European Investors Got An Energy Boost From Lower Inflation Reads
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European investors got an energy boost from lower inflation reads, and the falling nat gas futures, but US investors didn’t follow up on the cheery market mood.
However, US sovereign bonds gained yesterday as an indication that the latest market moves were backed by recession fears, rather than hawkish Federal Reserve (Fed) expectations…
The risk-off investors will likely continue
And if the first trading day of the year is any indication, we could see the holy negative correlation between stocks and bonds come back in 2023. This is what many investors think will happen. The risk-off investors will likely continue exiting stocks on profit recession – and not on hawkish Fed expectations, and they could go back to bonds and to gold instead.
US economy
Due today, the ISM manufacturing index will reveal if and how fast US manufacturing contracted last month. If yesterday’s PMI is any hint, we could see a fastening contraction in ISM manufacturing, which would then boost recession worries, hit the stocks, but not necessarily the bonds and gold.
Also, JOLTS data will show if, and by how much the US job openings fell in November.
Read next: Exxon And Chevron Abandon The Global Market And Focus On The Americas| FXMAG.COM
But regardless of the ISM data, and the US job openings, the FOMC minutes will likely confirm that the Fed remains serious about further tightening policy, even if it slows the pace of interest rate hikes.
Remember, if the Fed decided to go slower on its rate hikes, it’s to be able to go higher! And the more resilient the US economy and the US jobs market, the more eager the Fed will be to continue its journey north…
Watch the full episode to find out more!
- 0:00 Intro
- 0:35 European stocks rally but…
- 3:04 US stocks fall, as bonds rise…
- 4:08 … hinting at the eventual return of negative correlation btw stocks and bonds?
- 5:51 …from which Gold could also benefit?
- 6:30 What to watch today?
- 7:38 Oh Tesla, Apple and Exxon…
- 9:06 Do you dare going back to Chinese stocks?
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.
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