drivers of inflation, particularly the stickier shelter and services costs, which if stuck higher could move the December Fed funds future pricing more towards another 75bps rate hike, resulting in another round of selloff in equities and dollar gains. However, with another CPI report due before the next Fed meeting in December, market impact of this week’s report will likely remain restrained unless a major deviation from expectations is seen. For this week’s CPI data, we will be watching the USD, and bond yields, which may be expected to rally up if the data is hotter than expected. What next for the China reopening chatter, and what does that mean for commodity markets? Last Saturday, China’s National Administration of Disease Control and Prevention reiterated China’s adherence to the dynamic zero-Covid policy but at the same time pledged to improve the implementation of the policy so as to avoid massive and protracted lockdowns. Investors will focus on if subtle relaxation of implementation will gather momentum in the coming weeks. This will be key not just for mainland/HK markets, but also for commodity markets. The biggest impact will be seen on industrial metals (watch Copper, Iron ore) and energy prices, as China is the biggest consumer of such commodities. HG Copper broke through several resistances last week, but is seen lower back at $3.60 on Monday morning after Chinese officials hinted at adherence to the zero covid policy. Crude oil prices also remain on watch especially with OPEC+ production cuts set to take effect this month and upcoming EU sanctions against Russian oil, all leading to a tight market. Gold (XAUUSD) reversed its post-FOMC slump on China reopening optimism at the end of last week, and remains supported above $1670 for now. Will it break the short-term downtrend? Also worth watching Cotton, which bounced more than 20% from their low on signs of China’s improving yarn production, but still remains down on a YTD basis. US mid-term elections this Tuesday Pundits suggest that the Republicans have very strong odds of flipping the House of Representatives in their favour, while the odds look finely balanced for whether the Senate ends retaining the slimmest of Democratic majorities. Republicans taking both houses has few immediate ramifications, as US President Biden has the presidential veto, but a stronger than expected Democratic showing that somehow sees them retaining the House and strengthening their Senate majority would be a game changer – opening for more policy dynamism from the US over the next two years rather than the expected lame-duck presidency. Uncertainty is high as pollsters have had a hard time gathering accurate indications for the election results since Trump’s victory in 2016. China is scheduled to release credit data, CPI, PPI, and trade data Among the data scheduled to release this week, investors are likely to focus on the new RMB loans and aggregate financing numbers. After a very strong September in which banks were urged to lend, new RMB loans were expected to decelerate to RMB800 billion in October from RMB2,470 billion in September. New Aggregate Financing was forecasted to fall to RMB 1,600 billion in October from RMB 3,530 billion in September. On the inflation front, China’s PPI is expected to fall 1.6% Y/Y in October, due to the high base last year resulting from increases in material and energy prices. Unlike other major economies, CPI in China is expected to slow to 2.4% in October. On trade, while export growth in RMB terms is forecasted to rise to +12.7% YoY in October from +10.7% in September, exports in US dollar terms are expected to decelerate. China’s Singles’ Day this Friday, Nov 11 Investors will watch closely Alibaba, JD.com, and other online retailers’ sales on Singles’ Day this Friday to gauge the strength of China’s private consumption. Analysts are expecting slower sales growth as recent data indicated slower user growth across online shopping platforms. UK GDP to confirm the onset of a recession On Friday, UK’s Q3 GDP is released and the first negative print of the current cycle is expected to be seen. Consensus forecast is seen at 2.1% YoY, -0.5% QoQ, significantly lower than the second quarter print of 4.4% YoY, 0.2% QoQ. August GDP data had already begun to show a negative print with -0.3% MoM and the trend will only likely get worse in September, exacerbated by a one-off factor relating to Queen Elizabeth II’s funeral in the month, which was a national holiday. The economy is already facing a cost of living crisis, and both fiscal and monetary policy have to remain tight in this very tough operating environment. Technically, a recession may still be avoided as activity levels picked up in October, but still it will remain hard for the UK to dodge a recession going into 2023. This suggests more downside for the sterling may be in store, especially as the market refuses to cater to the Bank of England’s warning that the current expectations of terminal rate may be too steep. Key Earnings to watch Saxo’s Head of Equity Strategy, Peter Garnry, wrote the following, for key focus areas for corporate earnings this week. On Monday our focus is Activision Blizzard which is struggling with negative top-line growth like the rest of the gaming industry as the pandemic boom is over. Analysts are expecting revenue growth of -17% y/y and EPS of $0.50 down 39% y/y. Walt Disney is next week’s biggest earnings release scheduled on Tuesday with analysts expecting Q4 (ending 30 September) revenue growth of 15% y/y but EBITDA at $3bn down from $3.86bn in Q3 highlighting the ongoing margin pressure. Adidas, reporting on Wednesday, is also key due to its size in consumer goods but also because of its costly partnership breakup with Ye; analysts estimate revenue growth up 13% y/y but EPS at €1.24 down 47% y/y due to one-off items. On Thursday, we will focus on ArcelorMittal, because Europe’s largest steelmaker is an important macro driver, and analysts are getting increasingly negative on the steel industry expecting ArcelorMittal to announce a 14% drop in Q3 revenue and a 66% drop in EPS. The week ends with Richemont expected to see revenue growth coming down fast to just 7% y/y in Q3.   Key company earnings releases Monday: Westpac Banking, Coloplast, Ryanair, Activision Blizzard, BioNTech, Palantir Technologies, SolarEdge Technologies Tuesday: Bayer, Deutsche Post, KE Holdings, Nintendo, Walt Disney, Occidental Petroleum, Lucid Group, DuPont Wednesday: National Australia Bank, KBC Group, Genmab, Siemens Healthineers, E.ON, Adidas, Honda Motor, Coupang, Rivian Automotive, Roblox, DR Horton, Trade Desk Thursday: Brookfield Asset Management, Fortum, Engie, Credit Agricole, Allianz, Merck, Hapag-Lloyd, RWE, SMIC, Nexi, AstraZeneca, ArcelorMittal, Siemens Gamesa Renewable Energy, Becton Dickinson, NIO Friday: Richemont Key economic releases & central bank meetings Monday 7 NovemberChina (Mainland) Trade (Oct)Germany Industrial Production and Output (Sep)Eurozone S&P Global Construction PMI (Oct)Indonesia GDP (Q3) Tuesday 8 NovemberJapan BOJ Summary of Opinions (Oct)Japan All Household Spending (Sep)Eurozone Retail Sales (Sep) Wednesday 9 NovemberJapan Current Account (Sep)China (Mainland) CPI and PPI (Oct)United States Wholesale Inventories (Sep) Thursday 10 NovemberUnited States CPI (Oct)United States Initial Jobless ClaimsChina (Mainland) M2, New Yuan Loans, Loan Growth (Oct) Friday 11 NovemberNew Zealand Manufacturing PMI (Oct)Germany CPI (Oct, final)United Kingdom monthly GDP, incl. Manufacturing, Services and Construction Output (Sep)United Kingdom Goods Trade Balance (Sep)United Kingdom GDP (Q3, prelim)United Kingdom Business Investments (Q3)United States UoM Sentiment (Nov, prelim)     Source: https://www.home.saxo/content/articles/macro/saxo-spotlight-7-nov-2022-07112022
Two Small Caps Listed On Euronext Paris Have Faced Severe Financial Difficulties, The Q4 GDP Will Be Released In The US Today

Maersk Expects The Eurozone Enter Into A Recession | iPhone's Demand Is Coming Down

Saxo Bank Saxo Bank 07.11.2022 09:12
Summary:  Traders witnessed a wild session on Friday as the market decided that the US data would not add any further risk of a hawkish Fed for now, helping risk sentiment to rebound sharply as US treasury yields eased a bit lower. The US dollar was pummeled for sharp losses, particularly against commodity currencies that rebounded on chatter of China moving to ease Covid restrictions, only to see those hopes dashed over the weekend. Focus this week on US October CPI release this Thursday.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities are holding up pretty well given the remarks on Wednesday from Fed Chair Powell and assessment by Larry Summers that the terminal rates probably should be closer to 6% than 5%. S&P 500 futures are trading around the 3,767 level with the index futures likely trying to attempt again to move to the 3,800 level, but our view is that tighter central bank policy will begin to impact US equities negatively again and the 3,600 level is our shorter-term target for S&P 500 futures. Euro STOXX 50 (EU50.I) European equities are up 13% from late September as European earnings have been better than expected and the energy situation has eased. But this optimistic view might be premature as the economic activity in the euro area is slowing down fast and the winter has not even started, so we do not know the true strength of the European energy market. Also, the idea that ECB will begin pausing is not credible as the inflationary pressures are very high and will force ECB to continue being more aggressive on policy rates. STOXX 50 futures are trading just above the 200-day moving average this morning at the 3,680 level, with some potential to move higher if the index futures can close above Friday’s close. But overall, we maintain that it is more likely that equities will begin to roll over here as central bank hawkishness on terminal rates will sink in. Hong Kong’s Hang Seng (HSIX2) and China’s CSI300 (03188:xhkg) While China’s National Administration of Disease Control and Prevention reiterated its adherence to the dynamic zero-Covid policy at a press conference last Saturday, the health officials added that local governments should not unreasonably double down on the implementation and must ensure people’s livelihood and economic activities remain normal.  Investors took note of the above and recent signs of incremental flexibility in the implementation of pandemic control measures in China and saw the Hang Seng Index more than 3% higher as of writing. The resumption of large-scale sports events including the Beijing Marathon last Sunday, multinational sports events scheduled for 2023 such as Shanghai F1 and Hangzhou Asian Games, relaxation of PCR test requirements, increases in international flights, cancellation of circuit breaker for international flights, and approval of BioNTech vaccine for foreigners living in mainland China are among the factors cited by investors who anticipate gradual reopening in the coming months. Mainland A-shares’ reactions were more modest, with CSI300 climbing only 0.2%. FX: USD bounces back as China reasserts Zero Covid commitment after Friday’s huge sell-off The market absorbed Friday’s US data without further punishing US treasuries, as yields were capped and eased back. This saw the former USD strength reversing sharply to pronounced weakness Friday as risk sentiment also rebounded. Chatter late last week about China’s reopening added to brightening of sentiment. Commodity currencies had been supported with NZD leading the gains against the USD and being up over 2%. AUDUSD also surged above 0.6450 into the end of the week on hopes of a recovery in commodities demand. However, weekend reports from China’s Health Ministry confirmed that China will maintain its present zero-Covid regulations but improve the pandemic control measures, hinting that protracted lockdowns will be avoided. This has sent dollar back higher overnight, with AUD and NZD leading the declines, but this still appears merely a small consolidation of Friday’s weakening move. Focus this week on US CPI release on Thursday (more below). Gold (XAUUSD), silver (XAGUSD) and copper (HGZ2) … all raced higher on Friday, before giving back some of those gains overnight. The China reopening story gained its own momentum last week and while the official line has not changed, the tone has softened (see HK and China update above).  The extended rally despite a stronger-than-expected US report was driven by copper which recorded its best day since 2009, rallying close to 8% and in the process breaking through several key levels of resistance, thereby triggering some extra buying momentum from traders, not positioned for a bounce. The strong surge fed through to silver, up 7% on day, which found its own momentum above $20 and finally also Gold which had its biggest jump since March 2020. It may still be too early to call for a reversal given continued worries about the global economic outlook and Fed action, but Friday’s action will force a rethink of whether the sell-into-strength strategy is still valid. China developments, the dollar and incoming US data will provide most of the answers to this question.  Crude oil (CLZ2 & LCOF3) Crude oil trade lower following Friday’s strong gains with the market responding negatively to weekend headlines about zero-Covid policies being maintained in China. However, looking a bit deeper there is no doubt a softening approach is happening. The People’s Daily in an article on November 3 told people not to worry too much about “long Covid” ie the aftermath health problems from Covid while the health officials told local government not to make measures over stringent. With demand in China potentially starting to recover, the ill-timed OPEC+ production cut and EU sanctions against Russian crude is likely to keep the price risk focused to the upside, but with Brent failing to break above $98.75, and WTI above $93.65, the October highs, the market may spend the start of the week consolidating last week’s strong gains. US treasuries (TLT, IEF) US Treasury yields dropped back slightly on Friday as the US data was not seen stoking additional fears of the Fed intensifying its hawkish stance further for now, with this Thursday’s CPI weighing more in the balance than the mixed jobs report Friday. Focus is on the 4.32% top in the US 10-year treasury benchmark yield and the 3.90% low-water mark of the recent consolidation lower. What is going on? Mixed US jobs report US NFP headline gains of 261k were above expectations of 200k but slowed from last month’s 315k which was revised higher from 263k. Job gains were broad-based with strong gains in healthcare, professional and business services and manufacturing. Wage growth also held up strongly, coming in at 0.4% MoM in October from 0.3% MoM previously although a tad softer on a YoY basis at 4.7% from 5.0% YoY previously. However, the unemployment rate ticked up to 3.7% from 3.5% (exp. 3.6%) on a rather weak Household Survey although it was met with a 0.1% decline in the participation rate to 62.2%. However, with layoffs rising recently, especially in tech, it will be interesting to see how that impacts the headline NFP and the Fed tightening path in the months to come. Apple lowers iPhone output by 3mn units The demand for iPhones is coming down and Apple is now announcing a cut of 3mn units as consumers are under pressure from inflation and might be extending the life of their old phones. Apple has recently hiked prices on some of its services aiming to offset the weakness in its hardware business. Meta to start layoffs according to WSJ Investors have been frustrated with Meta following the Q3 earnings release as Mark Zuckerberg has reinforced the image that he does not listen to the concerns of investors that Meta is spending too much capital on its metaverse bets. According to Wall Street Journal, Meta might have listened after all as the technology company is expected to begin laying off thousands of employees. Ryanair lifts passenger target If there is an airliner that can do well during a recession in Europe it is Ryanair and the first half result this morning is a bit better than expected and the airliner expects net income of €1-1.2bn in the FY23 (ending 31 March). The Danish shipping giant Maersk sees the world entering a recession Maersk cut its forecasts for container demand this year. The drop is expected to reach minus 2 to 4 %. This matters because the company is often seen as a barometer for global trade. This is explained by well-known factors we have mentioned several times here: high inflation across the board, structural energy crisis in Europe, the geopolitical tensions and higher cost of capital. All of this weighs on consumer purchasing power and can potentially cause a global recession. Maersk expects the eurozone to be already or to enter into a recession, and potentially the United States as well. At Saxo Bank, we share this view, especially regarding the recession risk in the eurozone. Last week, ECB governor Martins Kazaks (which is seen as a hawk) acknowledged that the eurozone recession is now the baseline. This was the first time that an ECB governing council member said that officially.  The number of penny stocks is increasing on Euronext Paris With the significant equity drop that started earlier this year, many stocks are now close to zero. In Euronext Paris, the number of listed companies with stock value below 0.01 euro has jumped in recent months. For instance: Pharnext (biopharmaceutical company), NFTY (NFT and blockchain marketing services), Safe (specialized in the design and manufacture of medical devices) etc. Retail investors need to be very careful regarding small caps investment (especially when the valuation of the company is below 100 million euros). There are a lot of stocks that are not liquid enough and can represent a high risk of losses. What are we watching next? US inflation to test the 8% level, watch core and stickier components Bloomberg consensus expects US October CPI to drop below the 8% mark and come in at 7.9% YoY from 8.2% previously, but still higher at 0.6% MoM from 0.4% in September. The core measure is also expected to ease slightly to 6.5% YoY, 0.5% MoM (prev. 6.6% YoY, 0.6% MoM) but still remain elevated compared to historical levels. Key to watch also will be the drivers of inflation, particularly the stickier shelter and services costs, which if stuck higher could move the December Fed funds future pricing more towards another 75bps rate hike, resulting in another round of selloff in equities and dollar gains. However, with another CPI report due before the next Fed meeting in December, market impact of this week’s report will likely remain restrained unless a major deviation from expectations is seen. For this week’s CPI data, we will be watching the USD, and bond yields, which may be expected to rally up if the data is hotter than expected. US mid-term elections tomorrow Pundits suggest that the Republicans have very strong odds of flipping the House of Representatives in their favour, while the odds look finely balanced for whether the Senate ends retaining the slim Democratic majorities. Republicans taking both houses has few immediate ramifications, as US President Biden has the presidential veto, but a stronger than expected Democratic showing that somehow sees them retaining the House and strengthening their Senate majority would be a game changer – opening for more policy dynamism (and inflation from fiscal stimulus) from the US over the next two years rather than the expected lame-duck presidency. Uncertainty is high as pollsters have had a hard time gathering accurate indications for the election results since Trump’s victory in 2016. Earnings to watch The Q3 earnings season is slowing down this week but there are still important earnings releases to watch in certain industries or equity themes. Today our earnings focus is Ryanair, Palantir, and SolarEdge. Palantir is part of the technology segment that has been hit hard on valuations and with revenue growth slowing down and a negative EBITDA in Q2 the pressure is on Palantir to deliver a credible path to profitability; analysts expect 21% y/y revenue growth. Solar panel growth is still high and SolarEdge is enjoying this tailwind with revenue expected to grow 57% y/y and EPS up 57% y/y to $1.46. Monday: Westpac Banking, Coloplast, Ryanair (see earnings review above), Activision Blizzard, BioNTech, Palantir Technologies, SolarEdge Technologies Tuesday: Bayer, Deutsche Post, KE Holdings, Nintendo, Walt Disney, Occidental Petroleum, Lucid Group, DuPont Wednesday: National Australia Bank, KBC Group, Genmab, Siemens Healthineers, E.ON, Adidas, Honda Motor, Coupang, Rivian Automotive, Roblox, DR Horton, Trade Desk Thursday: Brookfield Asset Management, Fortum, Engie, Credit Agricole, Allianz, Merck, Hapag-Lloyd, RWE, SMIC, Nexi, AstraZeneca, ArcelorMittal, Siemens Gamesa Renewable Energy, Becton Dickinson, NIO Friday: Richemont Economic calendar highlights for today (times GMT) 0700 – Germany September Industrial Production Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:   Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-7-2022-07112022
Chinese Have Enough Money To Temper Recession, Tesla’s Record Profit

Disappointment Of Chinese Data | Disney, Occidental, Rivian Earnings

Swissquote Bank Swissquote Bank 07.11.2022 10:11
Week starts with blurred sentiment on the back of mixed US jobs data, and soft Chinese trade figures. Previous data Chinese exports and imports unexpectedly shrank in October; this was the first synchronized drop since May 2020. US jobs data was mixed, and triggered mixed market reaction, a rally that may not last long into the inflation data. US events ahead This week, US midterm elections & latest CPI update will be the major talking point. Earnings On the corporate calendar, Disney, Occidental Petroleum and Rivian are among companies that are due to go to the earnings confessional this week. Watch the full episode to find out more! 0:00 Intro 0:31 Chinese trade data disappoints 1:59 Over-optimistic reaction to the US jobs data’ 6:50 What to expect from US midterm elections? 8:39 Corporate calendar: Disney, Occidental, Rivian earnings Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #US #midterm #election #2022 #NFP #jobs #wages #inflation #data #Fed #hawks #Disney #Occidental #Petroleum #Rivian #earnings #China #trade #data #Covid #zero #policy #Foxconn #Apple #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Apple May Surprise Investors. Analysts Advise Caution

China's Covid Situation Negatively Affects The Iphone Market| Record Results Of India's SBI

Kamila Szypuła Kamila Szypuła 07.11.2022 11:57
Although the problem with the coronavirus pandemic has become a significant concern in global markets, it is still a problem for the Chinese economy. Inflation, although it is the main problem of economies around the world, has not had a significant impact on some companies. One such company turns out to be the Indian SBI lender. In this article: China And Covid Apple warns Twitter is the topic India's SBI What Chinese Goverments Will Do? Jim Cramer asked the question about Chinese covid situation. We have no idea what China is going to do with Covid so why do so many keep pretending they do? — Jim Cramer (@jimcramer) November 7, 2022 The situation in China is still serious. The media is flooding with information on how the government is fighting the virus. Recently, there has been information about covid camps where thousands of people stayed. Everyone wonders what action the Chinese government will take, many are sure, but are they sure? And paying attention to this situation may turn out to be instinctive for a global situation. Covid restrictions in China and their impact on Apple CNBC Now also touches upon the covid situation in China, but highlights its impact. BREAKING: Apple warns Covid restrictions in China are hurting iPhone production, and the company now expects “lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated” https://t.co/4q6RqhwHQd pic.twitter.com/fEsIurFTEN — CNBC Now (@CNBCnow) November 6, 2022 China as the second largest economy in the world is watched by market participants. The current situation in China not only affects the financial markets but also the manufacturing markets of companies such as Apple. As can be seen from the available information, Apple may have a problem satisfying the needs. Production of the iPhone 14 has been temporarily reduced due to Covid-19 restrictions at the main iPhone factory. So far, there have been warnings, but the possible deterioration of the situation in China may make the smartphone manufacturer's circuits real. Twitter and idea of monthly fees *Walter Bloomberg tweets about conclusion about twitter in The New York Times TWITTER SAID TO DELAY CHANGES TO CHECK MARK BADGES UNTIL AFTER MIDTERM ELECTION - NYT — *Walter Bloomberg (@DeItaone) November 6, 2022 After Elon Musk took control over Twitter and dismissed key directors, it seems that the discussions around the platform are endless. There is information that Musk wants monthly fees of $8 for using the site. This resulted in a lot of comments, including even Stephen King. Of course, there are two sides of the idea's supporters and opponents. But the information posted in The New York Times and then quoted in the post *Walter Bloomberg suggests that this idea was postponed for later discussions. Could this turn out to be a tactical action or a reaction to the current situation? The answers to these questions can only be known when discussions are resumed. Positive results of India's SBI Reuters Business tweets about the very positive results of India's SBI. Indian lender SBI's stock hits record high on "best-in-class" results https://t.co/HIWDsC2WYj pic.twitter.com/R01paWCJMG — Reuters Business (@ReutersBiz) November 7, 2022 Inflation causes that nowadays credit products are not readily used. Banks around the world are trying to cope with this difficult situation where the main source is crisis. The largest banks may be in a better position. One bank in India said they are doing pretty well. SBI announced a "best-in-class" quarter with higher-than-industry credit growth. Positive information from banks may also affect its image and share price, in other words, improve its situation on the market.
The Bank Of England Is Anticipated To Hike Rates By 50 bp As A Result Of A Wealth Of Data

Sunak (UK Prime Minister) May Have Won Back Investor Confidence

ING Economics ING Economics 06.11.2022 11:34
Prospects of fiscal tightening, limited energy support, and sky-high mortgage rates look set to reduce the size of the UK economy by roughly 2% over several quarters In this article The new prime minister has succeeded in calming markets Energy support to become less generous A recession looks inevitable Source: Shutterstock The new prime minister has succeeded in calming markets The appointment of Rishi Sunak as the new UK prime minister heralds a very different fiscal approach to his predecessor. Promises of debt sustainability have succeeded in stabilising financial markets, and both the pound and gilt yields have gone full circle since the mid-September ‘mini budget’. The political risk premium, as measured by the spread between German and UK 10-year yields, has narrowed back, although it is still wider than it was before the Conservative leadership contest started in July. Unfortunately, that’s where the good news stops. Sunak may have tentatively won back investor confidence, but he’ll need to find savings worth roughly £30-40bn/year to convince the independent Office for Budget Responsibility that debt won’t rise across the medium-term as a percentage of GDP. With very limited scope to cut day-to-day spending, we suspect he’ll have to chop back public investment plans and potentially also look at increases to personal taxes. Energy support to become less generous None of this will be good for growth, though the impact will be dominated by a decision to make the government’s flagship energy support programme less generous from April 2023. Under existing plans, the average household energy bill is capped at £2,500 for two years, but the government has signalled this will become more targeted. Aside from adjusting income tax rates, the only obvious way of doing this would be to make a distinction between those on welfare support and those that aren’t. One scenario could see most consumers move back to paying the Ofgem-regulated price from April. The cost of fixing household energy bills has collapsed Source: Refinitiv, Ofgem, ING calculations   Under that sort of policy, we'd expect most households to pay on average £3,300 in FY2023 for energy, without any government support. As the chart shows, the sharp fall in gas prices means that estimate has halved since August. But that would still leave the average household paying close to 10% of their disposable income on energy. Alongside that, mortgage rates look set to fall fairly gradually, against a backdrop of stubbornly high Bank of England expectations and a greater premium from lenders for high loan-to-value products. With roughly a third of mortgages fixed for two years, millions of homeowners look set to lock-in these higher rates. The two-year fixed rate recently peaked at 6.5%. A recession looks inevitable All of this suggests a recession is now inevitable, and we’ve once again downgraded our GDP forecasts. We now expect the size of the economy to shrink by roughly 2% over four quarters, concentrated in the first half of 2023. Admittedly these forecasts are still heavily contingent on how the government adjusts its energy support. If gas prices begin to rise, particularly for winter 2023/24 contracts, then the government will be under heavy pressure to once again extend its energy support to all households beyond April next year. TagsUK fiscal policy Energy crisis
Two Small Caps Listed On Euronext Paris Have Faced Severe Financial Difficulties, The Q4 GDP Will Be Released In The US Today

