Midweek Market Podcast

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The weakest start to the new year since 2009 for the US Treasury market continues to undermine equities and support the USD as yields continue to rise.


The Market Week – January week 3

The markets are now in focus inflation and the central banks. Treasuries continue to make a stormy start to 2022 and the move in yields is the main driver of market sentiment. The equity markets were rocked by the expected rise in interest rates and a disappointing start to the Q4 reporting season. CPI rates have hit 30-year highs.

Employment growth is also making headlines; good numbers from Australia and the UK this week continue to show a tight labor market but high inflation rates will continue to put pressure on the workforce. In the US, weekly claims rose 30,000 to 230k, the biggest increase since October 7.

Omicron vaccine and booster programs continue to support sentiment. The variant’s transmissibility is still testing global health systems, but severity also appears to be lower than previous variants, and many countries are reporting a drop in cases.

In FX the USDIndex holds its bid supported by the rise in yields rising from a 45-day low 94.55 to 95.80 this week while EUR USD fell from 1.1480 to test them 1.1300 handle. USDJPY from which ascended 113.50 Test and Reject Zone 115.00 and cable finally stalled 1.3750 and the 200-day moving average for testing 1.3570.

US Stock Markets had another weak week undermined by a disappointing start to the Q4 earnings season. the USA500 shifted down 4,530, that USA30 tested to 35,125 and the USA100 was once again the weakest, except for the exam 15,000 Zone.

the gold The price continues to range with no clear direction as inflation concerns have failed to show gold’s normally expected recovery and its appeal as an inflation hedge appears to be waning. $1830 remains key resistance and $1800 important support.

US oil Prices continue to be supported by very tight supply, low inventories and this week the conflict in Saudi Arabia and Yemen. The key psychological $85.00 A barrel was breached and touched to a height this week $87.00 ahead of today’s EIA inventories.

the income remain the main driver of the market this week, with the US 10-year Treasury breaking through to a high 1.90%, well above the pivot 1.75% level as Treasuries continue to have their worst start to the new year since 2009.