• USDIndex – holds above 111.
• Yields:  10-year surged 18 bps to hit 3.71% but finished at 3.69%. 2-year was 9 bps higher at 4.15% before easing off. It was an 11th straight session of losses, the longest on record (data going back to 1976), according to Bloomberg. The 10-year has sagged for 13 consecutive days. The curve inverted to -54 bps early on before rising to -42 bps late in the day.
• EUR – broke below 0.9800.
• JPY – remained supported after officials stepped in and intervened on forex markets yesterday. USDJPY is at 142.20.
• GBP – remains in the doldrums with Cable at 1.1200.
• Stocks were mired in the red, at 2 year lows, with weakness in consumer discretionary and financials. Some bargain hunting lifted the indexes off of their lows and saw the US30 edge fractionally higher temporarily, but dropped at the close to finish down -0.35%. The US100 lost -1.37%, and the US500 was off -0.85%.
• USOil – hovering at 80-82 area.

Overnight –Globally hot inflation rates have resulted in historically tough action from nearly every central bank around the world this week and over the month. Over the past 24 hours there has been a total of 250 bps in rate increases. Many emerging market central banks have been in action too, forced to keep pace with the Fed and to defend their currencies. South Africa lifted rates 75 bps, with Indonesia and the Philippines hiking 50 bps. The BoJ remained the odd man out, though it intervened in the currency market to support JPY. While the FOMC’s 75 bp hike was expected, the upward revisions in the dots to a 4.6% estimate for the terminal rate, and Chair Powell’s hawkish stance, caused much of the repricing in the markets. Additionally, Powell’s warning that there will be further pain in the housing market and that the risks for recession were on the rise exacerbated investor angst. That and the rise in yields knocked mega-tech sharply lower. Nevertheless, many doubt the FOMC will carry through with its projected policy path, while some found buying opportunities amid the downdraft in stocks.

Today –  Preliminary PMIs from UK, Germany, EU, and US alongside Canadian Retail Sales and Fed’s Chair Powell.

Biggest FX Mover @ (06:30 GMT) GBPUSD (-0.63%) MAs aligning lower, MACD histogram & signal lines extend well below 0, RSI 30.62, H1 ATR 0.00175, Daily ATR 0.01282.

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Andria Pichidi

Market Analyst

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