No Longer Dismisses The Possibility Of A Recession In The Eurozone

ING Economics ING Economics 06.11.2022 11:27
The eurozone economy expanded in the third quarter, but most recent data suggests that the recession has already started. Double-digit inflation is keeping the ECB in tightening mode, though substantial progress has been made in withdrawing stimulus. That means we're unlikely to see any more rate hikes after February next year In this article Growth surprises positively in the third quarter Consumption is likely to cave in Horror inflation Substantial progress in withdrawing stimulus Growth surprises positively in the third quarter The eurozone registered an unexpected 0.2% Quarter-on-Quarter expansion in the third quarter. Not surprisingly Spain, Italy and France did see growth on the back of a good tourism season, but Germany also performed much better than expected with 0.3% QoQ growth. However, it is striking to see that economic data has started to deteriorate strongly after the summer holidays. The eurozone composite PMI flash estimate fell to a lower-than-expected 47.1 in October. This is just a near 2-year low but also the fourth consecutive month that the PMI is hovering below the 50 boom-or-bust levels, clearly suggesting negative GDP growth. We get the same story from the European Commission’s economic sentiment indicator: it fell in October for the eighth month in a row to the lowest level since November 2020. The forward-looking components of the business surveys such as hiring intentions and new orders are heading south, a signal that the downturn is likely to intensify in the coming months. Consumption is softening Source: Refinitiv Datastream Consumption is likely to cave in Admittedly, consumer confidence improved slightly in October, but it remains close to the historical low reached in September. As households are expecting higher unemployment in the next 12 months, their intentions to make major purchases, renovate their homes or purchase a house, are all at very low levels. This strong cooling of consumption is also seen in high-frequency data such as hotel bookings, which are showing a post-summer dip. To be sure, in most countries there is budgetary support to alleviate the energy bills, but we don’t expect this to be sufficient to generate positive consumption growth in the coming quarters. With the significant rise in interest rates, accompanied by tighter credit standards, the real estate market is starting to cool rapidly in several countries, putting downward pressure on house prices. This is likely to impact construction activity negatively over the coming year. We're reiterating our forecast of a GDP contraction in the fourth quarter of this year and in the first of 2023. But there's more. The ECB's current tightening policies and the still difficult energy transition away from Russian gas will restrain the recovery thereafter. On the back of the better third-quarter numbers, we've revised our 2022 eurozone growth forecast up to 3.1%. For 2023 we are now pencilling in -0.7% growth and for 2024 1.3%. Horror inflation The October inflation data, published on Halloween, was another shocker: 10.7% headline inflation and 5.0% core inflation. The good news is that upstream in the supply chain there finally seems to be some moderation in price pressures. Supply chain delays eased to the lowest level for over two years, with shipping and material prices now clearly coming down. With inventories of finished products rising rapidly, pricing power is also likely to wane. On the back of the mild October weather, natural gas prices have also softened significantly, though we expect prices to rise again over the coming months when more normal winter temperatures set in. But even then, the contribution of energy to headline inflation is likely to diminish gradually. For 2022 we are now looking at 8.4% inflation and for next year, 5.6%. High inventories are likely to depress pricing power Source: Refinitiv Datastream Substantial progress in withdrawing stimulus The European Central Bank no longer dismisses the possibility of a recession, though we will have to wait for the December staff forecasts to know whether it will become the base case. For the time being the bank is still in tightening mode. But at the same time, it acknowledges that substantial progress has been made in withdrawing monetary stimulus. While the Bank's president, Christine Lagarde, didn’t want to put a figure on the neutral or the terminal interest rate during the press conference after the last rate hike, Banque de France President, Villeroy de Galhau, stated on several occasions that the neutral nominal interest rate is believed to be close to 2%. We, therefore, maintain our forecast of a deposit rate of 2% in December and a final rate hike of 25bp in February. The ECB is also likely to announce the conditions that will trigger the start of Quantitative Tightening. We believe that it will begin in the second quarter of 2023 at the earliest, basically through no longer fully reinvesting the Asset Purchase Programme portfolio. This will only have a minor impact on excess liquidity and bond yields next year. TagsMonetary policy Inflation GDP Eurozone ECB   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Swedish Real Estate Market Will See Significant Price Drops

The Residential Real Estate Market Is Suffer The Most

ING Economics ING Economics 05.11.2022 09:20
The Federal Reserve is focused on defeating inflation, whatever the economic cost. Nonetheless, after four consecutive 75bp rate hikes the pace is set to slow. We look for Fed funds to peak at 5%, but with nascent signs that inflation will fall sharply next year and the likelihood that recession will bite hard, the chances of a policy reversal in 2023 are high In this article Recession risks rise as the Fed stays focused on inflation Fed set to step down to 50bp from December Inflation is set to slow in 2023 2023 rate cuts remain our call Recession risks rise as the Fed stays focused on inflation The Federal Reserve has now raised interest rates by 375bp this year, the fastest pace of policy tightening since Paul Volker led the Fed in the late 1970s/early 80s. The danger is that the harder and faster a central bank moves into restrictive territory – to get a grip on inflation – the less control over the outcome and the greater chance of a recession. That is now our big fear. The residential real estate market is where the pain is currently most acute with surging mortgage rates prompting a plunge in mortgage applications and falling housing transactions. Home prices have fallen for two months in a row, but we feel this is just the start. To return house price-to-income ratios back to 30-year averages it would require prices to fall more than 20%. This would be dire news for residential investment and the construction sector more broadly while retail activity that correlates with home sales – household furniture, furnishings and home appliances – will also be heavily hit. House price-to-income ratios 1999-2022 Source: Macrobond, ING   The corporate sector is also now facing some strains as demand slows, yet cost pressures remain intense. This deteriorating profit outlook is forcing boards to dial back their expansion plans with falling capital goods orders pointing to declining investment, while the trending lower in the number of job openings signals increased caution. A cooling jobs market comes at a time when household spending power is squeezed by high inflation with confidence under additional pressure from broad asset price falls. Fed set to step down to 50bp from December Unfortunately, there will be no let-up in interest rate hikes until the Fed is confident inflation is coming under control. Currently, both the core CPI (ex-food and energy) and personal consumer expenditure deflator are reporting monthly price rises of 0.5% or 0.6%, but to get inflation to average 2% over time we need numbers closer to 0.2% month-on-month. In the very near term, we are not hopeful that momentum will slow, but it does appear that the Fed, like other central banks, is looking to moderate the pace of future hikes as recession fears spread. We continue to expect a 50bp rate hike in December, but given the stickiness in core inflation we now look at a final 50bp hike in February, which would take the Fed funds target range up to 4.75-5%. We don’t think the Fed will keep hiking into the second quarter though. Despite the near-term stickiness, there are encouraging signs that suggest inflation could slow quite quickly through the first half of next year. Inflation is set to slow in 2023 Normally house price moves lead to changes in the housing CPI components by a year, but there is evidence to suggest actual rents are already falling, as reported by rent.com and realtor.com, amongst others. If so, the heavy 32% weighting of housing within inflation can contribute to a steep CPI slowdown more quickly than would typically be the case. Furthermore, the Manheim used car data points to used vehicles (4% CPI weight) falling 15% over the next couple of months, which can make a big dent in annual inflation rates. NFIB survey suggests fewer companies are looking to raise prices, meaning core inflation could plunge     Source: Macrobond   The most interesting guide though is from the National Federation of Independent Businesses, whose price plans series, which shows the proportion of companies looking to raise their prices in the next few months, suggests that corporate pricing power is rapidly weakening. This is highly correlated with the Fed's favoured measure of inflation – the core PCE deflator (see chart above). A recession will only intensify competitiveness pressures as businesses fight for customers. 2023 rate cuts remain our call We now forecast three quarters of negative GDP growth in 2023 as the deteriorating domestic backdrop is compounded by a weakening external environment and ongoing dollar strength. But we also believe inflation will fall to close to 2% by the end of next year. With the Republicans likely to gain control of Congress after next week’s mid-term elections, this will severely curtail President Joe Biden’s ability to offer any support from fiscal policy. This means the onus will be on the Fed to promote a return to growth. We feel that in the second half of 2023 it will be in a position to do so with rate cuts. TagsUS Recession Inflation Federal Reserve   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Inflation Reports In Australia And New Zealand Were Higher Than Expected

Inflationary Momentum In New Zealand Remains Strong

InstaForex Analysis InstaForex Analysis 10.11.2022 10:24
Risk appetite noticeably fell this Thursday morning. The S&P 500 already lost more than 2% the previous day, while stock markets in Asia-Pacific countries traded in the red zone. Europe is also likely to open lower, which can not be said to government bond yields as it showed somewhat higher stability. 10-year US Treasures stayed above 4%, confidently indicating an increase in the risk of stagflation. Part of the reason why risk appetite decreased is the preliminary results of the US elections, according to which the Republicans will receive a majority in the House of Representatives and thus be able to influence the government's budgetary policy. There is still no clarity on the Senate, as the state of Georgia will hold a second round, scheduled for December 6. The second factor is the increase in the number of Covid patients in China, which reduces the likelihood of lifting restrictions. Today, the focus will be on the US inflation report, which has a base rate forecast of +6.5%, slightly below September's 6.5%. It is very important because if inflation does not show at least some signs of slowing down, then Fed rate forecasts could rise to 6% for 2023, which will increase panic and push up demand for dollar. Conversely, a data release of 6.5% or lower could dampen anti-risk sentiment slightly and boost demand for commodity currencies. NZD/USD Inflationary momentum in New Zealand remains strong and there is no slowdown yet. But the labor market is very stable, thanks to the very large decrease in the number of workers dropping out of the labor force. Another record performance for the 3rd quarter is the growth in average hourly wages, which in the private sector grew by 8.6% y/y. It is expected that by the end of the year, this figure will exceed 9%, which leaves the RBNZ no choice but to raise rates higher. The latest RBNZ survey on inflation expectations showed that inflation is expected to reach 5.08% in 1 year versus 4.86% in September. Then, it will return to 3.62% in 2 years versus 3.07% earlier. Obviously, inflation expectations continue to rise even though the RBNZ is raising rates quite aggressively. The ANZ Bank predicts that the rate will be raised to 5% in February, then peak in the end of 2023, which looks more aggressive than the Fed's policy, and will contribute to the growth of the yield spread in favor of the kiwi. But if prices for dairy products continue to drop, NZD will halt growth. That, however, is quite unlikely as a peak in stocks of dairy products has been formed and a reduction in production is expected, which will help support prices. According to reports, NZD net short position decreased for the second week in a row. There is a bearish advantage of -0.22 billion, but the estimated price turned up, increasing the probability of a bullish correction. Kiwi broke through the resistance level of 0.5866. In case of a rebound, support will be found in 0.5810/20, while resistance will be in 0.5960 (23.6% retracement level of the fall since February 2021). AUD/USD The consumer sentiment index reportedly fell 6.9%, from 83.7 in October to 78.0 in November. Obviously, inflation in Australia continues to grow, reaching 7.3% in the 3rd quarter against 6.1% earlier. Forecasts suggest further inflation growth. This is why the Australian government is very careful in making changes to tax policy. Rate forecasts are also rising to a higher level, which leads to a drop in consumer spending. There is also a marked decrease in labor market confidence, as well as in the possibility of buying a home. In terms of positioning, the latest data says net short position in AUD decreased by 0.1 billion over the reporting week. The bearish advantage remains, with the estimated price being below the long-term average and is directed downwards. Although the trend is bearish, there will be attempts of upward correction. Support is at 0.6320/30, while resistance is at 0.6510/30. But trading will move into a side channel, the exit from which is more likely down. When trying to grow to 0.6510/30, traders must sell first in order to return the quote to 0.6320/30. However, there is no reason yet to expect a full-fledged bullish reversal.   Relevance up to 07:00 2022-11-15 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/326725
CPI In The US Slowed Down Further, Falling To 6.5% y/y  With Expectations

A Reaction In Equities Will Likely Remain Worth Noting

Saxo Bank Saxo Bank 10.11.2022 10:30
Summary:  A potentially weaker US CPI print today doesn’t seem to have much of a power to change anything for the Fed or the markets. The focus for equity markets has gone beyond interest rates to earnings/recession risks and liquidity risks. Meanwhile, the dollar’s safe-haven bid may remain in play. The bigger risk remains on the upside surprise, which can turn things more ugly with a number of simultaneous risks playing out. Markets face a big test ahead with the release of US inflation figures later today. While some may still be hoping for a Fed pivot if we see a softer print, it is probably time for them to wake up and smell the coffee. There is no doubt that some indicators are pointing towards some easing of price pressures. That has to happen – maybe today, maybe in another 1-2 months. This month, we have had the price paid component of ISM manufacturing dip below 50, which marks the dividing line between expansion and contraction. Still, ISM services hinted at further gains in prices for the services sector, which continue to point towards stickier and broader price pressures. Meanwhile, commodity prices have once again remained in a range in October, while China reopening has not materialised in any substantial way. The wave of tech layoffs that we have seen over the last few weeks also suggests there will be some downward pressure on wages in the coming months. Expectations take this into account, with the headline CPI print for October seen softer at 7.9% YoY from 8.2% YoY previously. Core is expected at 6.5% YoY and 0.5% MoM, still way too high from the 0.2% MoM levels needed to bring inflation close to the Fed’s 2% target. However, any softness, if seen today, is unlikely to change the Fed path. The Fed has already communicated a downshift in its rate hike trajectory without exiting its hawkish bent. Could there be room for them to pursue more dovishness despite inflation being still far from its target? I would doubt that. December Fed rate pricing is currently closer to a 50bps rate hike, there is no way we will get a smaller hike than that. A poor showing of the Republicans in the US midterms has also given the Fed more ammunition to remain focused on inflation, rather than the markets. The biggest risk, therefore, is still a beat of expectations, as that could mean further higher terminal rate pricing and a move towards 75bps in terms of December rate hike pricing. An upside surprise in inflation and a move in US 2-year yields back towards 4.7% could be USD positive and move the yield-sensitive Japanese yen. But its better to still be wary of too much pressure on the USD, beyond a knee-jerk reaction, even if we see a softer CPI print because we are going into today’s release with a very weak risk sentiment on the back of the crypto turmoil and the tech sector layoffs sounding a louder alarm on recession concerns, suggesting the safe-haven reputation of the US dollar may come into play. A reaction in equities will likely remain worth noting. A core print of below 0.5% could spark a relief rally, but eventually the focus will turn back to Fed’s terminal rate target which will still be above 5%, mounting earnings pressures and liquidity woes stemming from the crypto crash and other financial risks in the markets. Also, a number of Fed officials are scheduled to speak after the CPI release, including the Fed's Daly, Mester and George – and they would potentially be ready to up their hawkish stance if we see a CPI miss. But a higher print, together with the risk mood we are in, can be quite painful for equities. We also have a 30Y treasury auction due, and such long duration supply could well extend a push towards higher yields.   Source: https://www.home.saxo/content/articles/macro/macro-insights-a-softer-us-cpi-expectation-does-not-materially-change-the-fed-path-10112022
RICS House Price Balance Is Below Zero | Inflation Data From Both Americas Are Ahead

RICS House Price Balance Is Below Zero | Inflation Data From Both Americas Are Ahead

Kamila Szypuła Kamila Szypuła 10.11.2022 11:30
Today there are no major economic events than the result of the US CPI report. In addition, there will be important speeches by members of the FOMC and other central banks, including the Bank of England of Canada. RICS House Price Balance The Royal Institution of Chartered Surveyors (RICS) House Price Balance was published early in the day. The result showed that the index fell sharply below zero. The current reading is at -2%. A drop from 30% to 20% was forecast, but the current figure has turned out to be more drastic. This means that house prices in the designated area have dropped drastically. There has been a decline in prices since May, and the present one signifies a significant deepening of this trend. The first speeches The first speech of the day took place at 2:45 CET. The speaker was Michele Bullock serves as an Assistant Governor of the Reserve Bank of Australia (RBA). The next speech was from America. Fed member Christopher J. Waller spoke at 9:00 CET More speeches Ahead Today also representatives of European banks will take the floor. Andrea Maechler serves as Governing Board Member of the Swiss National Bank (SNB) is set to speak at 14:30 CET. At the same time will be speak Andrea Enria, Chair of Supervisory Board of the European Central Bank. Speech by representatives of the Bank of England is scheduled for 15:00 CET and 15:10 CET. Speakers in turn: David Ramsden, Deputy Governor of the Bank of England and Silvana Tenreyro, a member of the Monetary Policy Committee (MPC). Another Fed speech and one from the Bank of Canada are also planned. Bank of Canada Member Governor Tiff Macklem will speak at 6:50 PM CET. After the published reports, the following will speak: Federal Reserve Bank of Philadelphia President Patrick Harker, Federal Open Market Committee (FOMC) Member Mester and Federal Reserve Bank of Kansas City President Esther George. All speeches can provide valuable information about the future of monetary policy actions of the banks concerned. ECB Economic Bulletin At 11:00 CET the ECB published a Bulletin. The Economic Bulletin provides a comprehensive analysis of economic and monetary developments and interim updates on key indicators. Which can help investors to assess the future development of this region, as well as summarize the effectiveness of ECB's work South Africa Manufacturing Production Today, South Africa will also publish a report on Manufacturing Production. The shift from Y / Y of output produced by manufacturers is forecast to decline from 1.4% to -2.4%. A smaller index in this sector may indicate serious problems which the country's economy is struggling with, which will hinder the growth. Brazil CPI Brazil as well as the United States will publish inflation data. In South America's largest economy, Y/Y inflation is expected to decline from 7.17% to 6.34%. It is very likely as the CPI has been in a downward trend since July. Meanwhile, the CPI m/m is expected to increase from -0.29% to 0.48%. US CPI Expectations for US inflation are positive. Slightly dropping is expected. Read more: Inflation In The USA Has A Chance Of Cooler| FXMAG.COM Initial Jobless Claims The number of individuals who filed for unemployment insurance for the first time during the past week is expected to increase by 3K weekly report. The last reading was at 217K and it was a positive reading as the level persisted for another week and the forecasts will increase to 220K. At 15:30 CET it will turn out if the reading is positive this time. Summary: 2:01 CET RICS House Price Balance 2:45 CET South Africa Assist Gov Bullock Speaks 9:00 CET Fed Waller Speaks 11:00 CET ECB Economic Bulletin 13:00 CET RPA Manufacturing Production 14:00 CET Brazil CPI 14:30 CET SNB Gov Board Member Maechler Speaks 14:30 CET ECB's Enria Speaks 15:00 CET MPC Member Ramsden Speaks 15:10 CET MPC Member Tenreyro Speaks 15:30 CET US CPI 15:30 CET Initial Jobless Claims 16:00 CET FOMC Member Harker Speaks 18:50 CET BoC Gov Macklem Speaks 19:30 CET FOMC Member Mester Speaks 20:30 CET FOMC Member George Speaks Source: https://www.investing.com/economic-calendar/
It Is Quite Possible That The Australian Dollar Is Tired Of Growth

Further Volatility Of The AUD/USD Pair In Today Session Is Expected

Kenny Fisher Kenny Fisher 10.11.2022 12:13
The Australian dollar has extended its losses today. AUD/USD is trading at 0.6412, down 0.29%. The US dollar has rebounded after a 3-day slide, which saw the Australian dollar climb over 200 points. The Aussie has coughed up half of those gains since Tuesday, and we could be in for further volatility in today’s North American session, as the US releases the October inflation report. Investors are somewhat confused, thanks to mixed signals from both the Federal Reserve and last week’s US employment report. The Fed meets next in mid-December, and it’s close to a toss-up as to whether the Fed will raise rates by 0.50% or 0.75%. At the last meeting, at which the Fed hiked by 0.75%, Fed Chair Powell hinted at easing up on rates but also said that the terminal rate would likely be higher than previously expected – this mixed message makes it difficult to peg the Fed as being hawkish or dovish. US inflation expected to remain hot Last week’s employment report was mixed, as unemployment and wage growth climbed, while nonfarm payrolls fell but still exceeded expectations. This makes today’s inflation report all the more important for the Fed ahead of the December meeting. A hot inflation report would likely boost the likelihood of a 0.75% hike, which would be bullish for the US dollar. CPI is expected to dip to 8.0%, down from 8.2%, which although a slight improvement, would indicate that inflation remains very high. Australia is also dealing with high inflation, and Melbourne Institute Inflation Expectations for October reinforced concerns that inflation is yet to peak. Inflation Expectations rose to 6.0%, up sharply from 5.4% in September, and the first acceleration in four months. The economy is showing signs of slowing down, and a report from the National Australian Bank on Wednesday projected that GDP would fall to 0.8% in 2023 and interest rates would peak at 3.6% next year. The cash rate is currently at 2.85%, which means that the RBA is likely to continue raising rates into 2003.   AUD/USD Technical AUD/USD is testing resistance at 0.6411. Above, there is resistance at 0.6549 There is support at 0.6239 and 0.6196 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
U.S. Treasury Bond Yields Rose On Friday,  Crude Oil Started The Week With Gains

If US CPI Meets The Expectations, The Us Yields Will Increase

InstaForex Analysis InstaForex Analysis 10.11.2022 12:27
Traders are focused on the upcoming US consumer price data this Thursday, but the inflation data due out a day later could be even more important in determining the short-term outlook for global markets. While the expected fall in the consumer price index is likely to be welcomed by investors, Friday's 5 to 10-year inflation expectations from the University of Michigan will resonate with Fed officials who fear a further increase in prices. The index rebounded to 2.9% in October, so another gain could put pressure on the bank and force it to raise rates even higher than expected. That would reduce risk appetite, from equities to bonds. On Thursday, Richmond Fed President Thomas Barkin vowed that the central bank would not back down from a slow return to normal inflation levels, which could threaten the stability of inflation expectations. US yields could rise if the consumer price index is in line with forecasts. 5-10 year inflation expectations may surge to the highest since 2011, said Prashant Nyunaha, a senior rate strategist at TD Securities. A decline in the expected consumer price index should not provoke a significant market reaction, but retesting the January and June highs, according to the University of Michigan, will confirm that the rate hike to date has not had the expected impact on inflation Relevance up to 10:00 2022-11-11 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/326771
Crude Oil Ended Higher | Initial Jobless Claims Rose Marginally

Crude Oil Ended Higher | Initial Jobless Claims Rose Marginally

Saxo Bank Saxo Bank 11.11.2022 08:26
Summary:  A softer US CPI print sent the equity markets skyrocketing in an extreme reaction, but there was some pushback against dovish expectations from Fed speakers and WSJ’s Timiraos, highlighting that a 50bps rate hike at the December Fed meeting is still in play. Dollar weakness fueled gains across the metals space, but oil market remained volatile on concerns around China’s covid cases even as the authorities urged targeted measures will remain in place. UK GDP due in the day ahead before focus turns to G20 meetings next week. What’s happening in markets? The S&P 500 (ESZ2) jumped 5.5% and Nasdaq 100 (NQZ2) soared 7.5%, staging the biggest rally in two years US equities surged the most since 2020 on a softer-than-expected CPI report. S&P 500 gained 5.5% and Nasdaq 100 soared 7.5%. The gains were board-based. All 11 sectors of the S&P 500 rose, with the information technology, real estate, and consumer discretionary sectors leading the charge higher. Semiconductor names surge, Marvel Technology (MRVL) up 16.1%, Nvidia (NVDA:xnas) up 14.3%, and Advanced Micro Devices (AMD:xnas) up 14.3%.  Amazon (AMZN:xnas) surged 12%, Meta (META:xnas) gained 10.3% and Apple (AAPL:xnas) climbed 8.9%. The shift of sentiment from risk-off to risk-on saw the crypto stabilize and Bitcoin rally 13%. US treasury (TLT:xnas, IEF:xnas, SHY:xnas) soared, yields tumbling 22 to 30bps across the curve Treasuries jumped in price and yields plunged on slower-than-expected CPI data. Large buying first concentrated on the 2-year and the 5-year notes. The yield curve bull-steepening in initially, with the 2-10 spread narrowed 8bps to minus-41bps at one point. However, the long ends rallied strongly in the afternoon following a strong 30-year bond auction. The curve reversed and became more inverted with 2-10-year finishing the session at minus-52 bps. At the close, 2-year yields fell 25bps to 4.33% and 10-year yields tumbled 28bps to 3.81%. On Fedspeak, Cleveland Fed President Mester said “services inflation, which tends to be sticky, has not yet shown signs of slowing” and she views “the larger risks as coming from tightening too little”. San Francisco Fed President Mary Daly remarked “it was indeed good news that inflation moderated its grip a bit” but “one month of data does not a victory make”. Hong Kong’s Hang Seng (HSIX2) China’s CSI300 (03188:xhkg) retreated on Covid outbreaks Hong Kong and China stocks retreated on Thursday as China’s daily new domestic Covid cases came in above 8,000 second day in a row and Guangzhou extended lockdown in one of its districts. Hang Seng Index dropped 1.7% and CSI 300 lost 0.8%. China Internet and EV stocks underperformed. NIO (0988:xhkg) fell 13.2% on a bigger-than-expected loss in Q3 and a Q4 guidance below analysts’ expectations. Overnight in U.S. hours, Hang Seng Index futures jumped 4.6% after U.S. stocks soared on softer CPI data. ADRs of Alibaba (09988:xhkg), Meituan (03690:xhkg), and Tencent (00700) surged around 7% to 9% in New York hours. FX: Massive dollar selloff in the aftermath of the US CPI release The Dollar Index saw its greatest losses in a single day since 2009, falling to lows of 107.7 after the release of that softer-than-expected US CPI. The biggest gainer on the G10 board was JPY, no surprises there, given its yield-sensitive nature and the plunge in US yields. USDJPY broke below 141 although it has rebounded to 141.68 in the Asian morning. If we do see hawkish Fed comments in the coming days/weeks, some of this rally in the JPY is likely to be unwound but overall the trend in USDJPY remains biased to the downside now with most of the interest rate expectations already in the market. GBPUSD was also a big gainer as it surged to the 1.17 handle, but a test lies ahead with UK GDP release today likely to confirm the onset of a recession (read preview below). Crude oil (CLZ2 & LCOF3) volatile amid dollar weakness and China's Covid concerns Crude oil ended higher in a volatile session as earlier concerns of weak demand were overtaken by the broader market rally in response to lower inflation and the weakness in the US dollar. Concerns however remain on China’s Covid cases with Beijing reporting its highest number of cases in a year, which kept the gains restrained. WTI futures rose above $86/barrel while Brent went above $94 before retreating later. Cooler US inflation prompts gains across metals The weaker USD eased pressure on the base metals complex, with copper rising more than 2%. This was boosted by reports coming out of a Politburo Standing Committee meeting that suggest Beijing would take more targeted measures to avoid damage to the economy. If China’s Zero covid measures remain targeted, this could shift focus back to supply issues and dollar weakness. Copper (HGZ2) broke the September high of $3.6925, and is now testing resistance at $3.78. Gold (XAUUSD) also broke above the double top at 1730, likely suggesting that the bottom is in place. Silver (XAGUSD) rose to $21.83 but has since returned to the resistance turned support at $21.50.   What to consider? Softer US inflation, but what does it mean for the Fed? US CPI was softer than expected across the board, as headline M/M and Y/Y printed 0.4% (exp. 0.6%, unchanged) and 7.7% (exp. 8.0%, prev. 8.2%), respectively, while the core metrics came in at 0.3% M/M (exp. 0.5%, prev. 0.6%) and 6.3% Y/Y (exp. 6.5%, prev. 6.6%) on a Y/Y basis. Shelter prices still remained hot while the used vehicle prices declined by 2.4% M/M. While the inflation still remains high and far from Fed’s 2% target, it can be expected that the trend is lower. Markets cheered the release, expecting a downshift in Fed’s rate hike trajectory which has already been communicated at the last FOMC meeting. December Fed rate hike pricing is still close to 50bps, while the terminal rate projections have slid lower to 4.9% for May 2023. However, it is worth noting that there is one more labor market report and another CPI report due before the FOMC’s Dec 13-14 meeting. Fed speakers pushed back on the market rally The kind of market reaction we have seen to the soft CPI print in the US yesterday confirms that investors still remain on edge expecting a Fed pivot. This can prove to be counterproductive, as easing of financial conditions can derail this downtrend in inflation and reverse the less hawkish path that Fed is expected to take in the coming months. The Cleveland Fed’s Loretta Mester said that, while she was encouraged by October’s data, she sees bigger risks from tightening too little than too much. Kansas City Fed President Esther George said monetary policy “clearly has more work to do”, while the Dallas Fed’s Lorie Logan said earlier that inflation has a long way to go before it reaches the central bank’s target. They also noted it may be time to slow down the pace of hikes, however, but that it shouldn’t be interpreted as easing policy. Equally importantly, WSJ's Timiraos tweeted, "The October inflation report is likely to keep the Fed on track to approve a [50bps rate hike] next month. Officials had already signaled they wanted to slow the pace of rises and were somewhat insensitive to near-term inflation data". Easing financial conditions will likely drive the Fed speakers to a further hawkish tilt in the coming days. US jobless claims still underscore a tight labor market Initial jobless claims rose marginally to 225k from 218k, and above the expected 220k. Meanwhile, continued claims also exceeded consensus to print 1.493mln (exp. 1.475mln) from, the revised higher, 1.487mln. While this still continues to show a tight labor market in the US, it may be worth watching how it moves in the coming months especially after the wave of tech sector layoffs that we have seen in the past few weeks. The latest in the Crypto space Bloomberg reports a balance sheet hole of $8bn for FTX. Likewise, the Wall Street Journal reports that Alameda Research owes FTX about $10bn. Reuters says that the loan to Alameda Research was equal to at least $4bn. Sam Bankman-Fried (SBF), however, went to Twitter to give an explanation. He goes on to talk about two major mistakes that he has made, one being that he underestimated the demand for sudden liquidity by clients withdrawing funds. In terms of liquidity, SBF further says that: “FTX International currently has a total market value of assets/collateral higher than client deposits (moves with prices!). But that's different from liquidity for delivery--as you can tell from the state of withdrawals. The liquidity varies widely, from very to very little.” Remember, that this is contrary to the story by Bloomberg and likely the Wall Street Journal and Reuters story. It now seems plausible that FTX has a serious hole in its balance sheet”, though, hard to judge anything at this stage given the amount of rumors and unconfirmed information floating around. What remains clear is that any liquidity event will unlikely remain isolated as cascading margin calls and contagion effects are likely to be felt beyond the crypto space. UK GDP to confirm the onset of a recession UK’s Q3 GDP is scheduled for release today and the first quarterly negative print of the current cycle is expected to be seen. Consensus forecast is seen at 2.1% YoY, -0.5% QoQ, significantly lower than the second quarter print of 4.4% YoY, 0.2% QoQ. August GDP data had already begun to show a negative print with -0.3% MoM and the trend will only likely get worse in September, exacerbated by a one-off factor relating to Queen Elizabeth II’s funeral in the month, which was a national holiday. The economy is already facing a cost of living crisis, and both fiscal and monetary policy have to remain tight in this very tough operating environment. Technically, a recession may still be avoided as activity levels picked up in October, but still it will remain hard for the UK to dodge a recession going into 2023. This suggests there maybe some downside for the sterling, especially as the market refuses to cater to the Bank of England’s warning that the current expectations of terminal rate may be too steep. Credit growth in China slowed in October China’s new aggregate financing fell to RMB908 billion in October, much lower that the RMB1,600 billion expected in the Bloomberg survey and the RMG3,527 billion in September. The growth of outstanding aggregate financing slowed to 10.3% in October from 10.6% in September. New RMB loans declined to RMB615 billion in October, below the 800 billion consensus estimate and much smaller than the RMB2,470 billion in September. New RMB Medium to long-term loans to corporate fell to RMB462 billion as loan demand was weak. China’s Politburo Standing Committee met to discuss pandemic control policies  On Thursday, President Xi and the rest of the Politburo Standing Committee had a meeting to discuss its policies on pandemic control. While the statement from the meeting reiterated adherence to the dynamic zero-Covid policy, it also highlighted the push for vaccination and treatments and called on government officials to implementation of control measures more scientifically targeted and precise and to avoid doubling down on each layer of execution.   China’s Singles’ Day this Friday, Nov 11 Investors will watch closely Alibaba, JD.com, and other online retailers’ sales on Singles’ Day this Friday to gauge the strength of China’s private consumption. Analysts are expecting slower sales growth as recent data indicated slower user growth across online shopping platforms.   For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-11-nov-2022-11112022
The ECB Has A Clear Tightening Bias And Is Chasing Inflation

