Stock markets ended flat into close, with Ukraine jitters easing a tad. USD & JPY remained bid, Gold has hit an 8-month high and Oil holds at $93.00. 2yr-10yr Yields at their narrowest since Feb 2019 but have cooled overnight. No leaks from closed door FED meeting, Bullard reemphasized his 100bps by July. Asia stocks lower too. Ukraine had no response from Russia although Lavrov & Putin agreed to more diplomacy with the West. Scholz in Moscow today. UK Foreign Sec, Truss “Invasion highly likely but not inevitable”. Iron Ore futures slumped over 10% amid the continued crackdown on prices by China hitting AUD.
- USD (USDIndex 96.15) stronger USD weaker EUR on unrest on its border and possible energy shortages.
- US Yields 10-yr closed Friday at 1.996 cooled to 1.97%, 2-yrs remain elevated.
- Equities – USA500 -16pts (-0.39%) 4401 -(TSLA +1.83%) Musk gave $5.7bln shares to a charity in Nov. US500 FUTS now 4396.
- USOil – Futures spiked to $93.80, trades at $92.70 now.
- Gold – Rallied (8-mth highs) to $1879 back to $1878 now.
- Bitcoin remains in the $45,000 to $42,000 range.
- FX markets – EURUSD down to 1.1324 USDJPY down to 115.29 & Cable to 1.3540.
Overnight – AUD RBA Mins, no surprises, analysts bring forward rate hikes to possibly August form year end. JPY GDP missed (1.3% vs 1.5% & previous quarter revised lower to -0.9%), GBP Earnings beat at 4.3% vs 3.8%, but inflation impacted real wages -0.8%. Tightening labour market too. – Unemployment steady at 4.1%.
European Open – The 10-year Bund future is up 68 ticks, outperforming versus Treasury futures, which are also slightly higher though. Markets are now increasingly worried that the Fed will act too aggressively on rates and stifle the recovery in the process. ECB’s Lagarde yesterday was eager to keep rate hike speculation at bay and even if the ECB pivots, a rate hike before the last quarter of the year, doesn’t really seem to be on the cards. Ukraine jitters have eased somewhat, but continue to cloud over sentiment and DAX and FTSE 100 futures are down -0.3% and -0.2% respectively.
Biggest FX Mover @ (07:30 GMT) AUDJPY (-0.36%) From 84.00 highs on Thursday to 81.50 yesterday & back to 82.00 now. MAs aligned lower, MACD signal line & histogram remains below 0 line, RSI 43.50, H1 ATR 0.185 Daily ATR 0.878.