After 50 bp rate hikes from the BoE and Norges Bank, ongoing hawkish comments from Chair Powell – who further warned of one or maybe two more additional rate hikes this year – exacerbated the selling.
Asian stock markets have remained under pressure and European as well as US futures are firmly in negative territory at the end of what is shaping up to be the worst week for stocks since March. The advent of supply with $120 bln in Treasury auctions announced, along with a 5-pronged offering from Nasdaq, extended the losses. Fighting inflation is taking precedence over growth concerns and for bank stocks in particular that could spell further pain, as markets worry about the risk of deteriorating loan portfolios. The 10-year Treasury yield has corrected -0.9 bp today, the German 10-year is down -2.2 bp and curves are inverting further. UK Retail Sales rose 0.3% m/m in May with the numbers suggesting that demand is holding up despite ongoing inflation overshoots that are eating into real disposable income.
- FX – The USDIndex is on the rise and currently at 102.68. EUR broke below 1.0900 printing a low at 1.0852, while Pound retests 1.2690 lows again. USDJPY reverted to 142.84 from 143.48 highs as risk aversion deepens.
- Stocks – China bourses were still on holiday, but the Hang Seng declined -1.8%, the Nikkei lost -1.5%, and after a mixed close on Wall Street yesterday. The US100 sank 0.45%, the US500 was down about 0.5%, while the US30 fell 0.37%.
- Commodities – Gold touched lows of $1910.05. The USOil meanwhile has dropped to $68.51 per barrel.
Today – PMIs from Germany, the Eurozone, UK and US will be monitored for growth signals.
Biggest Mover @ (06:30 GMT) USOIL (-1%) resumed decline today after -4% yesterday. Currently at $68.51, with fast MAs flattened for now, RSI at 28 and flat, Stochastic higher while MACD & signal line remain negatively configured.
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Andria Pichidi
Market Analyst
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