Forecast For The Eurozone Are Not Optimistic, Inflation Can Reach A Record High

Kamila Szypuła Kamila Szypuła 12.11.2022 10:40
The euro zone has been battling against surging inflation for about a year, with Russia’s invasion of Ukraine accentuating those inflationary pressures. The European Central Bank has meanwhile raised interest rates three times this year to tackle the rising prices. Expectations According to the autumn economic forecast of the European Commission, in the last quarter of 2022, the euro area and most EU countries will be in economic recession. Prices are expected to fall in 2023, but inflation is projected to remain at 7% in the EU and 6.1% in the euro area before falling to 3% in the EU and 2.6% in the euro area in 2024 r. The EU forecast was based on the assumption that geopolitical tensions, such as the war in Ukraine, would not normalize or escalate and sanctions against Russia would remain in place. EU labour markets are expected to react to the slowing economy. Unemployment rates in the EU were projected to be at 6.2% in 2022, 6.5% in 2023, and 6.4% in 2024. GDP growth will be around just 0.3% in the EU and euro area in 2023, the European Commission predicted. Inflation The new percentages were revised up from the European Commission's last economic outlook, which predicted that inflation would reach an average of 7.6% in the eurozone this year and 8.3% in the EU. Inflation in the eurozone reached a record high. Eurozone inflation is expected to hit a new record high of 10.7% in October. Eurostat's October estimates predict that the prices of food, alcohol and tobacco, non-energy industrial goods and services will rise from August and September, when annual euro area inflation was expected to be 9.1 percent and 9.9 percent respectively. Official figures will be released on Thursday, November 17 Energy prices were again the main driver of inflation with a 41.9% increase year-on-year, compared with 40.7% in September and 38.6% in August. Euro area #inflation up to 10.7% in October 2022: energy +41.9%, food, alcohol & tobacco +13.1%, other goods +6.0%, services +4.4% - flash estimate https://t.co/b9t9sOMDLM pic.twitter.com/NbsakF4eVe — EU_Eurostat (@EU_Eurostat) October 31, 2022 Every corner of the continent is facing rising prices and the expected economic recovery in Europe after the coronavirus pandemic is hampered by a number of factors. The Baltic countries remain the hardest hit, with annual inflation above 20%. Estonia leads in comparison with estimates of 22.4%. This is mainly because they are particularly vulnerable to fluctuations in the energy markets. According to Eurostat, the price of natural gas for households increased by 154% and 110% respectively in Estonia and Lithuania between the first half of 2021 and the first half of this year. Meanwhile, France maintained its position as the country least affected by the crisis, although annual inflation in October was 7.1%. The European Central Bank (ECB) raised interest rates Central banks use their interest rates to make money more expensive or cheaper to increase or reduce spending as they directly affect the interest rates offered to households and businesses by commercial banks. Following in the footsteps of its counterparts elsewhere in the world, in July the European Central Bank (ECB) raised interest rates for the first time in 11 years by more than expected as it pursues persistently high inflation. This was followed by another record rate hike in September, raising new questions about whether the rush to increase credit costs and keep inflation in check will plunge major economies into recession. On October 27, the ECB raised interest rates again, increasing the deposit rate by another 75 basis points to 1.5 percent. – the highest level in over a decade. Further such increases are expected in the coming months as "inflation remains far too high and will remain above the [2%] target in the extended version." Source: ec.europa.eu/eurostat/en
Czech Republic: Tax Revenues Should Be Higher Than MinFin Expects

Core Inflation In Czech Republic Shows The Opposite Picture

ING Economics ING Economics 12.11.2022 11:08
October inflation showed the first price decline in almost two years thanks to government measures against high energy prices. The surprise of the market and the central bank stems from the unclear approach of the statistical office. Inflation should remain at only slightly higher levels until the end of the year, but January remains a question In this article Savings energy tariff pushed inflation down Clear outlook for the end of the year, but January brings back uncertainty 15.1% October inflation (YoY)    Lower Savings energy tariff pushed inflation down Consumer prices decreased by 1.4% month-on-month in October, the first MoM decrease since December 2020. This development primarily reflected the government savings tariff and waiver of fees for supported energy sources for electricity prices and on the other hand higher food prices. The year-on-year growth of consumer prices amounted to 15.1% in October, which was down 2.9 percentage points on September. The result is 2.3pp below the Czech National Bank's new forecast and 2.8pp below market expectations. On the other hand, core inflation shows the opposite picture with an acceleration from 0.3% to 1.2% MoM, translating to 14.6% YoY, which is basically the same level as in the last five months, surprising the CNB forecast on the upside by 0.3pp. The main topic here is government energy measures that are effective from October to December and from January the type of measures will change again from the savings tariff to price caps. Therefore, we can expect weaker CPI prints in November and December as well, but in January the uncertain approach of the statistical office comes into play again, just like in the case of today's number. According to the CNB's calculation, the impact of the government measures reduced inflation by 3.5pp, otherwise inflation would have been 18.6% YoY. Contributions to year-on-year inflation (pp)   Clear outlook for the end of the year, but January brings back uncertainty For the coming months, we can expect inflation to be only slightly higher in YoY numbers, but January remains the big question. On the one hand, based on energy supplier announcements and other anecdotal reports, it seems that a massive new year's repricing upwards can be expected. On the other hand, the government's price cap comes into play, which unevenly affects households depending on their contract. Moreover, here again it is unclear how the statistical office will approach this. At the moment we are leaning towards the view that we should see just slightly higher household energy prices from January compared with the October number under effect of the savings tariff, so January inflation will be driven mainly by new year repricing but still lead to a lower number due to base effects. Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The G20 Leaders' Declaration : Central Bank Independence Is Crucial To Achieving Price Stability

The Host Of The G20 Meeting (Indonesia) Invited Russia's Putin And Ukraine's Zelenskyy

Marc Chandler Marc Chandler 13.11.2022 09:37
Policymakers have often said that exchange rates should reflect fundamentals. What does that really mean? Can they do anything but that? It begs the question of which fundamental factors they should reflect. Therein lies the rub.  We are still struck by the latest Bank for International Settlements figures. Their survey found that the average daily turnover in the foreign exchange market was $7.5 trillion a day. World trade last year was about $22.5 trillion. The foreign exchange market sees that every three days. Nevertheless, many still see trade as the factor that exchange rates should bring into balance. Many observers are surprised when the Chinese yuan depreciates, as it has this year, despite a huge trade surplus ($730 bln through October, a 43% increase from the first 10 months of 2021). At the same time, most accounts of the dollar's strength since January 6, 2021 (yes, that January 6 when the Dollar Index bottomed and the euro peaked) say little, if anything, about the US trade deficit. Through September this year, the deficit was nearly $746 bln (up from $620 bln in the same period last year). Instead, the dollar's strength seems most often attributed to the aggressive tightening, real and anticipated, by the Federal Reserve. Given the relative size of the market for capital and the market for goods and services, we tend to emphasize drivers of capital to understand and anticipate exchange rate movements. Put this in concrete terms. That $730 bln trade surplus China recorded this year through October is swamped by the Chinese yuan's $500 bln a day turnover. Moreover, Chinese exports are not the same as the demand for the yuan. This is because most of China's trade is not conducted in yuan. From a different but consistent perspective, Antonia Foglia (from Belgrave Capital and Banco del Ceresio) argued in the Financial Times recently that hedging the dollar exposure of the some $14 trillion of US bonds owned by foreign investors, is an important, even if overlooked, driver of the dollar's exchange rate. However, given this year's precipitous decline in US bonds, the dollar hedges need to be reduced, which entails buying the dollar and selling the local currency. He estimates that roughly half of the US Treasuries are in official hands and are not likely hedged, and he conservatively estimates that half are owned by the private sector and half again are hedged. The 20% decline in the value of Treasuries this year translates into around $700 bln of hedge-related dollar buying. We have made a parallel argument regarding the Japanese yen's so-called safe haven status. Observers have often seen that the yen strengthens risk-assets decline. However, it is difficult to know the difference between buying to go long and buying to cover a short. We argue that the yen has often been used as a funding currency. With near-zero interest rates, it is borrowed, and the proceeds are used to buy higher-yielding and/or more volatile assets. When that higher-yielding or volatile asset goes south, the funding currency is bought back, and the position is unwound. This gives the illusion of a safe haven when something entirely different is taking place. II Last week was a watershed. The softer-than-expected US CPI figures and the inversion of the 3-month-18-month bills, a part of the curve that Fed Chair Powell had drawn attention are part of the macro developments that helped mark the end of the dollar's historic rally. We thought it had already topped against sterling when the pound plummeted to record lows at the end of September, and our conviction was growing that the greenback had peaked against the Canadian dollar when CAD1.35 gave way. Position adjustment may trump fundamentals in the near term, but the dollar looks oversold for the first time in months.   While US producer prices may draw some attention, the focus in the week ahead will be on the real sector. Helped by stronger auto sales (14.9 mln, best since January and nearly 15% above Oct 2021), retail sales are expected to rise by around 1% after a flat report in September. The core measure, which excludes autos, gasoline, building materials, and food services, is rising by 0.3%. Retail sales pick up about 40% of consumption, which has been softening. It averaged 1.2% a month in Q1, 0.8% in Q2, and 0.3% in Q3. On the other hand, industrial production is expected to have slowed from 0.4% in September to 0.1% in October. Such a print would bring down the three-month moving average to about 0.14%, its lowest since last September. Yet, industrial capacity utilization remains at elevated levels. In September, it was slightly above the last cyclical high set in August 2018. Indeed, it has not been this high (80.34%) since the Great Financial Crisis, when it peaked a little above 81%. It is the interest-rate-sensitive housing market that the tightening of financial conditions is being felt most acutely. Housing starts look to break the sawtooth pattern of alternating between increases and decreases this year with back-to-back declines. On average, starts have fallen 1.9% a month on average this year through September. In the Jan-Sept period last year, housing starts fell by an average of 0.2%. As a result, existing home sales likely fell for the ninth consecutive month in October. It is the most prolonged slump since the Great Financial Crisis, though inventory levels were around four times higher back then. Limited inventory now compounds the problem of higher mortgage rates.  China reports October, industrial production, retail sales, investment, and surveyed jobless rate on November 14. The economy appears to be stabilizing at what is historically considered soft levels. The median forecast in Bloomberg's survey sees the world's second-largest economy expanding by 1.5% quarter-over-quarter in Q4. It is expected to begin a streak of quarterly increases of 1.0%-1.2%. The market is more interested in modifications of its Covid regime, especially given the flare-up of cases, but also additional efforts to support the economy. If the one-year Medium Term Lending Facility rate (2.75%) is not reduced and/or the volume is not increased (from CNY500 bln), speculation of a cut in reserve requirements will likely be heightened. The fact that the UK economy is set to contract for the next several quarters may remove some of the market sensitivity of the UK's high-frequency data. At the same time, it may heighten the focus on the inflation reports. The BOE expects CPI to peak shortly but is still committed to tightening financial conditions. The central bank meets in the middle of December. The swaps market has a 50 bp hike discounted and a little bit more, perhaps conditional on the fiscal statement due November 17. An austere budget of tax increases and spending cuts is likely, though, at this late date, there still seem to be several unresolved issues. The latest talk suggests that the tax rate of the top bracket may be increased or its threshold lowered. There has also been talk that the National Health Insurance tax on employers may be raised. An increase in the inheritance tax may be under consideration, as well. The eurozone's September trade deficit is a good reminder of the deterioration in its external balance this year. With Q3 GDP already released and set to be updated, the trade balance may be short of practical importance. The eurozone recorded a trade deficit of almost 229 bln euros through August. In the first eight months of 2021, the trade surplus was about 124 bln euros. With the largest economy in the eurozone, Germany, headed for recession, the ZEW survey may not be very interesting. The expectations component fell to its lowest level in August since the Great Financial Crisis, a ticked up slightly in October. The assessment of the current situation has continued to deteriorate. It has risen twice since September 2021. At -72.2 in October, it was the poorest assessment since August 2020. While existing home sales in the US through September have fallen by about 23% this year, existing home sales in Canada have slowed by more than 35%. They have slowed for seven consecutive months. Canadian housing starts have fared considerably better. They rose a modest 2.5% last year and are up by a quarter this year. Housing starts rose by the most this year in September, with a 10.8% surge. Typically, a pullback the following month is recorded after such a significant increase. Yet, the highlight of the week will be Canada's October CPI reading. The headline has slowed since peaking in June at 8.1%. It stood at 6.9% in September. It is likely to have decelerated again last month, helped by a favorable comparison to last October when Canada's CPI rose by 0.7%. Looking forward, the base effect is less friendly in November and December. The underlying core measures have been stickier. The Bank of Canada has three, averaging 5.3% in August and September, which is 0.2% off the peak seen in June and July. In the US, average hourly earnings slipped below 5% year-over-year for the first time since last December, and average pay (permanent workers) in Canada rose 5.5% in October. After the Bank of Canada hiked rates by half a point instead of 75 bp on October 26, the market immediately anticipated a 25 bp hike at the last meeting of the year (December 7). However, the strength of the employment report and wages prodded the market into thinking a 50 bp hike was more likely. A firm CPI report would likely push the market more in that direction. Australia reports its October employment figures. The job market down under was fairly steady until Q3. In Q4 21, and the first two quarters of this year, Australia grew full-time positions by 54.0k to almost 57k a quarter. In Q3, it lost full about 1k full-time jobs. This probably overstates the case and was largely the result of a sharp drop in July, the first loss of full-time positions since last October. Indeed, an average of 34k full-time people were hired in August and September. The Reserve Bank of Australia meets on December 6. The swaps market does not have a quarter-point hike fully discounted. Yet it sees the terminal cash target rate around 4% in a year compared with the 2.85% prevailing now.  Lastly, two international gatherings will attract attention in the coming days. The first is the Asia Pacific Economic Cooperation (APEC) which meets in Bali November 14-15. US President Biden will likely miss it due to a granddaughter's wedding, but the highlight may be a meeting between Japan's Prime Minister Kishida and China's Xi. They have not met since Kishida become prime minister. Former Prime Minister Abe visited Beijing in 2019, and there were plans for Xi to come to Japan in 2020 but were disrupted by Covid. Regional security is a crucial issue for Japan. Its own security is seen at risk if China were to move on Taiwan. Tokyo appears close to a defense agreement with the UK and possibly the Philippines. The G20 meets in Bangkok November 18-19. The host, Indonesia, is neutral and invited Russia's Putin and Ukraine's Zelenskyy. Recall that earlier this year, Biden called for Russia to be removed from the G20. Ukraine is not a member of the G20, and Zelenskyy said he would not attend if Putin did. The latest reports suggest Putin will not attend. Reports suggest Biden intends to meet with Xi at the G20 meeting. Taiwan and trade are obviously the two most salient issues. It would be the first face-to-face meeting since Biden was elected two years ago. Biden may hope to repeat Nixon's tactic of putting more space between Moscow and Beijing, and Putin's invasion of Ukraine has done Xi no favors. NATO is stronger, Europe is tied more tightly to the US via energy and defense,  and Japan and Australia, to name two, are even more wary of China's regional ambitions. Still, given what appears to be a bipartisan consensus in the US of the strategic challenge posed by Beijing, it is not clear what the US can offer China to induce a change in behavior.   The statement issued afterward will likely demonstrate the old adage that a camel is a horse made in committee. With several countries not wanting to take sides on key issues, judging from the voting patterns at the UN, the G20 may be downgraded by the US in favor of the G7 again.  Disclaimer Capital Flows Outstrip Trade Flows and that is Where to Look for Drivers of FX
Soft PMIs Are Further Signs Of A Weak UK Economy

October's Inflation Print May Be Market Moving

Kamila Szypuła Kamila Szypuła 13.11.2022 12:30
Every month a team of specialists in UK collects around 180,000 separate prices of over 700 items covering everything a typical family might buy, such as milk, bread and bananas. The results of analysis is published evry month as CPI report. The October reading report will be published on November 16. Previous data The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 8.8% in the 12 months to September 2022, up from 8.6% in August and returning to July’s recent high. The largest upward contributions to the annual CPIH inflation rate in September 2022 came from housing and household services (principally from electricity, gas and other fuels, and owner occupiers’ housing costs), food and non-alcoholic beverages, and transport (principally motor fuels). On a monthly basis, CPIH rose by 0.4% in September 2022, compared with a rise of 0.3% in September 2021. The Consumer Prices Index (CPI) rose by 10.1% in the 12 months to September 2022, up from 9.9% in August and returning to July’s recent high. Rising food prices made the largest upward contribution to the change in both the CPIH and CPI annual inflation rates between August and September 2022. Inflation Returning to double-digit inflation will be difficult for ministers and the Bank of England. It shows that price increases have not yet reached their peak, despite the energy price guarantee that will reduce gas and electricity bills this winter. September's inflation figures highlight the severity of the UK's inflation crisis and comes as the country is going through a period of economic instability. The central bank will assess rising price pressures against the government's recent changes to unfunded tax cuts, which could help ease inflation in the coming months. Double-digit inflation is expected to continue. And it will increase again to the level of 10.6%. The monthly change is also forecast to increase by 1.2%. Source: investing.com The Outlook Inflation has been on an upward trajectory, and since May this year the pace has accelerated to double digits. Gross domestic product fell 0.2% from the second quarter, a slightly better outcome than the 0.5% decline feared. Overall in the third quarter, service sector output was flat, driven by a fall in consumer-facing services. Retail sales volumes in particular fell 1.9% in the period. The negative data adds to the country’s dampened economic outlook and already depressed consumer sentiment. Some model predicts the UK to enter a recession as early as this year. This is largely due to surges in inflation as the cost of living crisis impacts all demographic groups. The central bank of England expects GDP to continue falling through 2023 and into the first half of 2024. Expectatiosn Here are few reasons why we expect inflation in the UK to fall sharply from the middle of next year. First, the price of energy won’t continue to rise so quickly. The Government has introduced a scheme that caps energy bills for households and businesses for six months. Second, Bank Of England don’t expect the price of imported goods to rise so fast. That’s because some of the production difficulties businesses have faced are starting to ease. Third, there can be less demand for goods and services in the UK. That should mean the price of many things will not rise as quickly as they have done. Source: https://www.ons.gov.uk/, investing.com
Easing In Chinese Covid Measures | Crypto Distress Continues | Markets Trade Joyfully

Easing In Chinese Covid Measures | Crypto Distress Continues | Markets Trade Joyfully

Swissquote Bank Swissquote Bank 14.11.2022 10:25
It has been an ugly weekend for cryptocurrencies, even though the selloff remained relatively contained in the sector giants like Bitcoin, compared to the size of the bad news that flew in last Friday. Market mood Market mood outside crypto is extremely joyful after last week’s inflation data surprised investors to the downside and China announced to relax Covid measures, and boost its shattered property sector. US And China Although the US inflation remains relatively high to contain a perhaps premature bull run on dovish Fed expectations, news from China could help keeping the mood nice and sweet. We will yet discover if the latest news will be enough to get international investors back on board of a Chinese dream that has been shot to the ground by the very Xi Jinping. Joe Biden and Xi Jinping  Joe Biden and Xi Jinping will talk today on the sidelines of the G20 summit in Bali. Talks could go either way; they could either boost, or hit risk appetite in Chinese, and global assets. China retailers & Nvidia earnings Other than that, investors will watch the Q3 earnings from Nvidia, and some US and Chinese retail giants throughout this week! Watch the full episode to find out more! 0:00 Intro 0:32 FTX goes bankrupt, crypto distress continues 4:40 Traditional markets trade joyfully post-US CPI… 6:49 And easing in Chinese Covid measures! 8:26 Investor attention shifts to US, China retailers & Nvidia earnings Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #FTX #bankruptcy #Bitcoin #Ethereum #Solana #crypto #selloff #USD #inflation #data #Fed #expectations #China #Covid #measures #market #rally #retailer #Walmart #Target #Alibaba #JD #earnings #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH      
The Fed Doesn’t Want To Be Responsible For A Needlessly Sharp Downturn

The Soft US Inflation Report Has Raised Expectations About Fed's Decision

Kenny Fisher Kenny Fisher 14.11.2022 12:33
After a huge rally last week, the Japanese yen has reversed directions today. USD/JPY is trading at 140.21, up 0.99%. On the economic calendar, Japan releases GDP for the third quarter. There are no economic events in the US today. A week to remember The US dollar dropped like a stone last week, courtesy of a soft inflation report that saw both the headline and core readings fall in October. Both readings were lower than expected, and investors pounced on the news, as stock markets soared and the US dollar took a tumble. The yen made the most of the dollar’s misery, as USD/JPY slumped by a massive 5.3% last week and dropped to a 10-week low. The market reaction to the inflation data looks a bit extreme, and this explains the dollar’s comeback today. The soft inflation report has raised expectations that the Fed will put the brakes on its tightening, after pushing full speed ahead with four straight jumbo hikes of 0.75%. Fed policy makers aren’t bandying around the magical word “peak” to describe inflation just yet, but we are now seeing a change in terminology, such as “gradual” and “measured”. What is interesting is that the markets have gone giddy over a drop in inflation but appear to be ignoring the Fed’s warning that rates could end up higher for longer than expected. I don’t detect any signs of the Fed going dovish, but the markets are expecting a pivot, as there is already talk in the markets of the Fed cutting rates in H2 of 2023. The dollar is dusting itself off after last week’s disaster, and the yen may have trouble holding onto last week’s impressive gains. The Fed will almost certainly raise rates in December by at least 0.50%, and with the Bank of Japan maintaining a cap on JGB yields, the US/Japan rate differential will continue to widen. That spells trouble for the yen, which has lost about 20% against the dollar this year.   USD/JPY Technical USD/JPY is testing resistance at 139.91 and 141.61 There is support at 137.34 and 135.90 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Warren Buffett Is Not The Biggest Fan Of Diversification

