Written Commentary
STOCK INDEX FUTURES
Global equity markets were mixed overnight with the markets seeing a smattering of interest in chip sector/AI stocks countervailed by residual macroeconomic and geopolitical negatives. With the markets remaining in a lower high and lower low pattern since August 13th it is clear the fear of rate hikes from disturbingly high energy prices has clipped investor wings. At present we are not seeing evidence that the equity market trade has shifted into a “bad economic data is good for stock prices” mentality. However, given the duration of selling from rate hike fears traders should be prepared to high a noted recovery from definitively week US headline data
CURRENCIES
Despite a bullish macroeconomic and geopolitical set up this morning the dollar has faltered perhaps because of a revival of interest in the Japanese Yen carry trade. On the other hand, it is possible the shift in sentiment toward the dollar is anticipation of soft jobs related data the coming 48 hours. Certainly, the prospect of renewed war premium injection lives on just under the surface of the currency trade.
TREASURY FUTURES
The path of least resistance is down in treasuries from a constant barrage of rate hike fears brought on by oil prices sitting at the highest levels of the war which in turn are fanning a rekindling of inflation. However, inflation fears remain anticipatory as rearview mirror inflation data from Europe and the US has held steady or ticked slightly lower over the last several monthly readings. Fortunately for the bull camp, treasury prices have factored in a large portion of the recent jump in CME Fed rate hike probabilities approaching 70% earlier in the week.
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