Steady start of the week

Craig Aram

European stocks have risen steadily on Monday, recovering a small portion of last week’s big losses amid rising economic concerns.

Over the past week and a half, market thinking has changed and has had a significant impact on risk assets. The outlook for a recession is much more widely considered, and moreover, central banks are increasingly resisting the urge to oppose the recession.

Inflation seems to be the only concern from the main concern. Sacrificing the economy to pursue price stability seems to be aimed at by a lack of choice.

Hope now recession It’s calm and concise, but the situation is evolving so rapidly that it’s hard to know for sure.

Under these circumstances, central bank statements and economic data may be more sensitive. At the current level, investors are looking for clues that inflation is easing. This may enable the recovery of welcome relief in the stock market.

Without it, they would not be comforted by what they heard.

There is no shortage of central bank appearance, which can cause nerve fraying for an additional week. Not surprisingly, the headline is a two-day appearance with Federal Reserve Chairman Jerome Powell and his parliament to testify about the semi-annual monetary policy report.

From ECB President Christine Lagarde later on Monday 1 week later The central bank held an emergency meeting to discuss the fragmentation of the euro area.

Italy’s yields are at their highest level in eight years and are widening between the perimeter and core expansion, so the central bank has decided that it is best to act swiftly to overcome them.

This kind of decisive action is not what we have come to associate with the ECB. This could be a sign of lessons learned and, more realistically, an indication of how concerned they are about inflation and the knock-on effects of policy. Required action.

Bank Holidays in the US can be relatively mild at the beginning of the week as investors are already looking at Powell’s testimony. Nonetheless, nothing is guaranteed in these markets and there is no shortage of other drivers. ..

Oil hit by the fear of recession

Crude oil prices were stable on Monday after falling as economic instability settled late last week.

The market is still very tight, but the threat of a recession is one of the few negative forces on oil prices. Whether it is enough to produce more than two-way pricing behavior is another matter.

Prices are higher than last month and the bullish case is still much more compelling.

Libya’s production has reportedly recovered from 100,000 to 150,000 to 700,000 barrels per day, which could have contributed to a slight market easing in the short term.

European gas prices have skyrocketed recently, and Russia has rejected Ukraine’s offer to pass more supply through the pipeline to accommodate the lost flow through Nord Stream, putting pressure on the block. Does not seem to be in a hurry to alleviate.

It seems to support the view that the Gazprom move is a political motivation and will come when Europe fills its reserves and loses significant US LNG supply through freeport facilities.

Gold to build a bullish case

The variable weeks of gold will return widely to where it began and will fluctuate at around $ 1,850.

The good news is that many monetary tightenings are currently priced and that is their main bare case.

The increased risk of recession seems to be driving the demand for traditional safe shelters. I’m not sure if that’s more than $ 1,870 and enough to trigger a bigger rally. But as the story of the recession grows, the bullish cases are as good as they used to be.

Bitcoin will survive, but how long will it last?

Bitcoin’s other vibrant weekend fell below $ 20,000 and quickly recovered and resumed trading around it. That didn’t cause a complete collapse of the crypto market, but it certainly made it quite nervous.

Hat levels have long been touted as important, and weekend moves have seriously undermined the foundation below. The idea of ​​HOD Ler is actually being tested, and those who have not yet been rescued can be more tempted than ever.


Craig Erlam is a Senior Market Analyst in the UK and EMEA. OANDA

Opinions are those of the author and not necessarily those of OANDA Global Corporation or its affiliates, subsidiaries, officers or directors. Leveraged trading is risky and not suitable for everyone. Losses can exceed investments.

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