Warren Buffett's Investing Tips | New Clear Regulations For Crypto Market

Kamila Szypuła Kamila Szypuła 14.11.2022 12:12
Inflation, and thus economic growth, remains an unchanging topic. Thus, market reactions are monitored even more closely. With UBS Investor Sentiment you can find out about the situation from the perspective of investors. In addition, the cryptocurrency market is also becoming an important topic recently. The CEO of Binance’s call at the G20 meeting is a perfect example of this. In this article: Global growth Regulations in cryptocurrencies Warren Buffett's tips U.S. House Speaker statement Concern among investors Global economic is not doing well IMF tweets about slowdown in global growth, to helps to illustrate the situation, chart is added. High-frequency economic indicators show that the slowdown in global growth is increasingly evident. See our latest Chart of the Week blog for a snapshot of the data and factors at play. https://t.co/YGDi9m8MFB pic.twitter.com/F79l7zYq0M — IMF (@IMFNews) November 14, 2022 This year shows what difficulties the economy is facing. Global economic growth prospects are confronting a unique mix of headwinds, including from Russia’s invasion of Ukraine, interest rate increases to contain inflation, and lingering pandemic effects such as China’s lockdowns. Every economy tries its best to avoid a crisis, but the faces of a recession are more likely. In particular, if the world's major economies are struggling, smaller economies may feel the effects even more. They will be aware of the possibility of an even more difficult situation, you can start adventures, e.g. reduce expenses. Binance's chief executive called for new clear regulations Reuters Business in post addresses the topic of cryptocurrencies and highlights the call of Binance's chief executive Changpeng Zhao. Dominant cryptocurrency exchange Binance's chief executive Changpeng Zhao called for new but stable and clear regulations for the industry, in light of recent developments and participants ‘cutting corners’ https://t.co/2DVdiDFzmK — Reuters Business (@ReutersBiz) November 14, 2022 The cryptocurrency market is still young. Its unfolding is taking place before our eyes. Despite the great interest among investors and other market participants, there are uncertainties that must be regulated. Each state strives to meet the expectations of citizens and enable them to use new forms. Cryptocurrencies are still not limited by strict legal regulations, but as the current situation on this market shows, they may be more needed than previously thought. The CEO of Binance himself urges to define such regulations. His statements may initiate actions in this direction. How to achieve a investing success Morningstar, Inc. tweets about Warren Buffett's tips for investing success. Warren Buffett has a simple recipe for investing success. Here's what it boils down to. https://t.co/DTUm8j3BLD — Morningstar, Inc. (@MorningstarInc) November 14, 2022 Warren Buffett is undoubtedly one of the most respected investors of all time. Not only novice investors draw from his tips. His advice, or at least getting acquainted with it, becomes crucial in this market. Provided in a simple and accessible and understandable for everyone. Of course, what's simple in theory can be less so in execution. U.S. House Speaker wnats to current U.S President stay *Walter Bloomberg in his post U.S. House Speaker Nancy Pelosi quotes. U.S. HOUSE SPEAKER PELOSI: BIDEN SHOULD SEEK RE-ELECTION -ABC NEWS INTERVIEWU.S. HOUSE SPEAKER PELOSI: I DON'T HAVE ANY PLANS TO STEP AWAY FROM CONGRESS -ABC NEWS — *Walter Bloomberg (@DeItaone) November 13, 2022 From the statements we can learn about the opinion of an American politician. Her job is to see the current president running for re-election. Elections in the states will certainly attract attention, and the possible re-election of Joe Biden becomes more likely. The support he received in the speech may work to his advantage. Of course, there may be conflicting moods. There may be voices that someone so old wants an older person to seek reelection and that is time for over 75 years olds to retire and let a younger group of leaders take over. Impact of the economic situation on US investors UBS tweet about investors moods. Nearly two-thirds of US investors are highly concerned about politics and inflation. In fact, half of investors have already cut spending due to inflation. So which party do most investors favor on the economy? Check out the latest #UBSInvestorSentiment. #shareUBS pic.twitter.com/iLr4SY5tw1 — UBS (@UBS) November 13, 2022 The economic situation has a negative impact on investors. Everyone is trying to cut losses. And the economic picture is not satisfactory, so the spending cuts are not unexpected. Find out more about current investor sentiment at UBS Investor Sentiment.
Two Small Caps Listed On Euronext Paris Have Faced Severe Financial Difficulties, The Q4 GDP Will Be Released In The US Today

The ECB Should Consider The Interests Of All EU Members

InstaForex Analysis InstaForex Analysis 15.11.2022 08:00
The EUR/USD currency pair moved very calmly on Monday. We admit that we expected a noticeable correction on the first trading day of the week and throughout the week, but so far, our calculations have yet to be justified. So far, there is a clear upward trend for the euro/dollar pair, and, from a technical point of view, everything now speaks in favor of further growth of the euro currency. Recall that on the 24-hour TF, the price managed to overcome all the important lines of the Ichimoku indicator, so finally, we can witness a reversal of the long-term downward trend. At the same time, the "foundation" and geopolitics can break the entire "raspberry" of the European currency at any moment. After all, it is not the euro that is growing but the dollar that is falling. Let's read more: the dollar has been growing for almost two years, and traders have been busy buying American currency. And now they are reducing purchases, reducing the demand for the dollar, so the pair is growing, but this does not mean that the demand for the euro currency is growing. COT reports If we talk about the demand for a particular currency, it is best to turn to COT reports. However, they do not give a clear answer to what is happening in the minds of traders and investors. The net position on the euro among professional traders has long been "bullish," and the euro currency began to grow only in the last couple of weeks. Moreover, according to the logic of things, this "bullish" position should increase for the European currency to continue growing. Or it should decline against the US dollar. As we can see, there are certain reasons for the pair's growth in the future, but they still need to look more convincing as the factors for the growth of the US dollar at the beginning or middle of this year. We rely on technical analysis when we make forecasts and recommendations, so now we need to look more toward purchases. But at the same time, we must keep in mind that the current growth of the euro is quite doubtful from a fundamental background point of view. The EU inflation report will be quite formal. Industrial production The current week began with the publication of a report on industrial production in the EU. It turned out to be slightly better than predicted, which could support the euro on Monday. However, this is different from the scale of inflation or central bank meetings, so count on a long and strong market reaction. Let's go through the other events of the week in Europe. GDP The second estimate of the GDP report for the third quarter will be published today. The market is waiting for a slowdown in the growth rate of the European economy to 0.2% q/q. Still, in principle, all indicator estimates do not have much significance for the market. Some reactions may follow this report, but it is too "stretched" in time to "see" a reaction to it. Recall that three estimates are always published for GDP, which rarely differs much from each other. And in any case, the market is more interested in the ECB's monetary policy, which directly impacts GDP. The speech of ECB President  Thus, a much more important event will be the speech of ECB President Christine Lagarde on Wednesday. The ECB seems to have decided to raise the rate "to the bitter end" or at least "significantly" to lower inflation in the Eurozone as much as possible. This is good news for the euro, but the market needs to understand to what level the regulator will be ready to raise the key rate. We have already said earlier that not all member countries of the alliance can bear the high cost of borrowing relatively smoothly for their economies. The ECB should consider the interests of all EU members, so the rate will not rise to 5%, as, for example, in the USA. EUR/USD Christine Lagarde can refute this assumption or confirm it. She may want to do this, but her comments may dissuade traders from continuing to buy the euro currency (if they even have a place to be). So far, the euro is growing more on the fact that the Fed will stop raising its rate in a few months, and since traders had plenty of time to work out all the tightening of monetary policy, now the actions of the ECB, which is behind schedule from the Fed, are more important. The average volatility of the euro/dollar currency pair over the last five trading days as of November 15 is 168 points and is characterized as "high." Thus, we expect the pair to move between 1.0177 and 1.0513 on Tuesday. The reversal of the Heiken Ashi indicator downwards signals a new round of downward correction. Nearest support levels: S1 – 1.0254 S2 – 1.0132 S3 – 1.0010 Nearest resistance levels: R1 – 1.0376 R2 – 1.0498 R3 – 1.0620 Trading Recommendations: The EUR/USD pair continues to move north. Thus, we should stay in long positions with targets of 1.0498 and 1.0513 until the Heiken Ashi indicator turns down. Sales will become relevant again by fixing the price below the moving average line with targets of 1.0010 and 0.9888. Explanations of the illustrations: Linear regression channels – help to determine the current trend. The trend is strong if both are directed in the same direction. The moving average line (settings 20.0, smoothed) – determines the short-term trend and the direction in which trading should be conducted now. Murray levels are target levels for movements and corrections. Volatility levels (red lines) are the likely price channel in which the pair will spend the next day, based on current volatility indicators. The CCI indicator – its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.       Relevance up to 01:00 2022-11-16 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade Read more: https://www.instaforex.eu/forex_analysis/327095
The Bank Of England Is Likely To See One Or Two More Rate Hikes In The First Half Of The Year

The Value Of The Cable Makret (GBP/USD Pair) Is Very High

InstaForex Analysis InstaForex Analysis 15.11.2022 08:03
The GBP/USD currency pair also showed no desire to move volatile on Monday. The price continues to be above the moving average line, and at least one linear regression channel is already directed upwards. As in the case of the euro currency, the pound overcame the important lines of the Ichimoku indicator on the 24-hour TF, so it has technical grounds for continuing growth in the medium term. However, there are a lot of questions about the "foundation" and geopolitics. What will happen if the conflict in Ukraine escalates with renewed vigor? What will happen if the Bank of England stops raising the rate in the near future? Recall that the military conflict between Ukraine and Russia has not been completed or frozen, and peace talks are not even "smelling" now. The APU is gradually moving forward, but this hardly means that the Russian army will turn back, which would end the conflict. New rocket attacks on Ukrainian cities are not excluded, the use of new weapons is not excluded, and the intervention of third countries directly into the conflict is not excluded. I don't even want to talk about sanctions because the parties have already introduced almost everything that could have been introduced. We can assume that the worst is over, but the probability of this is not 100%.  Bank of England The same is true with the Bank of England and its monetary policy. The British regulator has already raised the rate eight times in a row, and inflation has been growing and continues to grow. The key rate at the moment is already 3%; this is the value at which it is possible to expect at least a slight slowdown in price growth. However, this week, the next inflation report will be published and judging by the forecasts, there is no point in expecting something good from it. Currently, inflation in the UK is 10.1%, and forecasts for October indicate a new increase to 10.7–11.0%. Consequently, the Bank of England can be expected to tighten monetary policy by another 0.75% in December, but to what extent can it raise the rate? After all, its economy is also going through hard times. The British government So far, it is unclear how the British government will close the "hole" in the budget by 50 billion pounds. The corresponding financial plan from Jeremy Hunt and Rishi Sunak will be presented only on November 17. Most likely, taxes will be raised, which may cause serious discontent among the British population and significantly lower the ratings of the Conservative Party. Therefore, the BA does not have the opportunity, like the Fed, to raise the rate as much as it wants. British inflation British inflation is the most important report of the week. Unemployment rate In the UK, the unemployment rate, changes in average wages, and retail sales will also be published this week. Of course, these reports do not match the inflation report, so we associate the main market reaction with this report. A new increase in the consumer price index can support the pound, as it will likely mean a new increase in the BA rate in December by another 0.75%. But this is just a theory and an assumption, and the market can react as you like. And also, no one can know if this report has not already been worked out because it is very easy and simple to expect a new acceleration of inflation in Britain now. UK Data In the US, retail sales, industrial production, and data on applications for unemployment benefits will be released this week. Also, quite secondary are the reports. With such a macroeconomic background, it will be difficult for the pair to continue growing, which now largely depends on traders' expectations for the Fed and BA rates. We expect a tangible correction after the "take-off" last week. The pound has recovered from its absolute lows by 1400 points and is regularly adjusted downwards. Therefore, this week is a good time for a rollback. As for the longer-term prospects, the pound may continue to grow, but we do not expect a rapid recovery after losses over the past year and a half. Most likely, periods of growth and rather deep corrections will alternate. The pound still needs to look like a stable and safe currency. GBP/USD The average volatility of the GBP/USD pair over the last five trading days is 222 points. For the pound/dollar pair, this value is "very high." On Tuesday, November 15, thus, we expect movement inside the channel, limited by the levels of 1.1516 and 1.1954. The upward reversal of the Heiken Ashi indicator signals the resumption of the upward movement. Nearest support levels: S1 – 1.1719 S2 – 1.1597 S3 – 1.1475 Nearest resistance levels: R1 – 1.1841 R2 – 1.1963 Trading Recommendations: The GBP/USD pair has started a minimal correction in the 4-hour timeframe. Therefore, at the moment, buy orders with targets of 1.1841 and 1.1960 should be considered in the case of a reversal of the Heiken Ashi indicator upwards. Open sell orders should be fixed below the moving average with targets of 1.1475 and 1.1353. Explanations of the illustrations: Linear regression channels – help to determine the current trend. The trend is strong if both are directed in the same direction. The moving average line (settings 20.0, smoothed) – determines the short-term trend and the direction in which trading should be conducted now. Murray levels are target levels for movements and corrections. Volatility levels (red lines) are the likely price channel in which the pair will spend the next day, based on current volatility indicators. The CCI indicator – its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.       Relevance up to 01:00 2022-11-16 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/327097
Czech Republic: Year-On-Year Inflation Would Have Reached A Record High Of 19.8%

China Could Be The Next Hit To Global Inflation | Donald Trump's Announcement

Swissquote Bank Swissquote Bank 15.11.2022 09:52
Equities saw some profit taking in last week’s post-US inflation rally, as some Federal Reserve (Fed) officials reminded investors that the 7.7% inflation is still high and that the Fed would continue fighting to bring it lower. G20 In geopolitics, yesterday’s meeting between Jow Biden and Xi Jinping went well. US-listed Chinese stocks extended gains. Crude Oil In energy, American crude dived on the news that OPEC cut its oil demand outlook and warned of uncertainties around global growth. Earnings In earnings, big US retailers Walmart and Home Depot are due to release earnings today Donald Trump And in fun news, Donald Trump will make an important announcement! Whoo! Watch the full episode to find out more! 0:00 Intro 0:41 Fed members warn of premature optimism 2:54 US inflation expectations go up 4:31 China could be the next hit to global inflation 5:05 Crude oil down on OPEC demand outlook cut 6:20 Biden, Xi meeting went well! 7.49 Crypto selloff cools 8:53 What to watch today? Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #US #inflation #expectations #G20 #Biden #Xi #meeting #US #China #crude #oil #FTX #bankruptcy #Bitcoin #Ethereum #selloff #Binance #recovery #funds #Walmart #HomeDepot #earnings #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
BoJ Core CPI Has Now Accelerated And Challenging The Bank Of Japan’s Stance

The Results Of Japanese GDP Is Negative | US PPI Ahead

Kamila Szypuła Kamila Szypuła 15.11.2022 11:10
It is busy day. Reports will be from many economies CPI from European countries and PPI from America. And also Asian countries shared their GDP and Industrial Production reports. Japan GDP Events on the global market started with the publication of GDP in Japan. The results turned out to be negative. GDP fell from 1.1% to -0.3% quarter on quarter, while GDP y/y fell even more sharply, from 4.6% to -1.2%. Both results were below zero, which proves that the recession is starting in this country. RBA Meeting Minutes From Australia came a summary of the economic situation, i.e. Minutes of the Monetary Policy Meeting of the Reserve Bank Board. Members commenced their discussion of international economic developments by observing that inflation abroad. Members also noted that Australian financial markets had followed global trends. Such a summary can help to assess the condition of the country and its sub-sectors and determine next steps. Industrial Production in China and Japan China and Japan have published reports on their Industrial Production. Comparing October this year to October last year, a decrease was recorded in China. The current Industrial Production level was 5.0%, down 1.3% from the previous reading. In Japan there was also a decline, but in Industrial Production M/M. The indicator fell from 3.4% to -1.7%. Which means that the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities has dropped drastically. This is a consequence of high inflation and, as far as China is concerned, the fight against the Covid pandemic. UK data The UK released the reports at 9am CET. Two of them were positive. Only the unemployment rate turned out to be negative as it increased slightly from 3.5% to 3.6%. The change in the number of unemployed people in the U.K. during the reported month fell. U.K. Claimant Count Change dropped from 3.9K to 3.3K. This may turn out to be a slight decrease, but in the face of the forecasts of 17.3K, it turns out to be very optimistic. Average Earnings Index +Bonus, although it fell from 6.1% to 6.0%, is a positive reading as it was expected to fall to 5.9%. Which may mean that despite the forecasts, the decline is milder and personal income growth during the given month was only slightly lower, which is good news for households. CPI Two Western European countries, France and Spain, published data on CPI. In France, CPI y/y increased from 5.0% to 6.2%. The opposite was the case in Spain where consumer inflation fell from 8.9% to 7.3%, moreover meeting expectations. Despite high inflation, which is still higher than the expected level of 2%, these European countries, can be said, are doing well and their economies are not facing recession. Speeches Today's attention-grabbing speeches will be from the German Bundesbank. The first one took place at 10:00 CET, and the speaker was Dr. Sabine Mauderer. The next speeches will take place in the second half of the day at 16:00 CET. The speakers will be: German Bundesbank Vice President Buch and Burkhard Balz ZEW Economic Sentiment Economic sentiment in Germany rose once again. Currently, they have risen to the level of -36.7. Previously, they rose from -61.0 to 59.2. Although ZEW have increased but are still below zero, which means that the general mood is pessimistic US PPI The most important event of the day is the result of inflation from the producer side in the US, i.e. U.S. Producer Price Index (PPI). The previous level of 0.4% is expected to hold. This may mean that from the producers' point of view, the situation in price changes tends to stabilise, which may have a positive impact on the dollar as well as on the US economy in general. Canadian data Canada will release its Manufacturing Sales and Wholesale Sales reports at 15:30 CET. Both are expected to be below zero. Manufacturing Sales is projected to increase from -2.0% to -0.5%. This means that progress in this sector is expected. The wholesale sales level is forecasted at -0.2% vs. the previous 1.4%. Summary 1:50 CET Japan GDP (Q3) 2:30 CET RBA Meeting Minutes 4:00 CET China Industrial Production (YoY) 6:30 CET Japan Industrial Production (MoM) (Sep) 9:00 CET UK Average Earnings Index +Bonus (Sep) 9:00 CET UK Claimant Count Change (Oct) 9:00 CET UK Unemployment Rate (Sep) 9:45 CET French CPI 10:00 CET German Buba Mauderer Speaks 10:00 CET Spanish CPI 12:00 CET German ZEW Economic Sentiment (Nov) 12:00 CET EU ZEW Economic Sentiment (Nov) 15:30 CET US PPI (MoM) (Oct) 15:30 CET Canada Manufacturing Sales (MoM) (Sep) 16:00 CET German Buba Balz Speaks 16:00 CET German Buba Vice President Buch Speaks Source: https://www.investing.com/economic-calendar/
Poland: Rapidly Rising Core Inflation Confirms That The Impulse From Energy Shock Is Strong

Poland: Rapidly Rising Core Inflation Confirms That The Impulse From Energy Shock Is Strong

ING Economics ING Economics 15.11.2022 14:29
The StatOffice confirmed its estimate of October CPI at 17.9% year-on-year. We estimate that core inflation rose to 11.2% from 10.7% YoY in September. Our concerns about high core inflation are shared by economists at the National Bank of Poland. Despite this, the MPC has decided to essentially end the rate hike cycle We already knew from the flash CPI estimate that the significant increase in food and fuel prices was mainly responsible for the increase in inflation last month relative to September. On the other hand, there was slightly less pressure from energy carriers, as prices grew at a slightly slower rate (1.9% month-on-month) than in August and September, mainly due to the deceleration of coal price increases. This does not change the fact that energy carriers are now more than 40% more expensive than a year ago, despite the Anti-Inflation Shield (VAT and excise tax cuts) covering electricity, gas, thermal energy prices, and the freeze on regulated prices through 2022. CPI increase in October vs. September mainly stemmed from upswing in food prices % YoY, percentage points.   Source: GUS, ING.   We are now seeing the effects of the energy shock (more expensive fuel and energy carriers), but the most worrying phenomenon is the propagation of this shock in the economy and the increasing spillover of price increases due to secondary effects. Rapidly rising core inflation confirms that the impulse from this side is strong, and its impact on prices may be long-lasting. Based on the CPI structure data in October, we estimate that core inflation rose by about 1.1% MoM to 11.2% from 10.7% YoY in September.   Our concerns about the high core inflation and the spillover of price increases across the economy are shared by economists at the central bank. In its November projection, the National Bank of Poland said that high inflation expectations of companies and households translate into increased acceptance of price increases in many sectors of the economy, increasing its persistence. At the same time, the minutes of the October meeting noted that in light of the inflation expectations of companies, households, and professional forecasters, the level of real interest rates remains negative. Despite this, the MPC has decided to essentially end the cycle of interest rate hikes and has adopted a wait-and-see attitude. Policymakers prefer a gradual and slow decline in CPI to the target. In our view, such solutions mean that ultimately, the cost of fighting inflation will be higher. Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Soft PMIs Are Further Signs Of A Weak UK Economy

The Bank Of England Is Undoubtedly Worried About Inflation

ING Economics ING Economics 16.11.2022 13:10
With the government fixing energy prices until at least April, it looks like October's 11.1% inflation rate could mark the peak. But it's unlikely to fall below double-digits until early next year, and the Bank of England is undoubtedly worried about inflation linked to the tight jobs market. Still, a pivot back to a 50bp hike in December looks likely The latest rise in household energy costs was enough to take UK inflation up to 11.1% in October. That’s a bit higher than was expected, and seems to be partly explained by another punchy 2% month-on-month increase in food prices, and a little bit of upside at the core level. All of this is marginally hawkish for the Bank of England in that its closely watched measure of ‘core services’ inflation, which excludes some volatile components and the impact of VAT changes, came in a few percentage points higher than they’d pencilled in. By our calculation, that sits slightly above 6% YoY, compared to a forecast of 5.7% by the BoE a couple of weeks ago.   As we noted yesterday, worker shortages are proving to be a persistent issue for firms, and that potentially points to stickier inflation rates for service-sector firms where pay is a key pricing input. Still, with hiring demand falling, we suspect we’re near the peak for wage growth. In fact – famous last words – it looks like UK headline inflation is at its peak too, or there or thereabouts. The fact that the government is effectively fixing electricity/gas unit prices below wholesale costs until next April means this is probably as high as it will get, though admittedly we expect headline rates to stay in double-digits until at least February next year. From there, we think there are compelling reasons to expect headline inflation to drift lower through the year, ending up closer to the Bank of England’s 2% target by early 2024. That’s especially true of goods categories, where lower input/shipping prices, stalling consumer demand and rising inventory levels not only point to lower inflation rates, but potentially also outright price falls in certain areas as retailers are forced to become more aggressive with discounting. The story, as we discussed earlier, is less clear-cut for services inflation. UK inflation in 2023 will depend a lot on how energy support evolves after April   Source: Macrobond, ING   The 2023 inflation outlook will also heavily depend on how the government adapts energy support next year. We’re still awaiting detail, but one possibility is that the majority of households switch back to paying the Ofgem regulated price from April. Based on our latest estimates using wholesale energy costs, the average household would pay £3300 in fiscal-year 2023 without any government support, compared to £2500 if prices remain capped. That would initially bump up inflation rates after April by roughly 2pp. While it’s tempting to say that higher headline inflation rates in that scenario would be hawkish for the Bank of England, in practice the opposite is probably true. Reduced energy support would amplify the UK recession that most, including ourselves, now expect. That would imply lower core inflation further down the line. With signs that inflation – both in core and headline terms – is close to or at a peak, and signs of recession mounting, we think the Bank of England is likely to pivot back to hiking in 50bp increments in December. Assuming another 25-50bp hike in February, we think the peak for Bank Rate is likely to be around 4%, a little below what markets are now pricing.   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The ECB Has A Clear Tightening Bias And Is Chasing Inflation

European CPI Reached 10.6% | UK Budget Ahead

Kamila Szypuła Kamila Szypuła 17.11.2022 11:54
At the beginning of the day positive data came from Australia. GBP traders eyes will be on the UK budget release. Behind the assessment, there will also be important reports and speeches that may affect the situation on the currency market. Australian Labour Market In October, there was an improvement in the employment sector. The number of people employed increased from a negative level (-3.8K) to 32.2K. The unemployment rate also turned out to be positive. The reading was lower than expected and will reach 3.4% against the previous 3.5%. Strong employment data may help the Australian currency (AUD) and also influence the RBA's future monetary policy decisions. EU CPI Inflation in Eurozone turned out to be slightly lower than expected. The current reading showed that inflation rose from 9.9% to 10.6%. It was expected to reach 10.7%. Core inflation reached the expected level of 5.0%. Read more: Forecast For The Eurozone Are Not Optimistic, Inflation Can Reach A Record High| FXMAG.COM Autumn UK Forecast Statement Chancellor Jeremy Hunt will deliver the statement to MPs. The government is set to announce tens of billions of pounds worth of spending cuts and tax rises. It is expected about 55% of the measures will be spending cuts, but confirmation of this will appear at 14:30 CET. The Autumn Statement will affect the take-home pay and household budgets of millions of people, as well as money for key public services. Some of the Autumn Statement will affect the whole of the UK. However, the governments of Scotland, Wales and Northern Ireland also make some tax and spending decisions independently. UK Speeches In connection with the publication of budget data, speeches from the UK are also expected. The first speech will take place at 14:30 CET with MPC Member Huw Pill as the speaker. The next speaker will be Silvana Tenreyro, his speech is scheduled for 16:30 CET. US Building Permits Building permits are a key indicator of demand in the housing market. The change in the number of new construction permits issued by the government last time increased to 1,564M. It is expected that there will be no further increase and the number of permits will fall to the level of 1,512M. Observing the data from the beginning of the year, we see that the downward trend continues, and the few rebounds from the trend suggest better temporary periods. Source: investing.com Initial Jobless Claims The weekly report on he number of individuals who filed for unemployment insurance for the first time during the past week will appear today. Previously, this number increased significantly from 218K to 225K. The figure from the previous reading is expected to hold. Philadelphia Fed Manufacturing Index The Philadelphia Federal Reserve Manufacturing Index rates the relative level of general business conditions in Philadelphia. We have been seeing negative results since May. And the last two readings were below zero, and it is expected that this time the level will be below zero, but will increase slightly. Forecasts show that the indicator may increase from -8.7 to -6.2. This may mean that a bad situation may slowly improve. Source: investing.com FOMC speeches Fed officials will also speak today. The first speeches will take place at 15:00 CET. The Federal Reserve Bank of St. Louis President and Federal Open Market Committee (FOMC) voting member James Bullard. At 16:15 CET, Michelle W. Bowman, member of the Board of Governors of the Federal Reserve System, will speak. U.S. Federal Open Market Committee (FOMC) Member Mester also speaks at 16:40 CET. Summary: 2:30 CET Employment Change 2:30 CET Unemployment Rate (Oct) 12:00 CET EU CPI (YoY) (Oct) 14:30 CET Autumn UK Forecast Statement 14:30 CET BoE MPC Member Pill Speaks 15:00 CET FOMC Member Bullard Speaks 15:30 CET US Building Permits (Oct) 15:30 CET Initial Jobless Claims 15:30 CET Philadelphia Fed Manufacturing Index (Nov) 16:15 CET FOMC Member Bowman Speaks 16:30 CET MPC Member Tenreyro Speaks 16:40 CET FOMC Member Mester Speaks Source: https://www.investing.com/economic-calendar/
The Witcher 3: Wild Hunt - Complete Edition for Next-Gen Consoles Coming to Retail in January!

