KBC Sunrise Market Commentary 20/07/2022 via Trader Talent

Wednesday, 20 July 2022 Dear reader, There will be no KBC Economics-Markets reports on Thursday, July 21 and Friday, July 22. We resume our publications on Monday, July 25.     Please  click here  to read the PDF version Markets •          After recessionary fears dominating market sentiment of late, markets yesterday were gradually captured by a remarkable, some kind of ‘reflationary dynamics’. This was especially the case for European markets. Investors pondered whether enough bad on news on European gas supplies was discounted. The change in sentiment was supported by a Reuters report citing sources familiar with the topic that …

KBC Sunset Market Commentary 19/07/2022 via Trader Talent

Sunset Tuesday, July 19, 2022 Daily Market Overview Click here to read the PDF-version of this report. Markets • The debate about a 25 or 50 bps ECB rate hike is at least as hot as temperatures outside today. It is the central bank itself, or rather “people familiar with the discussions”, that fueled speculation just two days ahead of the policy meeting this Thursday. Citing those sources, Reuters reported that ECB policymakers are looking more closely at a half-point rate increase this week instead of the 25 bps move ECB president Lagarde and many others flagged earlier. It has a Fed …

KBC Sunrise Market Commentary 19/07/2022 via Trader Talent

Tuesday, 19 July 2022 Please  click here  to read the PDF version Markets •          Especially European markets yesterday showed a remarkable risk-on mood despite multiple event risks (ECB meeting, Italian political crisis, Russian gas supply to Europe, EMU PMI’s) looming large over the next days. Several (also hawkish) governors last week indicating the Fed won’t step up the pace of rate hikes to 100 bps provided some comfort for risk-takers globally. European equities (including Italy) mostly gained about 1.0%. US indices opened with a similar but gain but reversed gains on Bloomberg headlines that Apple is considering to slow hiring …

KBC Sunset Market Commentary 18/07/2022 via Trader Talent

Sunset Monday, July 18, 2022 Daily Market Overview Click here to read the PDF-version of this report. Markets • European markets are supposed to face multiple event risk this week. The ECB will likely start policy normalization with a 25 bps rate hike, but a 50 bps step still isn’t completely ruled out. The bank also will have to come up with a convincing, but ‘politically acceptable’ new tool to address market fragmentation. Aside from ECB policy, European investors face the uncertainty of the reopening of the Nord Stream 1 Russian gas supply (or the absence of it) and a potential political …

KBC Sunrise Market Commentary 18/07/2022 via Trader Talent

Monday, 18 July 2022 Please  click here  to read the PDF version Markets •          Markets on Friday closed a volatile week on a positive note. The move was at least partially inspired by investors taking a more guarded approach on next week’s Fed meeting. The FOMC for sure still will debate both a 75 and 100 bps step. However, several Fed governors including Bullard, Waller, Bostic and George suggested that the bar of a 1.0%pt hike is quite high. Friday’s US data weren’t enough for markets to further embrace the idea of such a step. US retail sales were solid …

KBC Sunset Market Commentary 15/07/2022 via Trader Talent

Sunset Friday, July 15, 2022 Daily Market Overview Click here to read the PDF-version of this report. Markets • Dollar strength was the one constant in a week where inflation angst traded for recession worries and vice versa. That subsided somewhat as markets headed into the weekend. The greenback consolidated after surging to multidecade highs in a range of crosses over the previous days. On a trade-weighted basis, DXY retreated slightly from 108.54 to 108.25. USD/JPY punched through recent cycle highs around 137/138 yesterday to close just shy of 139. The pair is changing hands at levels that are barely lower (138.69). “Third …

KBC Sunrise Market Commentary 15/07/2022 via Trader Talent

Friday, 15 July 2022 Please  click here  to read the PDF version Markets •          European bond yields started off with a massive surge yesterday. We view it as a belated catch-up move with their US counterparts following the CPI release on Wednesday. Both German yields and European swap yields rose almost 20 bps intraday at the short tenors. But doubts soon emerged once again with an unfolding Italian political crisis (cf. infra) obviously not helping sentiment. Germany’s curve bear flattened with changes ranging from +0.3 bps (30y) to 6.5 bps (2). Europe’s 10y swap yield tried to settle north of …

KBC Sunset Market Commentary 14/07/2022 via Trader Talent

Sunset Thursday, July 14, 2022 Daily Market Overview Click here to read the PDF-version of this report. Markets • Frontloading policy tightening is the talk of the town on interest rate markets these days. The Bank of Canada was leading by example as it yesterday raised its policy rate by 100 bps The move was justified as serving a soft landing as it hopefully removes the need to raise rates higher and longer further down the road. A 9.0%+ US inflation print fully opened the debate whether the Fed should consider a similar move on July 27. Markets think it’s likely. This morning, …

KBC Sunrise Market Commentary 14/07/2022 via Trader Talent

Thursday, 14 July 2022 Please  click here  to read the PDF version Markets •          Faster than expected US inflation (9.1% y/y) once again sent shockwaves through financial markets yesterday. US bond yields shot up as much as 18 bps at the short end of the curve before paring some of that to 10.7 bps (2y) eventually. There’s a lot of market chatter for a 100 bps rate hike by the Fed later this month (given a 60% chance) instead of the earlier flagged back-to-back 75 bps. For Fed’s Bostic “everything is in play”. Mester said the CPI release meant there’s …

KBC Sunset Market Commentary 13/07/2022 via Trader Talent

Sunset Wednesday, July 13, 2022 Daily Market Overview Click here to read the PDF-version of this report. Markets • Chinese trade data and comments by ECB Villeroy served as amuse-bouche for today’s main dish: June US CPI numbers. Chinese exports rebounded significantly in June as parts of the country (Shanghai) reopened. Exports rose by 17.9% Y/Y in USD terms with imports rising by 1% Y/Y. An acceleration in shipments of auto data processing machine parts drove growth with export growth of many other goods slowing (clothing and accessories, shoes, steel products, aluminum, rare earths,…). ECB’s Villeroy mentioned the decline of the single …