Major Layoff Announcements From The Tech Sector, From The Real Estate

Saxo Bank Saxo Bank 18.11.2022 08:56
Summary:  Our ‘Macro Chartmania’ series collects Macrobond data and focuses on a single chart chosen for its relevance. This week, we focus on the U.S. Employment Cost Index. It shows that inflationary pressures are finally fading on Main Street but not good for reasons. Click to download this week's full edition of Macro Chartmania. The market narrative machine is fascinating. In 2022, the bear market narrative was « inflation shock, rates shock and recession shock ». For 2023, the market narrative is rather bullish. Analysts expect that inflation will move lower but will remain sticky, that a mild recession will affect most of the developed economies and that central banks will hike a little further (probably until the start of the second quarter) before pausing for the rest of the year. It is certainly too early to know the steepness of the recession and whether the United States will manage to avoid it. This is an ongoing debate among economists. But there are early signs inflation is finally receding, at least in the United States. This is not the case in the United Kingdom where the October CPI reached 11.1% year-over-year, for instance. In the United States, higher wages reflecting Covid unbalances, worker shortage and tight labor market partially explained the increase in prices. This is now reversing. In just the last several weeks, we have seen major layoff announcements from the tech sector (Meta, Stripe, Paypal, Microsoft, Amazon etc.). But this is not just a technology story. We have seen layoffs in other sectors of the economy, from the real estate promoter Redfin and the trucking giant C.H. Robinson among many others. To understand why layoffs are starting now, we need to first understand the sequence of the economy. Employment is a well-known lagging indicator. In the past, it has already happened that job losses started only with a lag of several months after the economy entered into a recession (job losses started 8 months after the official start of the 1974 recession, for instance). But some sectors of the economy are more sensitive than others to higher interest rates, which can help predict whether or not we will face massive layoffs. This is the case of the housing market especially (we used to say that the housing market is the business cycle in the United States). With the cooling of the housing market which started in early 2022, the consumption of things associated with home buying are also going down - with a lag. Think home appliances, home-building tools etc. The housing slowdown is spreading into the rest of the economy. This puts pressure on big durable goods and thus on the industry that moves these goods around the world. This explains why C.H. Robinson fired 650 employees one week ago. This is only the beginning, in our view. Mass layoff to come means that the drop in wage increases, which has just started, will continue in the coming months. In the below chart, we have plotted the National Federation of Independent Business (NFIB) compensation plans and the Employment Cost Index. Only a net 23 % of small businesses plan to raise compensation in the next three months. This is much lower than a few months ago (when it was at a cycle peak of 32 %). Compensation practices of small businesses tend to lead to broader wage and salary growth. Therefore, we can expect that the Employment Cost Index, which has started to decelerate recently, will continue moving downwards, likely well below 4% going into 2023. This could ultimately ease inflationary pressures and open the door to a slower pace of Fed rate hikes. This echoes comments from Fed Vice Chair Lael Brainard earlier this week : “It will probably be appropriate soon to move to a slower pace of increases.” Source: https://www.home.saxo/content/articles/macro/chart-of-the-week--us--employment-cost-index-18112022
Bestway Might Have Larger Designs On The UK's Second Biggest Supermarket

UK Yields Rose Yesterday | The Chinese Electric Vehicle Market Showing Strong Growth

Saxo Bank Saxo Bank 18.11.2022 09:01
Summary:  Market sentiment managed to bounce mid-session yesterday in the US and was steady overnight, with the USD back lower but still very range bound and US treasury yields rising off their lows, with a new extreme for the cycle in the yield-curve inversion, suggesting the market remains worried that the Fed’s tightening will lead to recession. The market shrugged off yesterday’s budget statement from UK Chancellor Jeremy Hunt as most of the measures were flagged ahead of his speech.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures extended their declines yesterday to the 100-day moving average at around the 3,916 level driven by comments from Fed’s Bullard saying the sufficiently restrictive zone on policy rate was in the range 5-7% spooking markets. It is obvious, that the Fed is out trying to dampen expectations following the rally on the lower than estimated US October inflation print. S&P 500 futures are bounced back after the initial shock but closing lower for the session and this morning they are trading around the 3,950 level. Hong Kong’s Hang Seng (HSIX2) and China’s CSI300 (03188:xhkg) Hang Seng Index snapped a two-day decline and bounced about 0.3% as of writing. China interest stocks led the charge higher following Alibaba reporting earnings beating expectations and adding to its share repurchase programme. The Chinese authorities’ grant of a new round of 70 online game licences to firms including Tencent and NetEase also help the market sentiment. Hang Sent Tech Index climbed 2%. In mainland bourses, healthcare shares gained as new Covid cases surged to above 25,000, a new high since April. Online gaming stocks rose on the new game license approval. Financials however continued to trade weak as investors are troubled by recent incidents of retail investment products losing heavily as bond yields rising in China. CSI 300 gained 0.2%. FX: USD rally eases on risk sentiment bounce of the lows yesterday The US dollar eased lower after a bout of weak risk sentiment was turned mid-session yesterday in New York and despite US treasury yields lifting all along the curve (with a new multi-decade low in the yield curve inversion suggesting the market remains concerned that the Fed’s tightening regime will lead to a recession. After the very sharp move lower off the back of the October CPI data, the USD has traded in a rather tight range in most places, with EURUSD bottled up near the 200-day moving average (currently 1.0414) and GBPUSD still hugging the 1.1900 area after the market shrugged off the autumn budget statement yesterday. Next week has the Thanksgiving holiday in the US, which usually sees light trading from Wednesday through Friday and the first key data is not up until the week after, so upcoming catalysts are not readily evident. Crude oil (CLZ2 & LCOF3) Crude dropped sharply yesterday to multi-week lows, trading as low as 89.53 in January Brent and 81.40 in December WTI. Concerns of weakening demand in China are purportedly behind some of the weakness yesterday, but with a new extreme in the yield curve inversion yesterday, rising market anticipation of an incoming recession is likely weighing on sentiment in oil. For the December WTI contract, the 81.30 level is the last significant pivot low ahead of the 75.70 September low for that contract. For January Brent, the  87.52 level is the last pivot low ahead of the 80.94 September low for that contract. Gold (XAUUSD) Pushed a bit lower yesterday on the rise in US treasury yields, trading above 1,760 this morning after the 1,786 high earlier this week. The 200-day moving average is near the important 1,800+ area. An extension of the recent rally likely requires further declines in yields and the US dollar or some other catalyst that sees a run to safety. US treasuries (TLT, IEF) US yields surged across the entire yield curve with yields rising the most in the front end. The 2-year yield jumped 10bps to 4.45% and the 10-year climbed 8bps to 4.77%. The 2-10 year spread inverted further hitting a new low of minus 71bps. Selling concentrated on the front end as St. Louis Fed President James Bullard referred to the “sufficiently restrictive level” being “5% to 5.25%” and “that’s a minimum”. In addition, Bullard showed a chart that suggested a range of terminal rates from 5% to 7%. Meanwhile, Minneapolis Fed President Kashkari said the Fed is “not there yet” to pause and it is an open question of how far the Fed needs to go. What is going on? Japan’s CPI increased more than expected in October Japan released its national CPI data which came in hotter than expected. Headline CPI grew 3.7% Y/Y (consensus: 3.6%, Sep: 3.0%). CPI excluding Fresh Food was 3.6% higher than last year (consensus: 3.5%, Sep: 3.0%) and CPI excluding Fresh Food and Energy increased 2.5% Y/Y in October (consensus: 2.4%, Sep: 1.8%). UK budget statement sees little market reaction, but huge Gilt issuance set for next year The mix of measures was more or less as anticipated, with many of the specific larger moves well flagged ahead of yesterday’s speech on the budget from UK Chancellor Jeremy Hunt. After a strong surge in UK gilts (sovereign bonds), UK yields rose yesterday, as the Debt Management Office in the UK project that issuance of gilts in the 2023-24 financial year will rise almost 50% to £305 billion, with net issuance at £255 billion, almost double the previous high from 2011. Near term issuance to the end of the current fiscal year to April is expected somewhat lower than prior estimates. China urges local authorities to strike a better balance in pandemic control measures China’s National Health Commission urged local authorities to avoid “irresponsible loosening” of pandemic control measures. In a press briefing, health officials said local authorities “must continue to rectify the practice of excessive measures such as lockdowns and oppose the irresponsibility of evading a solution by loosening up”.The world’s second biggest lithium producer, SQM, sees lithium prices staying higher in 2023.SQM sees the Chinese electric vehicle market showing strong growth, buttressing solid demand for lithium. In its third quarter result, SQM’s income beat analyst estimates, rising by more than 10 times to $1.1 billion. The surge was fueled by the lithium price more than tripling over the past year, and rallying over 1,200% since 2020, amid tight supply and rising demand from EV makers. SQM sees the lithium market staying tight and higher prices for the rest of 2022 and into 2023. BHP (BHP) raised its takeover offer for copper giant, Oz Minerals (OZL) The offer was raised to $6.4 billion as global miners are hungry to boost copper production. Copper is a vital metal in electricity networks, electric vehicles, housing and renewable energy. BHP currently makes about 48.7% of its revenue from iron ore, 26.7% from copper, and 24.6% from thermal coal.What are we watching next? Earnings to watch today: JD.com Today’s earnings calendar is light with only the Chinese e-commerce giant JD.com reporting results. Analysts expect revenue growth of 11% y/y and EPS of $4.46 up 194% y/y on expanding EBITDA margin, but given the results from other Chinese companies we find it a bit unlikely that JD.com can deliver those types of results. Options expiry today in US to hit new record Options expire today on a notional $2.1 trillion in underlying instruments today as this month looks likely to set the record for options volume, with 46 million contracts in daily trading on average, up 12% from last month. Increasingly popular are contracts that expire within 24 hours, a phenomenon that may have driven the extreme volatility around the Thursday October CPI release last week. Economic calendar highlights for today (times GMT) 0830 – ECB President Lagarde to speak 1315 – UK Bank of England’s Catherine Mann to speak 1330 – Canada Oct. Home Price Index 1340 – US Fed’s Collins (non-voter) to speak 1500 – US Oct. Existing Home Sales 1500 – US Oct. Leading Index Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-18-2022-18112022
The Drop In German Inflation Is Welcome News, But It Is Mean That Can We Say That Inflation Has Peaked?

A Lot Of Attention On German Wage Settlements Across The Eurozone

ING Economics ING Economics 18.11.2022 10:25
A regional wage agreement in Baden-Wuerttemberg yesterday will pave the way for broader wage developments and shows the European Central Bank that second-round effects will kick in next year but should be dampened Last night, employers and unions in the metal and electronics industry in Baden-Wuerttemberg reached a new wage agreement. Wages will be increased by 5.2% in June 2023 and by 3.3% in May 2024. There will also be a one-off payment of €3,000, exactly the amount the German government had offered to exempt from tax and social security contributions. While this is "only" a regional wage agreement, it will have knock-on effects on other regional and sectoral wage negotiations. Almost four million people in Germany work in the metal and electronics industry. Traditionally, there has been a lot of attention on German wage settlements across the eurozone. The takeaway for German wage developments and the risk of second-round effects is that last night's deal shows what a compromise can look like. It won’t be enough to fully offset the drop in purchasing power caused by higher inflation, but it softens the damage. For the ECB, it signals that second-round effects remain dampened and that a lower, subdued inflationary pressure can last for longer than markets currently think. TagsInflation Germany Eurozone ECB   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Market Insights Podcast: Craig Erlam Discuss The Speculation Around The Bank Of Japan’s Meeting

High Inflation Print In Japan | Most Fed Members Remain Relatively Hawkish

Swissquote Bank Swissquote Bank 18.11.2022 10:57
Inflation in Japan soared to the highest levels in more than 30 years, to 3.7% in October, up from 3% printed a month earlier. High inflation print sure revived the Bank of Japan (BoJ) hawks, and the calls for a policy rate hike, and kept the dollar-yen below the 140 level, but it’s unsure whether the BoJ will give up on its ultra-soft policy stance. Therefore, if the US dollar picks up momentum, which will certainly be the case, the USDJPY could easily rebound back above its 50-DMA, which stands near 145. US And the reason I think the US dollar will recover is because most Fed members remain relatively hawkish regarding the Fed’s policy tightening. Plus, option traders are building topside structure over the one-month tenor that covers the next US inflation report and the Fed’s next policy meeting in December. Stock market So, the ambiance in the stock markets is not as cheery as it was at the end of last week. UK In the UK, the autumn budget statement went happily eventless. Gilts rallied, pound saw limited sell-off, while energy companies’ reaction to windfall taxes remained muted. Watch the full episode to find out more! 0:00 Intro 0:30 Japan inflation soars, Mr. Kuroda! 1:34 Should you prepare for another USD rally? 3:32 Market mood turns… meh. 4:01 The retail roundup 6:11 The happily eventless UK budget Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.   #hawkish #Fed #USD #recovery #US #retail #sales #Walmart #Target #Macys #HomeDepot #Lowes #Alibaba #earnings #UK #Budget #GBP #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
More Job Cuts, Microsoft Is Putting $10 Billion Into The Now-Very-Famous ChatGPT

Layoff In Amazon | Japan's Inflation Highest In 40 Years

Kamila Szypuła Kamila Szypuła 18.11.2022 12:29
Changes keep happening. Payments keep evolving. Inflation is also increasing, even in Japan. Layoffs at larger companies like Amazon are also on the rise. In this article: The 100 People list Transforming Business Business owners' Amazon Cross-border payments Japanese economy Goldman Sachs Chief Information Officer is in Top100 Goldman Sachs tweets about the 100 People list Transforming Business by Insider. .@BusinessInsider's 2022 list of Top 100 People Transforming Business recognizes our Chief Information Officer, Marco Argenti, among other game-changing leaders! Read more about how Marco is breaking new ground on Wall Street through technology: https://t.co/qDGLAooKCq — Goldman Sachs (@GoldmanSachs) November 17, 2022 Every year, Insider surfaces 100 leaders across 10 industries who are driving unprecedented change and innovation. The T100 does more than highlight career milestones. Goldman Sachs Chief Information Officer, Marco Argenti is on this list. Recognition of one of the directors in the field of finance is important for personal positioning and thus also for the company. Business owners' optimism UBS tweets about business owners' optimism. Despite recession fears, business owners continue to fill post-COVID labor gaps and are still optimistic about their businesses for the next year. #UBSInvestorSentiment #shareUBS — UBS (@UBS) November 17, 2022 There is no doubt that from 2020, companies, markets and entire economies are struggling. The pandemic has had a negative impact on employment, and the current inflation is also not encouraging. Despite the fear and all the difficulties, companies are getting ahead of it and are still hiring new employees. According to UBS bananas, business owners are very optimistic about the future. This is of particular importance for the labor market, as it affects not only the situation of households but also entire economies. Layoff in Amazon CNBC Now quotes the statement of Amazon CEO Andy Jassy. BREAKING: Amazon CEO Andy Jassy says layoffs will continue into next yearhttps://t.co/QEL5Diikjs — CNBC Now (@CNBCnow) November 17, 2022 The employment situation at Amazon is unstable. The company began informing workers this week that they were being let go. CEO Andy Jassy said this will continue next year. The cuts are being made as Amazon reckons with a worsening economy. Amazon isn't the only one struggling. Other giants also decided to reduce staffing. Cross-border payments IMF tweets about possible developments in cross-border payments. Cross-border payments are on track to be transformed by digital money. Learn how in F&D. https://t.co/uXmnOnQd8g pic.twitter.com/PwRn2wW1ki — IMF (@IMFNews) November 18, 2022 The development in this sector is very fast, but cross-border payments are still the Achilles' heel. We have all felt the frustration of sending money abroad. It takes time. It’s expensive. It turns out that there may be development in this payment sector. For people who love to travel or those who live in several countries, such a possibility may be very desirable. Japan CPI Reuters Business discusses the situation in Japan in its post. Japan's core consumer inflation accelerated to a 40-year high in October, driven by currency weakness and imported cost pressures that the central bank shrugs off as it sticks to a policy of ultra-low interest rates. Read more: https://t.co/AoJ6rkjSBw pic.twitter.com/DGaEal1df9 — Reuters Business (@ReutersBiz) November 18, 2022 Many economies around the world have been struggling with high inflation since the beginning of this year. Japanese inflation has been low for a long time. In October, it rose for the first time, reaching its highest level in 40 years. The activities of the Bank of Japan were dovish, which largely translates into the yen (JPY) exchange rate and the economic situation of the country. The Bank of Japan has made several interventions in the foreign exchange market, but economists do not expect the BOJ to join a global trend of raising interest rates. The more the question arises, will there be another intervention?
Asia Morning Bites - 27.01.2023

Asia Events: A Rate Hike By The Bank Of Korea (BoK)

ING Economics ING Economics 18.11.2022 14:58
A rate hike by the Bank of Korea, and inflation data from Tokyo and Singapore are just some of the highlights in the region next week In this article BoK to hike rates but expect a slower pace of tightening Inflation remains elevated in Japan and Singapore Export and manufacturing data for Taiwan Other important data reports: Loan rates in China steady and growth downgraded in Singapore Source: Shutterstock BoK to hike rates but expect a slower pace of tightening The Bank of Korea (BoK) will meet next Thursday and we expect it to carry out a 25bp hike. Consumer prices edged up in October but inflation appears to have passed its peak.  The recent FX market move probably would be one factor for BoK to adjust its pace of tightening after its recent jumbo increase. However, given that financial market stresses remain high, the BoK will need to consider market stability for its policy decision.  Inflation remains elevated in Japan and Singapore Next week, Japan will release November CPI inflation for Tokyo. We expect Tokyo inflation to accelerate to 3.6% year-on-year, from 3.5% in October. The travel voucher programme probably cooled down some of the service price pressures although other commodity prices rose to offset this decline. In Singapore, inflation is expected to remain elevated for both headline and core, although the headline number may dip from last month. Evident price pressure should keep the Monetary Authority of Singapore hawkish to close out the year as it monitors the impact of recent tightening.    Export and manufacturing data for Taiwan Taiwan will release data on export orders and industrial production. We project both figures to post a YoY contraction due to softer demand for semiconductors. Demand for electronics has been dampened by a mix of high inflation data in some economies and slower growth for others. More upside however could be anticipated in next month’s data as China’s Covid-19 measures have been eased. Other important data reports: Loan rates in China steady and growth downgraded in Singapore China will release its Loan Prime Rate next Monday and we expect no change from the current 3.65% for 1Y and 4.3% for 5Y. Loan prime rates will likely be untouched as the Medium Lending Facility Rate was put on hold by the People's Bank of China.   Lastly, Singapore will report revised third-quarter GDP figures and we expect a downward revision to the earlier report. Both retail sales and non-oil domestic exports have shown signs of moderation as higher inflation and slowing global trade appear to be taking their toll on the growth momentum. Asia Economic Calendar Source:Refinitiv, ING TagsAsia week ahead Asia Pacific Asia Markets Asia Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Two Small Caps Listed On Euronext Paris Have Faced Severe Financial Difficulties, The Q4 GDP Will Be Released In The US Today

Recession Fears In The Global Economy

ING Economics ING Economics 19.11.2022 10:27
Executive summary 1)Following the Russian invasion of Ukraine in 2022, European and Polish economies are experiencing a huge energy shock due to record-high prices and the risk of energy supply disruptions. 2)Due to the dependence on energy from Russia and the structure of energy balances, it is mainly a gas problem for the EU and a coal problem for Poland. This applies less to power plants as it does to households and district heating units which rely heavily on imported coal from Russia. The source is not only high prices, but also the risk of natural gas and coal shortages over the coming winter. 3)Higher energy prices on wholesale markets have contributed to a significant increase in producer and consumer prices, but this is not an automatic pass-through. It is stretched over time. Producer prices depend on previous contracts, competitive conditions and the substitutability of energy carriers. 4)The pass-through of higher costs to the end user depends on both demand and fiscal policy. Energy prices for households are largely influenced by the decisions of the government (e.g., the anti-inflation shield) and the regulator (Energy Regulatory Office tariffs). On average, consumer electricity prices increased by about 5% in 2022, following increases of 12% in 2020 and 10% in 2021. 5)Our survey of 300 small and medium-sized companies shows that: •70% of companies are concerned about access to energy in the upcoming heating season. •Companies have generally only partially passed on higher energy costs to buyers and are actively reducing other expenses. •High energy prices are increasing SMEs' interest in investing in energy efficiency and renewable energy sources (RES), especially in industrial companies. •The anti-inflation shield alone is not enough support but should be maintained at least until the end of 2023. •Companies are rather sceptical about the effectiveness of EU policy support. Energy Shock 2022: On the back of an economic rebound following the pandemic in 2021 and thereafter due to Russia's invasion of Ukraine in 2022, the prices of energy carriers in Europe have remained in a clear upward trend and fluctuated strongly. They shot up in the summer of 2022 following the initial threat and again after Nord Stream 1 completely halted gas supplies to Europe. By the end imports to Europe were about threeof September, daily Russian gas quarters lower year Gazprom manipulation from mid2021:onyear. Prices of energy carriers have been on an upward trend since mid2021. Russia's gas manipulations led to a jump in prices later that year, with energy prices rising further after the outbreak of war in Ukraine. Local maximum in midAugust: In midAugust 2 022, energy prices were many times higher than the average in January 2021. Prices for natural gas rose more than 15 times, electricity (wholesale market) by 7 times, coal by almost 5 times, and oil almost twice. The explosion in gas prices was due to volu me restrictions imposed by Gazprom. Shipments through Nord Stream 1 fell to 40% in June 2022, then to 20% in July August preceding the complete suspension of supplies through this pipeline in early September. September correction: When the European Commission and EU member states responded to Russia's gas manipulation, prices fell sharply. The correction in oil prices was largely due to recession fears in the global economy and also driven partly by monetary tightening. In early October, following fluctuati ons due to the Nord Stream leaks and the EU Council's decision to control rising energy costs, price increases were eight times higher for natural gas, almost three times for electrici and 1.5 times for oil. Prices of energy carriers: January 2021 =100 Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The IMF Warned That 2023 Would Be Worst Than 2022, As The US, EU And China Would All See A Decline In Growth

The Government Has Actively Used Instruments To Mitigate Energy Price

ING Economics ING Economics 19.11.2022 10:28
Energy prices are driving up CPI inflation: The increase in energy carrier prices in 2022 strongly impacted the acceleration of consumer inflation. In August, the contribution of fuels in transportation and home energy carriers was 6.0 percentage points inflation at 17.2% YoY. Neverthel, with CPI ess, the initial impetus for higher energy prices was also translated through socalled secondround effects on price increases for food and other goods and services in the core inflation basket CPI inflation and its sources (% change YoY) It’s not only energy responsible for the acceleration of inflation: In our view, the high price increase is a combination of cost inflation (pandemic, war in Ukraine) and demand inflation (consumption boom for a few years, tight labour market). These factors will continue to bring about high inflation as a result of the o ngoing energy crisis. Core inflation will rise with a peak in early 2023 because of the delayed pass producer price increases to retail prices. We forecast double-- through of digit CPI price growth in 202324. The anti-inflation shield and energy prices for households: Since the beginning of 2022, the government has actively used instruments to mitigate energy price increases by introducing indirect tax cuts as part of the antiinflation shield. These solutions have now been extended until the end of 2 022. Thanks to the reduction of the VAT rate on electricity (from 23% to 8%) in January 2022, the increase in this component of the CPI was about 5% rather than 24%, which would have otherwise been the result of Energy Regulatory Office’s hike in tar the 6 iffs for households. Prices of energy carriers in Poland - components of the CPI index (%ch YoY) Increases despite the anti-inflation shield: While the government has announced a freeze on the price of electricity, energy and gas for early 2023, consumers are still expected to face solid fuel (coal) price increases in autumn. Upward pressure on the price of food and other goods and services (second-round effects) will also persist. Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Reducing The Risk Of A Gas Shortage In Poland In The Upcoming Heating Season

Reducing The Risk Of A Gas Shortage In Poland In The Upcoming Heating Season

ING Economics ING Economics 19.11.2022 10:28
EU response to Russian invasion of Ukraine: In response to the Russian invasion of Ukraine, the EU has introduced economic sanctions on Russia, including a full coal embargo (since August), an oil embargo (with exceptions) and a two-thirds reduction in gas imports by the end of the year. Substitution of Russian gas in the EU: EU measures (more LNG and network gas from other locations, fuel substitution, and energy efficiency) leave a gap of around 20bcm. The EC has proposed voluntary (and forced if necessary) consumption cuts of 15% in EU countries. This is roughly equivalent to the additional gas consumption that occurs during a cold winter in Europe. Re-Power EU: EU policy, in particular the May 2022 Re-Power EU program, has remained consistent with the long-term goal of climate neutrality and the Green Deal strategy. In addition to diversifying gas supplies, it envisions accelerating the low-carbon transition, mainly through support for RES and energy efficiency. EU shields package from high energy prices: On 14 September, EC President Ursula von der Leyen announced the following: •A target to reduce gas and electricity consumption by 10% and by 5% during the peak winter season to a 5-year average •A tax on excess profits of energy producers •A €180/MWh price cap on low-cost technologies (mainly nuclear, lignite and RES) for the wholesale market in all segments and bilateral contracts •A €3 million investment in hydrogen The gas shock has already caused a significant reduction in natural gas consumption in EU countries, although market prices have not been passed on to the end user. In January-July 2022, gas consumption in the EU was 10% and in Poland 15% YoY lower than in 2021. Natural gas consumption in JanuaryJuly 2022 (%YoY) In the context of deep declines in gas consumption this year, the mechanism proposed by the EC in July to reduce consumption by 15% by member countries does not seem to be a major challenge for Poland. Twelve EU countries, including Poland, have already re duced gas consumption by 15% YoY in January-July 2022. High storage fills, the launch of the Baltic Pipe pipeline from late September and new interconnectors with Lithuania and Slovakia reduce the risk of a gas shortage in Poland in the upcoming heating season. High prices are being boosted by negative events related to the war in Ukraine, including sabotage at Nord Stream. Record high prices encourage gas substitution and directly affect the decline in demand and production in gasintensive sectors. Househ olds and the service sector are generally protected; hence price increases are most severe for producers of the chemical (including fertilisers), mineral and metal smelting industries. Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Czech Republic: Year-On-Year Inflation Would Have Reached A Record High Of 19.8%

Energy Prices And Their Impact On Marekts And Consumer Price

ING Economics ING Economics 19.11.2022 10:28
Energy price shock for producers in 2022 Translation of wholesale market prices into Producer Price Index (PPI) and Consumer Price Index (CPI) prices: Producer prices typically respond quickly to changes in wholesale energy market prices, which are driven by global developments. In Europe, they are largely impacted by the EU’s energy and climate policy and the EU’s energy market design. However, for individual companies, price changes are often indexed to market prices and occur with some delay. While stock market transactions are transparent, we have limited insights into bilateral contracts between energy utilities and individual manufacturers. Finally , the transmission of shifts in wholesale and 4 producer prices on consumer prices in Poland is constrained by the Energy Regulatory Office, which is responsible for electricity and gas tariffs to households, as well as government decisions on taxes and bene fits. Energy prices what and what does it depend on? Postrecession rebound 2021 and rising oil prices: The upward pressure on industrial output in 2021 was a rebound from the 2020 pandemic recession steadily. In January 2021, PPI growth was 1% built up quickly and YoY, and by December was already at 14.4%, largely driven by price increases in the coke a nd refined petroleum products While January 2021 saw a 6.9% . YoY decline in this category, while December 2021 price growth was 64.3% YoY. This category accounts for 5.2% of the PPI index basket in 2022. Producer price index (PPI) and its energy categories (%ch YoY) A rapid buildup of cost pressures in 2022 and increases in gas and electricity prices: Throughout 2022, water incre prices in the generation and supply of electricity, gas, steam, and hot ased systematically . Price increases in this category reached 30% January 2022 and accelerated to nearly 80% YoY in YoY in August. This category accounts for .8% 7.5% of the PPI basket in 2022. Increases in energy and other categories moved the PPI index from 14 YoY in January to 25.5% in August At the starting point ( before the energy shock ) , 2022 . energy prices for companies in Poland were generally close to the EU average: for companies (including taxes) average in Poland in the second half of 2021. They the past According to Eurostat data, electricity prices were about a quarter lower than the EU27 have increased by a total of about 25% over four years (between the second half of 2021 and of 2018). The price of natural gas for companies saw a total increase of 30% in four years, close to the EU average . Electricity prices for companies in the EU in second half of 2021 Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Commodities: EU Members Manage To Agree On Price Caps For Russian Oil

Companies Are Looking For Cheaper Materials And Suppliers

ING Economics ING Economics 19.11.2022 10:29
The quantitative survey was conducted by GFK Polonia on behalf of ING Bank Slaski in August 2022, using the Computer Assisted Telephone Interviewing (CATI) method. The sample consisted of 300 small and medium enterprises (SME). Research questions In the survey, we searched for responses to the following questions: 1) How are companies coping in times of an energy shock, mainly for natural gas? How does expensive energy affect their business? Do companies have problems with access to energy? Are they worried about energy access problems in the coming year? 2) How have they responded so far? What are their plans for investing in energy- efficient technologies or perhaps their own sources like photovoltaics, windmill, heat pump, and energy storage? 3) Does the anti-inflation shield (including the reduction of VAT and excise taxes on energy) help them? 4) Given the context of the current climate crisis, do they feel pressure/identify a need to switch to clean energy in the near future? 5) Are they aware of EU climate policy and opportunities to support clean energy and energy efficiency? Types of energy used One in five companies has its own power generator, and 17% of companies say they have their own sources of electricity. Own boilers/furnaces as heat sources are used by almost half of the companies - that's as often as heat from the grid. 10% of companies declare using electric-powered vehicles, although this result is likely inflated. According to local automotive associations PZPM and PSPA there are only about 50,000 pure electric and plug-in hybrid cars in Poland. Natural gas is twice as popular as electricity in company vehicles. Share of energy in total costs About two-thirds of all companies indicate a share of energy (all carriers, including transport fuels) making up more than 10% in company costs. Larger companies declare a larger share of energy in their costs, most often between 10% and 30% (for more than half of the companies over PLN 10 million in turnover last year). About half of the companies with higher turnover are industrial companies, which are generally more energy-intensive than the service or construction industries. Average share of energy costs in the company's costs Perception of the energy situation Companies perceive energy and fuel price increases differently. Most (26%) believe that prices have already risen between 50% and 80%. Perception of past increases in fuel and energy costs - by how much? (%) Expectations for future increases are slightly more consistent, with 32% of companies predicting that prices will still rise between 30% and 50% further. Predicting further increases in fuel and energy costs - by how much? (%) The vast majority of companies (nearly 70%) are concerned about problems with access to energy and fuels. Concerns about access to fuel and Energy Responses to increased energy and fuel costs Almost all companies have reacted to rising energy and fuel costs by increasing the price of products or services. Only 5% have avoided this so far. The second most common way to cope with the situation is looking for cheaper materials and suppliers (recorded by 77% of companies), followed by cutting other costs (60%) and halting R&D investments (41%). More than one in three companies intend to invest in solutions that will help save energy in the future. Responses to increased energy and fuel costs Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
German Export Weakness In The Fourth Quarter Suggests That Recession Fears Are Real

German Economy Can Avoid Recession? GDP Forecast

Kamila Szypuła Kamila Szypuła 19.11.2022 11:26
Europe is facing an energy crisis, rampant inflation and a clear economic slowdown. Germany as the main and largest economy in Europe and the European Union attracts the attention of not only tourists but also investors. General outlook A drop in energy imports from Russia after the invasion of Ukraine sent energy prices soaring in Germany, driving inflation to its highest level in more than 25 years, while fueling fears of a potential gas shortage this winter, even with storage facilities nearly full. All leading indicators point to a further weakening of the economy in the fourth quarter, with no improvement in sight. The prices of consumer goods and services are rising at a double-digit rate in Germany, according to the latest data from the local statistical office. CPI inflation rose to 10.4% in October, exceeding economists' forecasts. Inflationary pressures actually extend throughout the economy. The almost record high inflation in Germany, as in the whole of Europe, was to a large extent caused by a sharp increase in fuel and energy prices (by 43% y/y against 43.9% in September and 35.6% in August). Food prices also accelerated (to 20.3% against 18.7%). Prices of services increased even faster than in previous months (4.0% against 3.6%). In addition, the pressure on price increases was reduced by the reduction of the VAT rate on gas from 19% to 7%. October flash PMIs for Germany are worse than market expectations. Manufacturing PMI falls to 45.1 in October, lowest since May 2020. Manufacturers saw a deepening decline in new orders due to growing concerns about the economic outlook and high energy costs. Any result below 50 points (neutral level) suggests a recession of the economy. PMI indices show what GDP may look like soon. The economy continued to thrive despite challenging global economic conditions: broken supply chains, rising prices and war in Ukraine. GDP forecast The German economy can surprise GDP growth in the third quarter. However, this does not mean that the country will avoid a recession. Estimate of third-quarter German GDP growth came in at 0.3% quarter-on-quarter, from 0.1% QoQ in the second quarter. It is too early to be optimistic about the country's economic prospects next year, despite the expected GDP growth. The official results will be published on Friday, 25 November. Source: investing.com Recession? Despite not the best forecasts, Germany defends itself against a decline in GDP. This does not mean that the country will avoid recession in the future. Even though the weather has brought some relief to the German economy as rainfall has raised water levels and warm October weather has delayed the start of the heating season, a gradual recession continues. Businesses and households are increasingly suffering from higher energy bills and persistently high inflation adjusting consumption and investment. The war in Ukraine probably marked the end of a very successful German business model: importing cheap (Russian) energy and raw materials, while exporting high-quality products to the world, benefiting from globalization. The country is now forced to accelerate its green transition, restructure its supply chains and prepare for a less globalized world. Such a change can be time-consuming and moreover generate more costs. A sharp decline in German production will help drag the EU into recession this winter. Production across the EU is expected to fall in the current quarter and the first three months of 2023, with Germany experiencing one of the largest drops in activity. Production is important for the German economy and its decline has a significant impact on the economic situation. Source: investing.com
The IMF Warned That 2023 Would Be Worst Than 2022, As The US, EU And China Would All See A Decline In Growth

German PPI And Hong Kong CPI Significantly Decreased

Kamila Szypuła Kamila Szypuła 21.11.2022 10:46
The beginning of the week is quite calm when it comes to reports. Today, attention may be drawn to the events from the second half of the day, ie reports from New Zealand. German PPI In Germany, there was a report on inflation from the manufacturer. For Europe's largest economy, it turns out that the reading was positive/negative. The current reading has reached the level of -4.2% , which is what was expected. In September, the PPI m/m peaked at 7.9% for the year and then dropped dramatically to 2.3%. Today's reading may suggest a negative trend. PPI YoY has been on an upward trend since the beginning of the year. The current reading is at 34.5% and it is a drop from level of 45.8%. Hong Kong CPI The Hong Kong Consumer Price Index has reached 1.8% and thus increased/decreased. Since the beginning of the current year, it has remained at low levels to a maximum of 2.5%. A sharp increase in inflation took place in September and reached the level of 4.4%. Source: investing.com Speeches Today, the market awaits three speeches from the European continent, including one from Great Britain. The first speech was at 10:00 CET, The European Central Bank Supervisory Board Member Edouard Fernandez-Bollo. This speech can clarify certain aspects of the financial regulation in the eurozone. The speeches of the ECB's officials often contain references to possible future monetary policy objectives, assessments and measures Bank of England (BOE) Monetary Policy Committee (MPC) Member Sir Jon Cunliffe will speak at 11:05 CET. His speeches often contain indications on the future possible direction of monetary policy. Deutsche Bundesbank President and voting member of the ECB Governing Council Joachim Nagel is set to speak at 19:30 CET. He may drop subtle clues regarding future monetary policy. BCB Focus Market Readout The Central Bank of Brazil will publish a report on market expectations regarding the economic performance of the country's economy, i.e. Focus Market Readout. Expectations are important because they will determine what mood prevails in the economy, whether the country is developing and what the further economic situation in Brazil may look like. US 2-Y and 5-Y Note-Auction Yield fluctuations should be monitored closely as an indicator of the government debt situation. Investors compare the average rate at auction to the rate at previous auctions of the same security. US Treasuries have maturities of two to ten years. Governments issue government bonds to borrow money to cover the gap between the amount they receive in taxes and the amount they spend refinancing existing debt and/or raising capital. The interest rate on government bonds reflects the return an investor will receive by holding the bond for its life. When it comes to 2Y and 5Y bonds, yields are increasing, which means that investors rate the risk associated with US debt high. And they want the highest possible rate of return to decide to buy US bonds. The last reading for 2Y was 4.460% and if the trend continues you can expect a drop of 4.5%. The situation for 5-Y bonds is better as the ongoing uptrend has not gone that high and the last reading was down. The decrease took place from the level of 4.228% to the level of 4.192% New Zealand Trade Balance At the end of the day, reports on imports and exports, and thus on the trade balance, will come from New Zealand. This country is expected to import more than it exports and its trade balance will remain negative. The trade balance is forecast at -1.715M, this is the expected decline from the previous reading which was at -1.615M. It can mean that a country with a large trade deficit borrows money to pay for its goods and services. Even though the beginning of the week was calm, watch out for the next days. There may be important reports for the markets. Summary: 3:15 CET China New Loans 9:00 CET German PPI (Oct) 10:00 CET ECB Supervisory Board Member Fernandez-Bollo Speaks 10:30 CET Hong Kong CPI (YoY) (Oct) 11:05 CET BoE MPC Member Cunliffe Speaks 13:25 CET BCB Focus Market Readout 18:30 CET US 2-Year Note Auction 19:30 CET German Buba President Nagel Speaks 20:00 CET US 5-Year Note Auction 23:45 CET New Zealand Trade Balance Source: https://www.investing.com/economic-calendar/
At The Close On The New York Stock Exchange Indices Closed Mixed

The Minutes Of Fed May Help Shape The Upcoming Week On Wall Street

InstaForex Analysis InstaForex Analysis 21.11.2022 13:21
The minutes of the November meeting of the Federal Reserve are expected to help shape the upcoming week on Wall Street, which is shortened due to the holidays. U.S. stock and bond markets will be closed Thursday, Nov. 24, due to the Thanksgiving holiday. Also, on Black Friday, trading will close early. The report on the discussions at the U.S. central bank meeting earlier this month, due out Wednesday, will be the highlight of the economic calendar in the coming days. The earnings calendar will also be relatively sparse as the third quarter reports come to a close. Stocks posted a loss last week despite a modest gain on Friday after hawkish statements from the Federal Reserve dampened optimism. The S&P 500 fell 0.7% last week: Nasdaq Composite lost about 1.6% as central bank members said they intend to continue aggressive policy tightening. The Dow Jones Industrial Average remained virtually unchanged over the week: Minutes from the latest meeting of the Federal Open Market Committee (FOMC) show that officials are planning a half-point rate hike at their December meeting. Fed Chairman Jerome Powell said at a press conference that he and his colleagues have some avenues to mitigate rising prices, acknowledging that the inflation picture has become more complex. An aggressive increase in interest rates could lead to a recession in the U.S. economy, and Fed officials have recently become more open about this risk. Goldman Sachs raised its Fed rate forecast to a range of 5% to 5.25%, adding another 25 basis point hike in May, noting that the investment bank's exposure to its Fed outlook has turned up. "Inflation is likely to remain uncomfortably high for a while, and this could put pressure on the FOMC to deliver a longer string of small hikes next year," economists led by Jan Hatzius said. Wall Street is nearing the end of its reporting season, but the results from Dell (DELL), J.M. Smucker (SJM), Zoom Video (ZM) and Dollar Tree (DLTR) will be some of the key corporate updates in the report. According to FactSet Research, fewer companies are expressing recession fears in the third quarter compared to the second quarter. Of the S&P 500 companies that reported earnings between Sept. 15 and Nov. 16, 26% fewer companies mentioned the term "recession," with 179 mentioning the word, compared with 242 in the reporting period for the most recent quarter. Still, according to FactSet, this quarter still ranks third among companies stressing fears of a potential economic downturn, at least since 2010.     Relevance up to 10:00 2022-11-26 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/327652
Tight Monetary Policy Is Already Weighing On The Swedish Housing Market

2023 FX Outlook: Swedish Krona (SEK) Remain Vulnerable On The Back Of European And Global Risk Factors

ING Economics ING Economics 21.11.2022 14:22
For now, higher-than-expected inflation data trumps the mounting concerns about the housing market for the Riksbank. A 75bp rate hike looks likely on Thursday, and we expect one final 50bp increase in February In this article The Riksbank is likely to hike faster than signalled in September Riksbank is keen to stay ahead of the ECB, but housing is a risk A stronger SEK still unlikely in the near term The Riksbank is likely to hike faster than signalled in September When the Riksbank hiked its policy rate by a full percentage point back in September, it was coupled with a message that this was unlikely to happen a second time. The bank’s forecasts pointed to a peak policy rate of 2.5% in April, effectively setting the stage for a 50bp hike this week. But in what has become a familiar tale for central banks, core inflation has since come in higher than the Riksbank had anticipated, and a more aggressive move now looks likely. The Riksbank's September rate hike projection Source: Riksbank, ING   At 7.9%, core CPIF is half a percentage point above the central bank’s September forecast. The jobs market still looks strong, too, even if we saw an unexpected rise in the unemployment rate in the latest set of data (these numbers are fairly volatile). Together with the weak krona, it looks like policymakers will opt for a 75bp rate rise on Thursday. We’re forecasting that rates peak at 3% in February. Core inflation rose from 7.4% to 7.9% in October Source: Riksbank, ING Riksbank is keen to stay ahead of the ECB, but housing is a risk All of this is reinforced by the recent messaging we’ve had from Swedish policymakers. Among the Riksbank’s hawks, Governor Stefan Ingves has stressed the importance of staying a “comfortable distance” ahead of the European Central Bank. Don’t forget that Thursday’s meeting is the last before February, and the ECB will meet – and presumably hike rates – twice before then. Ingves said in the last set of meeting minutes that the Riksbank would need to “follow along upwards at the same pace” at the very least. However, there are good reasons to think the Riksbank is not very far away from the end of its tightening cycle, and the most obvious of these is the housing market. It’s no secret that Sweden’s economy is among the more interest-rate sensitive, and there are already signs that tighter policy is weighing on the housing market. Transaction volumes have fallen sharply, and by some measures, property prices have already started to fall. The headline Valueguard HOX housing index fell a further 3% in October alone, and the Riksbank has projected more declines to come. Much of Sweden’s mortgage market is either fixed for short periods or not at all. Housing market is declining at a faster pace than expected Source: Macrobond, ING   In short, there’s a growing trade-off for the Riksbank between taming inflation and exposing debt fragilities – a challenge that’s far from unique to Sweden. We expect the Riksbank’s new rate projections to factor in a further 25-50bp of tightening next year, and much will depend on the outcome of wage negotiations in the spring. A stronger SEK still unlikely in the near term The SEK OIS curve is embedding around 60bp of tightening this week, so a 75bp move would likely come as a hawkish surprise. However, we believe a greater focus will be on the new rate projections, which are (unlike in Norway) hardly ever followed to the letter by investors, but will provide an indication of how much appetite there is for further tightening. Implicitly, the projections will also show how much the focus is shifting from the mere inflation-fighting exercise to domestic concerns – in particular on housing. This is important because it will shape how SEK rates react to future data releases. On the FX side, despite the Riksbank’s constant protests against a weak krona, the implications of monetary policy remain rather limited for the near term, where we see EUR/SEK trading around 11.00 and facing upside risks. The RB’s hawkishness has been ineffective at lifting SEK in an unstable risk environment, especially in Europe, and we doubt this will change any time soon. The actual implications may emerge in the longer run. If the RB ends up hiking substantially more than the ECB by the time both central banks’ tightening cycles come to an end, then EUR/SEK may face some downward pressure next year, but only under the condition that risk sentiment stabilises. As discussed in our 2023 FX Outlook, we expect SEK to remain vulnerable on the back of European and global risk factors, and only expect limited downside risks for EUR/SEK into end-2023 despite a widening in the Riksbank-ECB rate differential. We currently forecast 10.40/50 for the pair in 2H23. TagsSwedish krona Sweden Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
Buying In China Tech And In Airlines Shares Picked Up

Rates Spark: Reasons For The Bond Rally To Extend In The Near Term

ING Economics ING Economics 22.11.2022 09:34
We see a case for the bond rally to extend in the near term but we expect the move to run our of steam ahead of the next weeks’ inflation and employment data In this article Drift lower in yields to continue for a few days but is increasingly running on fumes Today’s events and market view   Drift lower in yields to continue for a few days but is increasingly running on fumes We didn’t have a potential OPEC output increase on our list of reasons why bonds should continue to rally this week but it clearly doesn’t hurt. Our reasoning had more to do with classic bond fundamentals. Even if winter has proved mild so far, and this may well change, we expect PMIs’ gradual slide lower to drive home the message that Europe is headed for a recession. What’s more, the Federal Open Market Committee minutes to be released tomorrow night are likely to paint a less hawkish picture than Powell’s press conference did after the meeting. Both would be supportive for bonds, and help them extend their already impressive rally. The odds of a snapback higher in yields are rising There is one problem, however. We think this is the wrong macro move and the odds of a snapback higher in yields are rising. For one thing, the all-important batch of employment and inflation releases that starts next week could well  trigger a wave of position-squaring from short-term longs. More importantly, volatility in economic releases, and the solid performance of US employment data so far in this cycle, means the bar for a further bond rally is higher and less likely to be met. Finally, as bond real rates drop, the odds of a pushback from central banks increases. In the case of 10Y German Bund, this means any dip below 2% in yields is unlikely to last past the end of this week in our view. In the case of US Treasuries, any test of 3.75% to the downside is likely to set up another jump back towards 4%. The drop in real rates is a headache for central banks fighting inflation Source: Refinitiv, ING Today’s events and market view Today’s European economic releases consist of the eurozone current account figures, as well as consumer confidence. The latter is expected to edge up slightly after its spectacular fall earlier this year. The UK Office for Budget Responsibility (OBR) testimony will also be closely watched by sterling investors given the controversy surrounding the government’s budget and economic forecasts. The European Central Bank speakers list features Robert Holzmann, Olli Rehn, and Joachim Nagel. Germany will make up today’s supply slate with a €3bn 5Y sale. The US Treasury will sell $35bn 7Y T-notes. The UK will sell 50Y inflation-linked gilts. The US economic calendar brings an update to the Richmond Fed manufacturing index. Fed speakers are likely to have a hawkish tone thanks to Loretta Mester, Esther George, and James Bullard all due to make public comments. TagsRates Daily   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Merkle Trees Have Proven To Be Highly Useful For Cryptocurrency Platforms

Stress In Crypto Market Continue | Global Recession Fears

Swissquote Bank Swissquote Bank 22.11.2022 10:30
Market sentiment is fragile on uncertainty regarding whether China would make a U-turn on its Covid reopening plans. Oil Recession fears were already weighing on fragilized oil on Monday morning, when news that OPEC+ would increase oil production by half a million barrels per day on the upcoming December 4th meeting wreaked havoc yesterday. The barrel of US crude tanked to $75 per barrel, below the September dip. Later, Saudi denied the report and we are back to $80 this morning. Forex In the FX, the US dollar index bounced higher after getting very close to the 38.2% retracement level on 2021-2022 rally, and mixed Fed comments tilt the balance to the upside for the greenback. Cryto In cryptocurrencies, news that Genesis warned investors that it could file for bankruptcy further weighed on sector sentiment. Watch the full episode to find out more! 0:00 Intro 0:22 China Covid worries fuel global recession fears 1:53 Oil dips on China worries, OPEC rumour 3:57 US dollar gains, equities fall 5:14 Should you sell Tesla because you don’t like Elon Musk? 7:39 Disney up as ex-CEO returns 8:30 Bitcoin slips below $16K on FTX contagion, Genesis warning Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Twitter #Tesla #Elon #Musk #China #Covid #selloff #crude #oil #EUR #USD #hawkish #Fed #FTX #contagion #Genesis #Bitcoin #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Russia's Active Production Cuts Could Be Grounds For A Bullish Shock

Russia's Active Production Cuts Could Be Grounds For A Bullish Shock

InstaForex Analysis InstaForex Analysis 22.11.2022 10:40
Against the backdrop of a tense market situation, any unexpected news may lead to sharp price movements. The Wall Street Journal insider said that OPEC+ would be discussing a 500,000 bpd increase in oil production at a meeting in early December, pushing futures on the North Sea crude to a 10-month low. Only a rebuttal from Saudi Arabia allowed Brent to recover. Was that a fake? The decision to cut production would mean reversing the previous OPEC+ decree to increase it by 2 mln bpd. However, insiders cited four reasons why such a reverse could take place. Firstly, a day after the meeting, the EU embargo on Russian oil and the G7 price cap on it will come into effect. According to the IEA, these restrictions will lead to a reduction in Russian oil production by 2 mln bpd, to 9.6 mln bpd by the end of March 2023, as Moscow will find it difficult to find new markets. Changes in oil production in Russia Second, Saudi Arabia may have made compromises to the US that called for lower oil production after the White House told a federal court that Crown Prince and Prime Minister of Saudi Arabia Mohammed bin Salman should have sovereign immunity from a lawsuit in the United States over the murder of a Saudi journalist. Third, OPEC forecasts that oil demand will increase by 1.69 million bpd in the first quarter, to 101.3 million, and a production ramp-up is needed to balance the market. Finally, the UAE and Iraq have a huge desire to increase production. The former has a quota of just over 3 million bpd, while its production capacity is estimated at 4.45 million bpd, and the country intends to increase it to 5 million bpd by 2025. The reasons are certainly weighty but in the current conditions, the increase in supply will drag the Brent quotations to the bottom, which is not beneficial both for OPEC+ and Saudi Arabia. Its statement that the Alliance's production cuts of 2 million bpd will be valid until the end of 2023 and no one is going to cancel it, has calmed the oil market. It returned to its usual drivers: the COVID-19 outbreak in China and the assessment of risks associated with squeezing Russia out of the market. The number of coronavirus cases in China rose to 27,307 per day, which is close to the April peak. The fatalities increase the risks of the economic shutdown, which has a negative impact on demand and prices. On the other hand, Russia's active production cuts could be grounds for a bullish shock. From the technical point of view, a pin bar with a long lower shadow was formed on Brent's daily chart. If the price manages to reach above the high near $88 per barrel, it may create an opportunity to open short-term longs with the target at the pivot level of $89.4 and the resistance level in the form of the MA at $91. If the price rebounds from these levels, bears may return to the market and drag the price to the downside.     search   g_translate     Relevance up to 08:00 2022-11-27 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/327778
Singapore's non-oil domestic exports shrank 20.6% year-on-year

Singapore Inflation Dipped Below Expectations

ING Economics ING Economics 23.11.2022 09:00
Inflation dipped below expectations after global crude oil prices slipped in September  Source: Shutterstock   5.1% Core inflation for October (year-on-year)  Lower Core inflation dips to 5.1% Price pressures eased slightly in October with both headline and core inflation slipping below market consensus. Headline inflation dipped to 6.7% YoY, down from 7.5% and much lower than expectations for a 7.0% increase. Core inflation was also lower than consensus, settling at 5.1% YoY from 5.3%. The downside surprise for inflation was traced to slower price gains for utilities and transport, both moderating as global crude oil prices edged lower in September.  Slower inflation was also recorded for clothing & footwear and recreation & culture, possibly as consumers adjust to tighter liquidity conditions and elevated prices. Food inflation, however, was higher at 7.1% YoY compared to the previous month’s 6.9%.  Start of the turn? MAS monitors impact of recent aggressive tightening Source: Singapore Department of Statistics Some breathing room but MAS likely to remain hawkish Today’s lower-than-expected inflation report gives the Monetary Authority of Singapore (MAS) some breathing room after core inflation finally eased after seven months of acceleration. The inflation reading also validates MAS’s view that the recent string of aggressive tightening would feed through the economy and lower price pressures over the next few months. Despite the apparent turn in inflation, MAS will likely remain vigilant, maintaining its hawkish tone while monitoring the trajectory of core inflation.    TagsSingapore inflation Monetary Authority of Singapore   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The OECD Warns That The Fight Against Inflation Will Take Time | Credit Suisse May Lose $1.6bn In Q4

The OECD Warns That The Fight Against Inflation Will Take Time | Credit Suisse May Lose $1.6bn In Q4

Saxo Bank Saxo Bank 23.11.2022 09:12
Summary:  Market sentiment bounced yesterday on little news, with sentiment steady in Asia overnight. Long US treasury yields dipped, and short yields were steady ahead of today's FOMC minutes release from the November 2 meeting, taking the US yield curve inversion to a multi-decade low of -75 basis points. The focus in Europe today will be on preliminary November PMI for a sense of how badly the EU is tilting into recession.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures rallied 1.3% yesterday closing at the 4,010 level, the highest close since 9 September, suggesting bulls are in control as bears are already sitting on strong profits for the year and therefore has little incentive to take bigger positions before yearend. The next big level on the upside is the 200-day moving average at around the 4,060 level. Today’s key events are preliminary US PMI figures for November and later this evening the FOMC Minutes which could provide more clues into the thinking of policymakers. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) According to Reuters, the Chinese regulators may be close to a decision to impose a fine of over $1 billion on Jack Ma’s Ant Group. Since its IPO was halted by the Chinese authorities in 2020, the group has been under regulatory overhaul. While the amount of the fine is substantial, initial reactions from the investment community to the news were positive as the fine could set the stage for the conclusion of the regulatory overhaul. Alibaba (09988:xhkg) jumped more than 4% on the news. China internet stocks gained, led by Kuaishou Technology (01024:xhkg) as the social media platform company surged 6.2% on better-than-expected Q3 results. After rising 25.5% yesterday, China Aluminum (02068:xhkg) continued its advance, rising 18% on Wednesday. Overall market sentiment remains cautious as the number of new cases reached 28,883 on Tuesday, just a touch below the April high of 29,317 cases. Hang Seng Index gained 1.2% and CSI 300 climbed 0.5%. In mainland A shares, infrastructure names surged while pharmaceutical and biotech stocks retreated. FX: Dollar drops as risk sentiment rebounds Softer long US treasury yields also pushed the US dollar lower as the US yield curve inverted to a new cycle low. Still, the big dollar has done very little after the huge, but brief sell-off move on the October CPI release nearly two full weeks ago, with today’s large data dump and FOMC minutes the last hope this week for providing a spark of volatility in either direction ahead of the long holiday weekend (tomorrow, US markets are closed, with most workers also out Friday). The FOMC minutes late today are not highly anticipated, but could surprise if there is more consensus on a hawkish stance than anticipated. EURUSD has carved out a 1.0222-1.0479 range now. Crude oil (CLF3 & LCOF3) Crude oil closed higher on Tuesday supported by a general recovery in risk appetite as the dollar softened and recent short sales in response to false production hike rumor were paired back. Crude oil prices have traded lower this month in response to a drop in demand from China as Covid cases surge to near a record with restrictions of movements currently impacting 48 cities. Ahead of today’s weekly EIA report, the API reported a 4.8 million barrel drop in US crude stocks. The data also showed that gasoline inventories declined by about 0.4m barrels last week, and distillate stocks increased by 1.1M barrels. EU diplomats will discuss and potentially approve a price cap on Russian seaborne oil sales today (see below), and if implemented Russia may retaliate by refusing to sell its crude to nations that adopt the cap. WTI resistance at $82.25 followed by $84.50 Gold (XAUUSD) Gold trades nervously around the $1735 support level for a second day as the market awaits the release of FOMC minutes. The yellow metal managed a small bounce on Tuesday as the dollar softened after Fed officials indicated they were open to implementing less aggressive hikes going forward. In the short-term the direction will be determined by fund activity and whether they need to make further reductions in recently established, and now under water, long positions. An extension of the recent rally likely requires further declines in yields and the US dollar driving fresh demand for ETFs or some other catalyst that sees a run to safety. US treasuries (TLT, IEF) US treasury yields were steady at the short end and dipped at the long end yesterday, driving a new extreme in the 2-10 yield curve inversion of –75 basis points. Traders are awaiting incoming US data today and the FOMC minutes for next steps, although more heavy hitting data awaits next week with Wednesday’s November PCE inflation data and next Friday’s November US jobs report. The key upside swing area for the 10-year treasury yield is near 4.00%, while the major downside focus beyond the 3.67% pivot low is the 3.50% cycle high from June. What is going on? New Zealand’s RBNZ hikes 75 basis points to 4.25% The market was divided on whether the bank would go with the larger rate hike after a string of 50 basis points moves prior to the meeting overnight. NZ two-year yields jumped back toward the cycle highs overnight as the market participants raised the anticipated peak in the policy rate by mid-year next year to almost 5.50%, up about 30 basis points after the decision. Fed’s Mester and George keep the focus on inflation As investors continue to try and gauge the path of Federal Reserve rate hikes, Cleveland Fed President Loretta Mester reiterated on Tuesday that lowering inflation remains critical for the central bank, a day after supporting a smaller rate hike in December. Kansas City President Esther George said the central bank may need to boost interest rates to a higher level and hold them there for longer in order to temper consumer demand and cool inflation. Russian oil price cap in the works The Wall Street Journal is reporting that Western countries are set to agree on Russian oil price cap around $60 per barrel. However, it could be as high as $70 per barrel on oil loaded after the December 5 start date. The sanctions that the G7, EU and Australia will set, will ban the provisions of maritime services for shipments of Russian oil unless the oil sells below the cap price. The aim is to reduce petroleum revenues for Russia's war machine while maintaining flows of its oil to global markets and preventing price spikes. Russian Urals crude oil already trades at around a 25-dollar discount to Brent, so the impact on Russia’s revenues at current international prices would be limited. Credit Suisse warns of big loss in Q4 The Swiss bank is stating in a press release this morning that it could lose $1.6bn in Q4 driven by losses in its investment banks. In addition, the bank says that it has seen net outflows of 6% relative to AUM in Q3. To improve profitability the bank is one-third of all investment banking employees in its Chinese subsidiary following a recent staff expansion in the country. HP cuts 6,000 employees as PC demand weakens The technology company reported Q4 results yesterday in line with estimates but its FY2023 (ending 31 October 2023) outlook was below estimates with adj. EPS guidance of $3.20-3.60 vs est. $3.61. Over the next two years the company expects to reduce staff level by 6,000 to improve profitability. The OECD revised downward its 2023 growth forecasts Yesterday, the OECD published its latest Economic Outlook. There is not much surprise. Global growth is expected to slow down significantly in 2023 to 2.2 % and to rebound modestly in 2024 at 2.7 %. This will be a long and painful economic crisis. Asia will remain the main engine of growth in the short-term. But the zero Covid policy in China will likely limit the country’s contribution to global GDP growth. Before Covid, China represented about 30 % of global growth impulse. It is now down to roughly 10 %. The OECD warns that the fight against inflation will take time. But several countries are successful. For example, in Brazil, the central bank moved swiftly, and inflation has started to come down in recent months. In the United States, the latest data also seem to suggest some progress in the fight against inflation. Nevertheless, a pause in monetary policy is unlikely in most countries in the short-term. Read the full report here. The increase in the ECB’s TLTRO funding costs for European banks came into effect Until today, European banks’ outstanding borrowings from the ECB’s Targeted Long-term Refinancing Operations III (TLTRO III). LTRO III has been funded at as low as 50bps below the average of the ECB’s Depository Facility Rate (DFR) over the entire life of those borrowings. The DFR, which is currently 1.5%, has been kept at minus 50bps from Sept 2019 to July 2022. It has been a large subsidy from the ECB in the form of below-market funding costs to European banks. Some banks are depositing these monies back into the ECB and arbitraging the interest rate differential. Last month, the ECB announced to change the calculation of the applicable DFR index with effect from Nov 23 to over the current period as opposed to the whole life of the borrowings. The move will reduce European banks’ net interest income and withdraw liquidity from the banking system. Currently, the TLTRO III balance is EUR 2.1 trillion.     JD.COM cut senior management pays while increasing benefits for all employees JD.Com announced that the company is slashing the pay for about 2,000 managers by 10-20% and using some of the savings from the move to fund planned increases in staff benefits, including health and housing benefits, for all employees including hundreds of thousands of delivery staff. Founder Richard Liu will also donate 100 million yuan of his own money towards staff benefits. Under the quest for “common prosperity” of the top government leadership, Chinese tycoons are mindful of doing their share in redistributing income. What are we watching next? Flash PMIs on the radar for US, UK and EU The S&P flash PMIs for the US, EU and UK will be released in the week, and will likely test the soft-landing rhetoric that has been gaining traction. We will likely see further broad-based easing in the metrics from the October prints, as consumer spending remains constrained amid high inflation and a rise in interest rates. While expectations for December remain tilted towards a downshift in rate hikes for the Fed, ECB and the BOE, the upcoming data point will be more key in determining the terminal rate pricing. Markets are now back at pricing 5% levels for the Fed, but the ECB’s pricing for the terminal rate is still sub-3% while UK’s is 4.7% with fiscal austerity being delayed. Copper demand growth shifting from China to Europe and the US At the FT Commodities Asia Summit in Singapore, Jeremy Weir, the CEO of Trafigura said demand for copper is shifting away from cooling building activities in China to energy transition demand, especially in Europe and the US. Weir said demand for copper has remained strong despite recent global headwinds. “We’re seeing for example very strong copper demand in Europe through electrification and even through the pandemic,” he said. “Even the current crisis and conflict in Ukraine is not reducing the demand for copper.” Following a recent rally, that got rejected ahead of key resistance at $4 per pound, HG copper has dropped back and currently trades near the middle of its established range around $3.55 FOMC minutes to be key for terminal rate pricing The FOMC minutes from the November 2 meeting are scheduled to be released on Wednesday, just ahead of the Thanksgiving holiday. The key message delivered by Powell at this meeting was that the pace of rate hikes will slow down as needed, and that will likely remain the highlight of the minutes as well. However, Powell managed to deliver this hawkish message at the press conference, but the risk from the minutes remains tilted to the dovish side. There is likely to be little consensus about whether the rates are in restrictive territory or there’s still room for that, and the divide within the committee remains key to watch as investors remain on the edge to expect a Fed pivot sometime in 2023. Earnings to watch Today’s US earnings focus is Deere, the US manufacturer of agricultural and forestry equipment, with analysts expecting FY22 Q4 (ending 31 October) revenue growth of 18% y/y and EPS of $7.09 up 72% as momentum and pricing power remain strong due to high commodity prices on agricultural products. Today: Xiaomi, Prosus, Deere Friday: Meituan, Pinduoduo Economic calendar highlights for today (times GMT) 0815-0900 – Eurozone Nov. Preliminary Manufacturing and Services PMI 0930 – UK Nov. Preliminary Manufacturing and Services PMI 1330 – US Oct. Preliminary Durable Goods Orders 1330 – US Weekly Initial Jobless Claims 1445 – US Nov. Preliminary Manufacturing and Services PMI 1500 – US Nov. Final University of Michigan Sentiment 1500 – US Oct. New Home Sales 1530 – EIA's Weekly Crude and Fuel Stocks Report 1700 – US Weekly Natural Gas Storage change 1905 – US FOMC Meeting Minutes 1905 – New Zealand RBNZ Governor at Parliament committee 2130 – Canada Bank of Canada Governor Macklem to testify to parliament committee Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-23-2022-23112022
The Reserve Bank Of New Zeeland Is Likely To Deliver 50bps Rate Hike

RBNZ Interest Rate Reached 4.25% | Singapore CPI Drop | US Reports Ahead

Kamila Szypuła Kamila Szypuła 23.11.2022 11:39
Today is full of important statistics from the USA. The first will be a report on durable goods orders, which will reflect the state of the industrial sector and consumer demand. In addition, there will be PMI reports from the European Union and the UK. RBNZ Interest Rate Decision Undoubtedly, Wednesday is a very busy day. The first important information came from Noerj Zealand. As expected, Reserved Bank Of New Zealand raised rates by 75bp. Thus, interest rates are the highest since 2008. RBNZ Interest Rate reached 4.25%. CPI data Singapore At the beginning of the day, information about the level of inflation in Singapore also appeared. CPI and Core CPI reached lower than expected levels. CPI for October will amount to 6.7% against the last reading of 7.5%. Core CPI decreased by 0.2% and reached 5.1%. This may mean that inflation is heading to decline and reach a stable 2% level. South Africa The opposite movement of inflation took place in South Africa. CPI Y/Y increased to 7.6% and Core CPI Y/Y reached 5.0% PMI data French Manufacturing PMI (Nov) rose from 47.2 to 49.1. Services PMI (Nov) fell to 49.4. German A similar situation took place in Germany. The Manufacturing PMI (Nov) rose to 46.7 and the Services PMI (Nov) fell 0.1 to 46.4. Both readings were greater than expected. EU PMI In the European Union, PMIs were higher than expected. The Services PMI (Nov) held its previous level of 48.6 against expectations of a decline to 48.0, and the Manufacturing PMI rose from 47.3. In Europe, the manufacturing PMI improved while services declined or remained flat. UK PMI In the UK, declines were expected, but the Manufacturing PMI And Services PMI remained at its previous level. The Manufacturing PMI remained at 46.2 and the Services PMI at 48.8. US PMI In the US, PMI reports will appear at 16:45 CET. The manufacturing PMI is expected to decline while the services PMI is expected to increase slightly. US Reports Ahead of Thanksgiving, the US will release a broad package of reports. Weekly reports as well as reports from the real estate sector may have an impact on the situation in this and other economies. Read more: Important US Reports Ahead, The Services And Manufacturing Projected Under 50| FXMAG.COM Speeches There will also be a lot of speeches today, especially from the Bank of England. At 11:45 CET, David Ramsden, Deputy Governor of the Bank of England took the floor. His public engagements are often used to drop subtle clues regarding future monetary policy. At 12:30 the Bank of England Monetary Policy Committee (MPC) Member Pill took the floor. Dr Catherine L Mann serves as a member of the Monetary Policy Committee (MPC) of the Bank of England to speak at 15:45 CET. The last speeches from the islands will be at 5:30 pm CET and Huw Pill will speak again. Representatives of the German bank will also take the floor. Two speeches are scheduled for 14:30 CET, Prof. Dr. Johannes Beermann and Professor Joachim Wuermeling are set to speak. At 16:00 CET Prof. Dr. Johannes Beermann will be speak again. FOMC Meeting Minutes The minutes are arrived today. The minutes offer detailed insights regarding the FOMC's stance on monetary policy, so currency traders carefully examine them for clues regarding the outcome of future interest rate decisions. Summary: 3:00 CET RBNZ Interest Rate Decision 7:00 CET Singapore CPI (YoY) 10:00 CET South Africa CPI (MoM) (Oct) 10:15 CET French PMI (Nov) 10:30 CET German PMI 11:00 CET EU PMI 11:30 CET UK PMI 11:45 CET MPC Member Ramsden Speaks 12:30 CET BoE MPC Member Pill Speaks 14:30 CET German Buba Beermann Speaks 14:30 CET German Buba Wuermeling Speaks 15:00 CET US Building Permits 15:30 CET US Core Durable Goods Orders 15:30 CET US Initial Jobless Claims 15:45 CET BoE MPC Member Mann 16:00 CET German Buba Beermann Speaks 16:45 CET US PMI 17:00 CET US New Home Sales 17:00 CET US Crude Oil Inventories 21:00 CET BoE MPC Member Pill Speaks 21:00 CET FOMC Meeting Minutes Source: https://www.investing.com/economic-calendar/
The ECB Has A Clear Tightening Bias And Is Chasing Inflation

Eurozone: Inflation Pressures Are Fading On The Back Of Easing Supply Problems

ING Economics ING Economics 23.11.2022 11:48
The eurozone composite PMI came in at 47.8 in November, slightly better than in October but nonetheless confirms a contraction in the business economy. The good news is that inflation pressures are fading on the back of easing supply problems and the imminent recession The slight increase in the November PMI was mainly driven by the manufacturing PMI     American economist Robert Solow famously said that the computer age was everywhere but in the productivity statistics. At the moment, we can say that the recession is everywhere except for in the GDP statistics. While the eurozone economy still eked out positive growth in the third quarter, it seems inevitable that a recession has started in the current quarter and today’s PMI figures confirm that. The slight increase in the PMI was mainly driven by the manufacturing PMI, which saw an uptick from 43.8 to 45.7. This is still showing a sharp contraction, but slightly less than last month. New orders continue to decline, meaning that current production is coming from a lot of previously built-up backlogs. The pace of decline in services was similar to October and fierce by historical standards. New orders continue to decline here too, and businesses are becoming increasingly reluctant to hire on the back of sluggish economic activity. The upside to the clearly recessionary environment is that inflationary pressures are fading. Weaker demand, lower energy prices than in August, and easing supply-side problems are all contributing to a softening of price pressures. While energy prices remain volatile and businesses are likely to still price through some of the higher costs incurred, these factors do point to a turning point in the inflation rate around the turn of the year. TagsInflation GDP Eurozone Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Bank Of England Has Warned That Negative Growth Will Extend All The Way

The Bank Of England Has Warned That Negative Growth Will Extend All The Way

Kenny Fisher Kenny Fisher 24.11.2022 11:33
The British pound has steadied on Thursday, after soaring 1.4% a day earlier. In the European session, GBP/USD is trading at 1.2074, up 0.17%. The pound has enjoyed a splendid November, gaining 5.3%. The upswing has been impressive but is more a case of a broad pullback in the US dollar rather than newfound strength in the pound. The UK economy is likely in a recession, and the outlook is as gloomy as a rainy November day in London. The October Manufacturing and Services PMIs remained mired in negative territory, pointing to contraction. The labour market has been a bright spot but that could soon change, with the Bank of England projecting that unemployment will double to 6.5%. The UK economy declined by 0.2% in Q3, and the BoE has warned that negative growth will extend all the way to the first half of 2024. With these formidable economic headwinds, it’s difficult to make a case for the pound continuing its upswing. Inflation has hit a staggering 11.1%, despite the BoE raising the cash rate to 3.0%. The bank pressed harder on the rate pedal at the last meeting, raising rates by 75 basis points. The BoE expects rates to peak at 5%, which means there’s a lot more tightening on the way. The bank will have to tread carefully in order not to choke off economic growth as it continues to tighten in order to curb red-hot inflation. Fed says pace of hikes will ease The Fed minutes reiterated what the Fed has been telegraphing for weeks; namely, smaller rates are on the way. Fed members agreed that smaller rate increases would happen “soon”, as they continue to evaluate the impact of the current policy on the economy. Members also noted that inflation was yet to show any signs of a peak. The markets aren’t completely convinced that we’ll see lower rates at the December meeting – the odds of a 75 basis point move are at 65%, with a 35% chance of a 50 bp increase. GBP/USD Technical 1.2040 and 1.1875 are the next support levels There is resistance at 1.2192 and 1.2357 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Bank of Korea Is Likely To Respond With A Rate Cut In The Second Half Of 2023

The Bank Of Korea Is Close To Its Final Destination In Raising Interest Rates

ING Economics ING Economics 24.11.2022 11:49
The Bank of Korea raised its policy rate by 25bp today with a hawkish tilt, expecting inflation to remain higher than its target of 2% throughout next year. But, given the falling pipeline prices and growing concerns over growth, we believe that the BoK is close to its final destination in raising interest rates Source: Shutterstock   3.25% BoK's 7-Day Repo Rate    As expected Terminal rate debate will be continued The Monetary Policy Board unanimously decided to raise rates by 25bp today. Compared to the previous month, volatility in the FX market has calmed significantly and the credit squeeze in the short-term money market has worsened, thus the BoK returned to a normal rate hike pace. However, the board seems to have quite different views on the terminal rate - one for 3.25%, three for 3.5%, and two for 3.5%-3.75%, not including Governor Rhee Chang-yong's own opinions. Regarding future policy decisions, Governor Rhee mentioned that as CPI inflation over the next two months is expected to fall due to the high base last year, the BoK will be cautious about reading into those figures and will wait to see whether inflation rebounds again in January and February. Also, the Korean won has appreciated meaningfully but external factors such as the Federal Reserve's December rate hike and China's Covid policy stance are uncertain, so FX moves in the coming months are another factor to consider in future policy decisions.  We are maintaining our call for a 25bp increase in 1Q23, and now see a better chance of a rate hike in February rather than January unless the Fed surprises the market with another large step in December. As inflation is expected to slow in the future, we believe that financial market stability and growth should be the focus of the BoK from now on. Also, the BoK is expected to adjust its hiking pace as there is limited room for further rate hikes.    The BoK has downgraded its 2023 GDP and CPI inflation forecasts The BoK revised down quite meaningfully its GDP forecast for 2023 from 2.1% to 1.7%. Most of the downward adjustments come from the external demand component, with growth in major trading partners such as the US (0.3%), the EU (-0.2%) and China (4.5%) expected to slow down in 2023.  Meanwhile, the BoK forecast that next year's inflation would be only marginally lower, at 3.6% from 3.7%. The accumulated pressure to raise prices is expected to continue until next year, offsetting much of the weakening pressure on the demand side due to the economic slowdown. For the next couple of months, base effects will play a major role in inflation thus CPI inflation is expected to fall to the 4% level temporarily but rebound to the 5% level in January. The BoK expects prices for gas, electricity, and manufactured food to rise further early next year, thus headline inflation is expected to stay above 4% in the first half of next year. What we see similarly to BoK's outlook First, Korea's growth is largely dependent on the external demand condition. Both ING and BoK have a cloudy global outlook, which is expected to negatively affect Korea's growth next year.  Second, the semiconductor cycle is expected to bottom out in the second half of next year. The recent slump in exports is mainly driven by sluggish semiconductor exports, but exports should rebound in the second half of next year.  Third, investment is expected to fall due to tight financial conditions and the bleak outlook for the construction sector. Fourth, although credit tightening in the short-term money market and some market jitters will likely continue, this shouldn't threaten the overall financial system. We think some losses are expected in the Project Financing and construction industry, but the shock is expected to be contained within the sector. (Please see "South Korea: corporate debt is a concern for the economy). What we see differently to the BoK's outlook First of all, ING's 2023 GDP forecasts for the US and the EU are -0.4% and -0.7% year-on-year, respectively, which is weak compared to the BoK's own forecasts of 0.3% in the US and -0.2% in the EU. As mentioned earlier, considering Korea's high dependency on external demand, we see a bigger negative impact on Korea's exports and overall growth.   Second, private consumption is expected to shrink in the first half of next year as the debt service burden increases, while the BoK expects consumption to continue to recover. More than 70% of household debt is based on floating interest rates and more than 65% of households are indebted. We have been seeing the deleveraging of household debt mostly in personal loans for several months which is a good sign for long-term growth but, in the short term, the propensity of households to spend should weaken. In addition, the wealth effect of Korean households is expected to weaken as real estate prices will likely continue to adjust further. These are the reasons that we foresee sluggish private consumption in 1H23. Third, we believe that inflation will decline faster than the BoK's forecast. It is true that there have been accumulated price pressures in utilities and other service prices and Korea's CPI is more sensitive to supply-side inflation factors. But, we think the price declines in rent and housing should have a bigger impact in leading to a sharp decline while price hikes from reopening will likely dissipate as well.  ING vs BoK's outlook BoK, INGBoK releases bi-annual %YoY forecasts only. ING estimates quarterly growth based on the BoK's bi-annual numbers Forward-looking price components point to further deceleration in coming months In a separate report, the BoK announced its Producer Price Index for October. Headline PPI inflation slowed to 7.3% YoY in October (vs 7.9% in September) with goods prices down the most. Goods prices such as fresh food (4.1% vs 7.1% Sept) and industrial products (7.7% vs 9.6% Sept) all declined due to good harvesting of winter vegetables and the drop in gasoline prices. Meanwhile, utility (32.4% vs 25.2% Sept) and services prices (3.4% vs 3.3% Sept) continued to rise, reflecting the recent gas/electricity rates hike. The utility rate hike will have some lingering effects, pushing up service prices in a few months, but we believe that headline prices will continue to decelerate as demand-side pressures are expected to turn weak with higher interest rates.  We expect CPI inflation to decline quite sharply to 5.1% YoY in November (vs 5.7% in October) for the following reasons. The Korean won significantly stabilised compared to October, gasoline prices continued to decline, and fresh vegetable prices came down meaningfully during the month. Also, we believe that inflation will likely decelerate to the 4% level in 1Q23 although there will be additional utility rate hikes next year. Pipeline prices continued to drop since early summer CEIC TagsMonetary Policy GDP CPI inflation Bank of Korea Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
South Korea Hopes To Achieve Carbon Neutrality By 2050

South Korea Hopes To Achieve Carbon Neutrality By 2050

ING Economics ING Economics 24.11.2022 12:19
South Korea hopes to achieve carbon neutrality by 2050 by expanding its renewable energy sources, namely nuclear power. In this article, our senior economist in Seoul looks at South Korea's journey to net-zero, and how this has been impacted by the war in Ukraine In this article Korea's electricity supply and demand South Korea’s efforts to achieve its net-zero 2050 target The Transition Committee’s five policy guidelines How has the war impacted the energy market? The Kori nuclear power plant in South Korea is the world's largest fully operational nuclear generating station    Korea's electricity supply and demand South Korea wants to pursue reliable and cheaper energy sources. In the following charts, we look at the reliability of South Korea's current energy supply. Industry (manufacturing) consumes more than half of electricity/energy Industry depends on more reliable and cheaper energy sources IEA, Kepco (LHS). KEEI as of 2020 (RHS)World as of 2019, Korea as of 2020 (LHS) This is to do with the structure of the Korean economy/industry Top electricity consumer shifted from Heavy Industry to IT. Both require a steady/reliable supply of electricity KEPCO Thus, Korea has been highly dependent on 'reliable' conventional energy Electricity generation heavily depend on coal, LNG, and nuclear Renewable facilities have grown fast to 14.5%. Power generation accounted 6% as of 2020 KEPCO   In the next set of charts, we look at how inexpensive power is in Korea. Inexpensive power: electricity consumption per capita ranked 13th Electricity is an important factor in the Korean economy, supporting the activities of industry and households BP statistical review of World Energy 2021 Almost 100% overseas dependence & isolated national power grid system The economy heavily depends on energy imports and households are more sensitive to energy prices KEEI and CEIC Higher energy prices affect Korea’s macro economy: inflation Households are more sensitive to energy prices and pay for electricity on a progressive rate KEEI, CEIC Higher energy prices affect Korea’s macro economy: trade balance CEIC Production of renewable energy (calorific unit) Renewable production increased steadily Korea Energy Agency, as of 2020Non-renewable waste data has been excluded since 4Q19 Inexpensive power: power purchasing unit cost by energy source Unit cost of renewable has lowered and has reached comparable levels for coal and hydro (if excluding RPS) KEPCOFore renewable, excluding RPS (Renewable Portfolio Standard) South Korea’s efforts to achieve its net-zero 2050 target Where does it want to be? South Korea has become the 14th country in the world to legislate a carbon target, aiming for a 40% reduction in emissions from 2018 levels by 2030 to achieve carbon neutrality by 2050 What has it been doing to get there? Since its formation in May 2021, the 2050 Carbon Neutrality and Green Growth Commission has implemented several measures in an effort to gradually move towards total carbon neutrality. The Carbon Neutrality Act, for example, became effective in March 2022 and aims to facilitate the transition to a carbon-neutral society and increased green growth. Alongside legislative changes, the government has also increased its 2022 carbon neutrality budget to KRW 12 trillion from the previous year’s KRW 7.3 trillion, with a newly established KRW 2.5 trillion climate fund. Following a change of government in early 2022, progress on energy policy has come to a halt. Although the previous administration was criticised for setting overly ambitious goals and disregarding corporate voices, the new government has confirmed that it intends to stick to the original plans, with details set to be reviewed more closely moving forward. The Ministry of Trade, Industry and Energy (MTIE) announced on 5 July that the government will resume the construction of Shin Hanul Units 3 and 4 nuclear reactors and maintain the current level of reactor capacity if safety is ensured. As a result, nuclear will be responsible for more than 30% of power by 2030, up from 27.4% last year. In addition, the Korean government plans to create a new law for disposing of high-level radioactive waste in order to reduce potential hazards, organising a team exclusively for nuclear waste management. The revised outline, including the target for renewables, will be detailed in the 10th Basic Plan on Electricity Demand and Supply due in the fourth quarter of 2022. The Transition Committee’s five policy guidelines 1. Feasible Carbon Neutrality Plan and energy mix No change for the internationally committed carbon neutrality objectives, but the implementation plans should be amended by embracing nuclear energy in its decarbonisation efforts. 2. Market-Based demand efficiency A market-based initiative to promote energy demand efficiency, and foster market principles and market competition. 3. Energy policy as a new growth engine Invest in nuclear power technology and export the K-nuclear plants. as well as foster renewable technologies such as solar, wind, and hydrogen as new growth engines 4. Strengthen resource security Secure a reliable supply chain of energy and core minerals and reinforce resource security. 5. Strengthen energy welfare policy Provide energy welfare policies for low-income households and reduce coal power generation, under the consideration of jobs and the local economy. How has the war impacted the energy market? Similar to other energy importers, South Korea is suffering from the ongoing war due to high inflation and worsening trade conditions. However, as a major refining/petrochemical exporter, South Korea has significantly reduced its oil imports from Russia and this trend is likely to continue. Meanwhile, LNG and coal imports have fallen but at a slower pace due to the high dependence on power generated by fossil fuels. South Korea plans to expand its renewable energy sources, with the anticipated gap likely to be filled by nuclear power. Given its value as a reliable and affordable renewable energy source, nuclear power is expected to become an increasingly critical point of focus for the government moving forward. What’s happened since the Ukraine war? South Korea’s imports of oil, coal, and LNG (in volume terms) CEIC Oil has seen the most dramatic change KITA (Korea International Trade Association) LNG: total imports volume declined -2.6% YoY due to high price Russia’s LNG import share significantly declined in 2022 and diversified imports sources 80% of LNG is provided under long-term contract KITA (Korea International Trade Association) Coal: Russian import share actually increased in 2022 KITA (Korea International Trade Association) TagsHydrogen Energy crisis Energy Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The China’s Covid Containment Continued To Negatively Impact The Output At The End Of 2022

Asia Market: Inflation Reports Will Be The Highlight

ING Economics ING Economics 24.11.2022 13:29
Regional PMI readings and inflation reports will be the highlight for the coming week In this article Regional PMIs Inflation from Australia, Indonesia and South Korea Growth numbers from India Other key data releases   Shutterstock   Regional PMIs Both official manufacturing and non-manufacturing PMIs for China should be in deeper contraction in October as the number of Covid cases increased, affecting both factory and retail activities. This should also be reflected in the Caixin manufacturing PMI numbers which could show a bigger contraction, as smaller factories are more adversely affected given the challenging logistical situation.  Meanwhile, PMI indices for both South Korea and Taiwan should edge lower due to stalling demand for semiconductors from the US, Europe and China. Inflation from Australia, Indonesia and South Korea Next week we have Australia's October CPI inflation. Inflation data has typically only been released quarterly so this provides us with much more insight into the evolution of prices and provides much more timely updates than we have been used to. We think the outcome will probably be close to the recent month-on-month rate of increase, which would keep it roughly in line with the same period last year and leave inflation at about 7.3%. That could be interpreted as the peak, so markets may respond positively to that. Inflation in Indonesia will likely pick up further, with core inflation likely accelerating to 3.5% year-on-year while headline inflation should settle at 5.9% YoY.  Elevated price pressures have kept Bank Indonesia busy lately with the central bank recently tightening by 50bp. We expect inflation to inch higher in the coming months which could ensure that BI will stay hawkish going into 2023.  Meanwhile, inflation in Korea is expected to decelerate quite sharply to 5.1% YoY, mainly due to base effects. Fresh food and gasoline prices stabilised during the month while pipeline prices suggest a further deceleration in the coming months. Growth numbers from India India releases 3Q22 GDP data next week. The 2Q figure was buoyed by base effects and came in at 13.51%, which although admittedly very high, was a disappointment, and led us to downgrade our GDP forecasts. We have 6.3% YoY pencilled in for the third quarter, as well as for the full calendar year 2023. Deficit data for October is also due, and will likely show that a modest improvement in India’s debt to GDP in 2022/23 remains on track. Something in the region of INR40,000 crore would be in line with recent deficit trends. Other key data releases In Korea, November exports will likely be disappointing as suggested by preliminary data reports. We expect a contraction of 10.5% YoY in November as semiconductor exports and exports to China remain sluggish. Slowing export activity should translate to industrial production contracting for a fourth straight month. Semiconductor and steel production will likely be a drag, but auto production should rebound. In Japan, the jobless rate may edge up to 2.7% (vs 2.6% in September), but overall labour market conditions remain healthy. However, given the disappointing 3Q GDP report, September industrial production is expected to drop 1.0% MoM, seasonally adjusted, with weak external demand pressuring manufacturing activity. TagsAsia week ahead Asia Pacific Asia Markets Asia Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Drop In German Inflation Is Welcome News, But It Is Mean That Can We Say That Inflation Has Peaked?

German GDP Showed Favorable Results | Switzerland Employment Level Keeps Its Trend

Kamila Szypuła Kamila Szypuła 25.11.2022 12:03
The end of the week is quiet due to America's lack of activity due to Thanksgiving. The market's attention will be focused mainly on the Asian and European markets. Today, an important report turns out to be the result of the German GDP. Tokyo CPI At the beginning of today, Japan, and more specifically Tokyo, published its inflation report. In this city, Core CPI increased from 3.4% to 3.6% and it was a higher than expected reading (3.5%). The upward trend of this indicator has been going on since the beginning of May, but since May Core CPI has been above 1.0%. Also CPI increased significantly from 3.5% to 3.8%. The consumer price index only in Tokyo excluding fresh food and energy prices held its previous level of 0.2%. In this city, the rate peaked this year in May (0.4%), and then fell twice. After that, from July to September it held the level of 0.3%. Singapore Industrial Production Singapore Industrial Production MoM increased significantly. Comparing October to September, the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities was 0.9%, which is a good result as another decline was expected. The same index comparing the result from October 22 to October 21 has fallen. The fall was expected. The current reading is -0.8%, it is the first result in a year that was below zero, but it was higher than the expected -0.9%. This means that the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities has decreased significantly, but not as much as expected. Source: investing.com German GDP In Germany, both the quarterly and annual change in gross domestic product turned out to be a positive surprise. GDP Q3 YoY was 1.2%. Unfortunately, it was a decrease in comparison to the previous period, the reading of which was at the level of 1.8%. This time it was expected to score 0.1% lower. A very positive result for the German economy as well as for the euro zone turns out to be the reading of GDP Q3 q/q. The index increased by 0.3% compared to the previous period and reached the level of 0.4%. An increase to 0.3% was expected, but the result higher than expected may raise some optimism. German GDP figures show the country’s economy has grown slightly more in the third quarter than anticipated on the back of consumer spending. Switzerland Employment Level The Employment Level measures the number of people employed during the previous quarter. As the current reading shows, the exemplary trend is successively maintained. Employment increased this time to the level of 5,362M. The previous reading was about 46M than (5,316M). Such results show the good condition of the economy, because employment increases household income, and thus these households are able to spend more, which drives the economy because money remains in constant circulation. ECB’s speeches Markets expect only two speeches at the end of the week, and this time only from the European Central Bank (ECB). The first speeches took place at 9:50 CET. The European Central Bank Supervisory Board Member Kerstin af Jochnick spoke. The second and final speech of the day will take place at 18:00 CET, with Luis de Guindos, Vice-President of the European Central Bank The speeches of the ECB's officials often contain references to possible future monetary policy objectives, assessments and measures. What's more, statements can give strength to the euro (EUR), or set it in the opposite direction. Summary: 0:30 CET Tokyo CPI 0:30 CET CPI Tokyo Ex Food and Energy (MoM) (Nov) 6:00 CET Singapore Industrial Production MoM 8:00 CET German GDP (Q3) 8:30 CET Switzerland Employment Level 9:50 CET ECB's Supervisory Board Member Jochnick Speaks 18:00 CET ECB's De Guindos Speaks Source: https://www.investing.com/economic-calendar/
A Better-Than-Expected US GDP Read, Nvidia Extends Rally

The Outlook For The US Economy | US GDP Ahead

Kamila Szypuła Kamila Szypuła 26.11.2022 18:26
Internationally, governments face a difficult challenge: supporting their citizens at a time when prices are rising dramatically, especially for necessities such as food and fuel, which have been deeply affected by the war in Ukraine. The Outlook The outlook for the global economy heading into 2023 has worsened, according to multiple recent analyses, as the ongoing war in Ukraine continues to hamper trade, especially in Europe, and as markets await a more complete reopening of the Chinese economy after months of destructive COVID-19 lockdowns. In the United States, signs of a tightening labor market and a slowdown in economic activity fueled fears of a recession. Globally, inflation picked up and business activity, particularly in the euro area and the UK, continued to decline. In June, inflation rose to a 40-year high of 9.1% and remained at 7.7% in October, well above the Fed's target of 2% a year. Fed Chairman Jerome Powell and his associates responded by raising interest rates from near zero in March to a range of 3.75% to 4%, with signaling indicators likely to exceed 5% for the first time since 2007. 2.6% in Q3 Gross domestic product in the US in the third quarter of 2022 increased by 2.6 percent. quarter-on-quarter (annualized), according to preliminary data from the Department of Commerce. This reading is higher than market expectations, as an increase of 2.4% was expected. This result was presented at the end of October (27.10.22) and this gave the Federal Reserve room to raise interest rates further. Forecast Expectations for the next reading are even more positive. GDP is expected to reach 2.7%. Source: investing.com How it is calcuated? The US uses a different way than European countries to compare GDP. They annualize their data, i.e. they convert short-term data as if they were to apply to the whole year, e.g. the monthly value is multiplied 12 times, and the quarterly value 4 times. For example, if GDP growth in a given quarter was 1%. compared to the previous quarter, the annualized growth rate was - to put it simply - slightly more than 4%. This means that we cannot directly compare data on GDP dynamics in the US to that recorded in European countries that publish data on economic growth dynamics without annualization. Recession? There is currently no recession in the US as it was not declared by the NBER, although the country entered a technical recession in the second quarter of 2022 with a second consistent quarter of negative GDP growth. However, there are several factors pointing to a growing likelihood of a recession in the coming months. Painful inflation can often persist without pushing the economy into recession. On the other hand, the actions of the US Federal Reserve (Fed), which sticks to a 2% price increase target, are increasingly likely to push the US into recession. Fed economists said it was a virtual coin toss as to whether the economy would grow or plunge into recession in 2023. Central bank staff cited rising pressure on consumer spending, trouble abroad and higher borrowing costs as short-term headwinds. Among the forecasts of a recession in the United States, there seems to be a growing consensus on its occurrence. However, there are some discrepancies as to how deep and how long it will be. Source: investing.com
Limiting The Availability Of Elon Musk's App In The App Store Could Be A Significant Blow For Twitter

Elon Musk Introduces Verified Accounts On Twitter

Saxo Bank Saxo Bank 28.11.2022 08:57
Summary:  A pivotal post-holiday week ahead kicked off with risk-off due to protests in China over the Zero covid policy, and China PMIs due this week could potentially signal demand weakness as well. The week is also key for US data and Fed as financial conditions are the easiest since May and more pushback may be on the cards with the most hawkish members of the Fed board, Powell and Bullard, on the wires this week before the FOMC quiet period kicks in. We also get ISM manufacturing, PCE inflation and jobs data that will be key for the dollar. Eurozone inflation may soften, but that won’t be enough for the ECB to take the foot off the pedal, while Australian CPI will pressure the RBA to continue with its steady rate hikes. An important week ahead for incoming US data: ISM manufacturing, PCE inflation and jobs data to be key for the dollar This week will offer an interesting test for markets, including the US dollar, which trades at pivotal levels, as we have a look at the next important data macro data points out of the US, especially the PCE inflation data and the Friday November jobs report. Core PCE is forecast to rise 0.3% MoM in October from 0.5% previously. In addition, we’ll have a look at the ISM manufacturing survey for the month on Thursday, which is also expected to slip into contraction after the decline in S&P flash PMIs last week resulted in further easing of Fed tightening expectations. The question for the run-up into the December 14 FOMC meeting and in the month or so beyond is how long the market can continue to celebrate the Fed easing off the accelerator, when the reason it is doing so is that economic slowing and an eventual recession threaten. Normally, a recession is associated with poor market performance as profits fall and credit risks mount. Bullard and Powell speak – pushback against easing financial conditions? While the economic data continues to slow, and markets continue to cheer on that, it will key for Fed members to bring the focus back to easing of financial conditions and consider what that means for inflation. Chicago Fed national financial conditions index eased further in the week of November 18, bringing financial conditions to their easiest levels since May. Most of the Fed members that have spoken since that soft CPI release for October have pushed back against pivot expectations, but it hasn’t been enough. Further pushback is still needed if the Fed is serious about bringing inflation under control, and only the most hawkish members of the committee Bullard and Powell may be able to deliver that. Both will be on the wires this week. Bullard speaks on Monday while Powell discusses the economic outlook and labor market on Wednesday. Other Fed members like Williams, Bowman, Cook, Logan and Evans will also be on the wires. China PMIs likely to show demand weakness, Asia PMIs also due China’s NBS manufacturing PMI is expected to decline to 49.0 in November, further into the contractionary territory, from 49.2 October, according to the survey of economists conducted by Bloomberg. The imposition of movement restrictions in many large cities has incurred disruption to economic activities. High-frequency data such as steel rebar output, cement plants’ capacity utilization rates, and container throughputs have weakened in November versus October. Likewise, the Caixin manufacturing PMI is expected to drop to 49.0 (Bloomberg survey) in November from 49.2 in October. Economists surveyed by Bloomberg expect the NBS Non-manufacturing to slow to 48.0. in November from 48.7 in October, on the enlargement of pandemic containment measures. PMIs for other Asian countries are also due to be reported this week, and the divergence between the tech-dependent North Asian countries like Taiwan and South Korea vs. more domestic-oriented South Asian countries like India and Indonesia will likely continue, with the latter outperforming. EUR may be watching the flash Eurozone CPI release Eurozone inflation touched double digits for October, and the flash release for November is due this week. The headline rate of the harmonized index of consumer prices (HICP) is expected to ease slightly to 10.4% YoY from 10.7% YoY last month. The core rate that excludes food and energy prices is forecast to however remain unchanged at 5% YoY. This print will be key for markets as the magnitude of the ECB’s next rate hike at the December meeting is still uncertain, and about 60bps is priced in for now. But even with a slight cooling in inflation, which will most likely be driven by lower energy costs, there is a possibility that inflation will likely remain high in the coming months as winter months progress and cost of living gets worse. Australia’s economy continues to weaken. Retail slides. CPI data is the next catalyst Australia has continued to receive mostly weaker than expected economic data, that support the RBA’s dovish tone. Today Australian retail trade data unexpected fell, showing sales dropped 0.2% from the prior month. This reflects that consumers are feeling the strain of inflation and rising interest rates. As a house, Saxo thinks further weakness in spending is likely ahead in 4Q and into 2023, with the full impact of rate hikes passing through households, and increasing amount of Australian in financial duress. This view is somewhat supported by the RBA’s thinking. The data the RBA will be watching next is ; Australian inflation data for October, released Wednesday 30 November. Inflation is likely to have fallen over the month, however consensus expects inflation to have increase year on year, up 7.6% year on year. If the market thinking comes to fruition, this would show Australian inflation rose from the prior reading (whereby CPI rose 7.3% yoy). Regardless, if inflation does rise, we think the RBA will likely save face, and keep hiking rates by 0.25%, with its next hike due December 6. Twitter to launch its ‘Verified’ service After Musk acquired Twitter last month for $44 billion, he plans to "tentatively" roll out its verified service on December 2, with multiple colours for different types of users. Blue checks will be allotted to people, while verified company accounts will get gold checks and grey marks will be given to governments. Musk said all verified accounts will be manually authenticated, before the check activates, which will be cumbersome. Twitter recently halted the launch of its $8 verified service, as it failed to cease impersonation issues the company has been having. Key earnings to watch this week Peter Garnry highlights earnings results to watch in his note. Pinduoduo on Monday is the key earnings focus in China with analysts expecting Q3 revenue growth of 44% y/y and the EBITDA margin staying at healthy levels around 21.2%. The main menu next week is on Wednesday with earnings from US technology companies Salesforce and Snowflake. Analysts expect Salesforce FY23 Q3 (ending 31 October) revenue growth to decline to 14% y/y down from 27% y/y a year ago and analysts expect Snowflake to report FY23 Q3 (ending 31 October) revenue growth of 61% y/y down from 110% y/y a year ago. Expectations for both companies highlight the slowdown in technology enterprise spending that we have seen from other technology companies including Intel, HP etc. Key economic releases & central bank meetings this week Monday, Nov 28 Eurozone M3 (Oct)UK CBI Retail Sales (Nov)U.S. Fed Bullard at MarketWatch Live Event Tuesday, Nov 29 U.S.  Conference Board Consumer Confidence (Nov)U.S. St. Louis Fed President Bullard speechJapan Unemployment Rate (Oct)Japan Retail Sales (Oct) Wednesday, Nov 30 U.S. ADP Private Employment (Nov)U.S. JOLTS Job Openings (Oct)U.S.  Fed Chair Powell speechEurozone HICP (Nov, flash)Germany Unemployment Rate (Nov)Japan Industrial Production (Oct)Japan Housing Starts (Oct)China NBS Manufacturing PMI (Nov)China NBS Non-manufacturing PMI (Nov)India Real GDP (Q3)Thailand Bank of Thailand policy meeting Thursday, Dec 1 U.S. PCE (Oct)U.S. ISM Manufacturing (Nov)U.S. Initial Jobless Claims (weekly)Eurozone Unemployment Rate (Oct)Japan Capital Spending (Q3)Japan Consumer Confidence (Nov)China Caixin China PMI Manufacturing (Nov) Friday, Dec 2 U.S. Nonfarm Payrolls (Nov)U.S. Unemployment Rate (Nov)Eurozone PPI (Oct)   Key earnings releases this week Monday: Pinduoduo, Capitaland, H World Group Tuesday: Li Auto, DiDi Global, Bank of Nova Scotia, Intuit, Workday, Crowdstrike, HP Enterprise, NetApp, Shaw Communication Wednesday: Royal Bank of Canada, National Bank of Canada, Salesforce, Synopsys, Snowflake, Splunk, Hormel Foods, KE Holdings Thursday: Canadian Imperial Bank of Commerce, Bank of Montreal, Toronto-Dominion Bank, Marvell Technology, Veeva Systems, Ulta Beauty, Zscaler, Dollar General, Kroger     Source: https://www.home.saxo/content/articles/macro/saxo-spotlight-28-nov-2022-28112022
A Slow Recovery Of The Belgian Economy Is Likely To Take Shape In The Course Of The Year

Belgians Are Looking For Savings To Cope With The Rising Cost Of Living

ING Economics ING Economics 29.11.2022 11:27
A new ING survey on a representative panel shows that nine in ten Belgians are reducing their energy consumption and six in ten are even saving on daily expenses. Over the next six months, they plan to step up their efforts. Online spending is also under pressure, even more so than in other countries. This will adversely impact economic activity In this article High inflation prompts six in ten Belgians to save on daily expenses Four in ten Belgians see energy bill more than doubling in last six months Decline in online purchases for all spending categories Belgians are much more cautious than their neighbours when it comes to budgeting Belgian economy dives into the red     High inflation prompts six in ten Belgians to save on daily expenses Belgians are looking for savings to cope with the rising cost of living. An international ING survey, conducted in early November in Belgium, the Netherlands, Germany, Romania, Poland, Turkey and Spain, shows that almost six in ten Belgians are saving on fresh food and groceries (see chart 1). A slight majority of Belgians also cut their clothing expenses. The Belgian urge to save is also slightly higher than in Germany for most product categories. While in Belgium, 58% already save on daily expenses, in Germany this is 'only' 50%. Remarkably, about half of Belgians also cut back on their spending on catering, travel and leisure activities, sectors that benefited greatly from the end of the pandemic. Compared to the results of the same survey in March 2022, the number of households cutting back on their consumption has risen sharply. In addition, many households plan to reduce their spending further in the coming months. While this was only 44% in March, 57% of Belgians say they are already saving on daily expenses and 60% expect to do so in the next six months. More and more Belgians are cutting back on their spending Due to rising prices, I try to save on... (% of respondents) ING consumer survey November 2022 Four in ten Belgians see energy bill more than doubling in last six months The extreme caution of households is obviously due to the energy crisis. According to the survey, the energy bill has more than doubled for four out of ten Belgians over the last six months. For almost one in ten, it has increased more than fivefold. In this context, the number of households taking measures to save energy and try to reduce the impact of the price increase has risen sharply, from 77% in March to 86% today. More than six out of ten Belgians say they are cutting back on heating, while four out of ten respondents say they are more economical with the use of electrical appliances, such as dishwashers (see chart 2). Six in ten Belgians turn down heating In what ways do you try to reduce your energy bills? (% of respondents) ING consumer survey November 2022 Decline in online purchases for all spending categories During the pandemic, Belgians appeared to be very active online shoppers, but the unusually sharp increase during the pandemic seems to be normalising somewhat. Almost a quarter (23%) of respondents say they have been buying online less often since the end of the pandemic, compared to only 15% who say they are buying online more often. When asked whether they expect to spend more online during the holidays than last year, one in four Belgians (25%) said they would spend less. The survey results show that the decline is mainly due to a general deterioration in the economic climate and not to consumers buying more in physical shops since the relaxation of health restrictions. Indeed, the percentage of respondents saying they spend relatively more in physical shops than online (21%) is balanced by the percentage saying they buy relatively more online than in physical shops (23%). Moreover, a significant proportion of the households also say they plan to further reduce their online purchases in the coming year. For instance, only 9% of respondents plan to buy more clothes online in the coming year, while 28% plan to buy less (see chart 3). Although the decline seems stronger for electronics and clothing, the trend is clearly felt across all product categories. It is therefore likely that the decline in online spending will be widespread in the coming months. No sector seems to be able to escape the economic downturn. Lots of families plan to further cut online budgets next year Do you plan to purchase more online in the coming months (% of respondents)? ING Consumer Survey November 2022 Belgians are much more cautious than their neighbours when it comes to budgeting The share of households planning to reduce their online spending is significantly higher in Belgium than in the Netherlands and Germany, and this is true for almost all product categories (see chart 4). While, for example, 28% of Belgian respondents said they would like to buy fewer clothes and shoes online, this is only 14% in the Netherlands and 23% in Germany. Although Belgians' purchasing power is much better protected compared to other eurozone countries thanks to the automatic indexation of wages, the crisis seems to have a greater impact on consumption patterns in Belgium than in other countries. Belgians seem much more cautious and willing to economise more to get through this difficult period. More Belgians cut online budget than neighbouring countries Do you plan to buy less online in the coming months (% of respondents)? ING Consumer Survey November 2022 Belgian economy dives into the red Belgians are massively looking to save money to cope with the rising cost of living. This will have an impact on economic growth in Belgium. The Belgian economy has already contracted slightly (-0.1%) in the third quarter, and this is expected to continue in the coming quarters. We expect economic growth to be negative in 2023. The full study is available in Dutch and French. TagsGDP Eurozone Energy crisis Consumption Belgium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Spain: Price Pressures Higher Up The Production Chain Are Starting To Ease

Spain: Price Pressures Higher Up The Production Chain Are Starting To Ease

ING Economics ING Economics 29.11.2022 11:32
Spain's inflation figure fell again sharply in November and is now already four percentage points below its peak level in July. The decline will continue in the coming months In this article Spanish inflation falls for the fourth month in a row Spanish inflation now significantly below eurozone average The light at the end of the inflation tunnel is getting brighter     Spanish inflation falls for the fourth month in a row Spanish inflation was 6.8% year-on-year in November, down from 7.3% in October. Over the month, consumer prices fell by 0.1%. The harmonised index was 6.6%, down from 7.3% in October. This development was mainly due to a fall in fuel prices last month, while they rose in November last year. Also, price increases for clothing and footwear were more moderate last month than in November 2021. Spanish inflation now significantly below eurozone average Spanish inflation has generally been above the eurozone average since the beginning of the year, but has fallen sharply since peaking at 10.7% in July. The weight of food in Spain is much higher than the eurozone average, which turbocharged the sharp price increases within this component. Hospitality also contributed more to price increases than the eurozone average, through a combination of faster rising prices but also a greater weight in the inflation basket. After its peak level, Spanish inflation has fallen sharply, making it unique in the euro area. Energy inflation has fallen sharply and is well below the eurozone average. Energy prices in Spain rose sharply in autumn 2021, making the year-on-year comparison much weaker this year.  Also the VAT cut on gas and electricity eased energy inflation. Details by component for November are not yet available, but October data showed that electricity inflation already turned negative last month (-15.4%) while also gas inflation fell sharply to 13.3% in October from 24.3% a month earlier. This decline will manifest itself further in the coming months. Spain’s inflation slowdown has set in earlier INE, Eurostat The light at the end of the inflation tunnel is getting brighter Price pressures higher up the production chain are starting to ease. Both commodity prices, freight costs for transport and factory prices are starting to fall sharply from their recent peak levels. Last Friday, Spain's statistics office INE announced that producer prices fell again in October. While producer price inflation was still 42.9% in August, it fell to 26.1% in October, its lowest level since September 2021. Moreover, it is also becoming increasingly difficult for companies to implement new price increases as demand has fallen and inventories have risen sharply. Inflation will gradually continue to normalise in 2023, but it will probably take until 2024 before inflation hovers around 2% again, the ECB's target. The development next year will depend on several factors, such as the prices of energy and other inputs on international markets, the fall in demand, the euro-dollar exchange rate and the speed at which falling prices higher up the production chain lead to lower prices for consumers. We expect inflation to reach 4.4% on average next year. TagsSpain Inflation Eurozone Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Switzerland Gross Domestic Product (GDP) And Spanish CPI Fell Sharply

Switzerland Gross Domestic Product (GDP) And Spanish CPI Fell Sharply

Kamila Szypuła Kamila Szypuła 29.11.2022 12:09
Markets await the release of the EU CPI, but before that event we are looking at the CPI reports in Germany and Spain. From North America there are also reports from both the USA and Canada. Switzerland Gross Domestic Product Switzerland Gross Domestic Product fell again. This time it was a drastic drop from 2.2% to 0.5%. On the other hand, the quarterly change in this indicator was higher than the previous reading. GDP Q/Q increased from 0.1% to 0.2%, but was lower than expected (0.3%). Spanish CPI At the beginning of the day, the inflation report from Spain appeared. The readings turned out to be lower than expected and also down compared to previous readings. CPI Y/Y dropped from 7.3% to 6.8%. Natmosiat CPI from month to month fell by as much as 0.6% and reached the level of 6.6%. Growth was expected in both cases. A decrease in this indicator may suggest an improvement in the situation, i.e. prices are not rising but have started to fall. Another reading may confirm this direction. Harmonised Index of Consumer Prices, is the same as CPI, but with a joint basket of products for all Eurozone member countries. The HICP also fell to 6.6%. German CPI The German CPI report is yet to come. CPI Y/Y is expected to maintain its previous level of 10.4%. On the other hand, CPI M/M will fall from 0.9% to -0.2%. As for the German HICP, it is expected to fall in both cases, ie year-on-year and month-on-month. The HICP M/M is expected to reach a horizontal 0.1% and if confirmed, it will be lower than the previous one by 1%. HICP Y/Y is expected to decline slightly by 0.3%. The previous reading was 11.6%. Canada GDP Canada's Gross Domestic Product report comes out today. The monthly change in GDP is expected to be at the same level as last time, ie 0.1%. This may mean that the Canadian economy is stagnating. Source: investing.com On the other hand, the quarterly change shows that the goposadraka is shrinking as it is expected to fall from 0.8% to 0.4%. Speeches Today, markets and traders are also waiting for speeches from the ECB and from the UK. Luis de Guindos, Vice-President of the European Central Bank has already given speeches. This speech took place at 9:10 am CET. The next speech from the European Central Bank is scheduled for 14:30 CET. Isabel Schnabel, member of the Executive Board of the European Central Bank, is set to speak. Two speeches are also scheduled from the Bank of England. The first will take place at 13:25 CET. Dr Catherine L Mann, a member of the Monetary Policy Committee (MPC) of the Bank of England, will speak. The next speech is scheduled for 16:00 CET. This time will be Bank of England (BOE) Governor Andrew Bailey. Bailey has more influence over sterling's value than any other person. Traders scrutinize his public engagements for clues regarding future monetary policy. CB Consumer Confidence The level of consumer confidence in economic activity expects a drop from 102.5 to 100.0 It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. But this time pessimistic sentiment is expected, once again. The last worsening took place in October and it may happen again this time. Summary: 9:00 CET                Spanish CPI (YoY) 9:00 CET                Switzerland Gross Domestic Product 9:10 CET                ECB's De Guindos Speaks 13:35 CET                BoE MPC Member Mann 14:00 CET                German CPI (Nov) 14:30 CET                Canada GDP 14:30 CET                ECB's Schnabel Speaks  16:00 CET                BoE Gov Bailey Speaks 16:00 CET                CB Consumer Confidence   Source: https://www.investing.com/economic-calendar/