Stephen Innes
SPI Asset Management
Risk markets are struggling with inverted yields across a wide berth of sovereign curves as global recession concerns are back in the main thanks to a hawkish central bank policy that may have to inflict some economic pain to reign in core inflation. In that environment, the current level of risk-free yields makes investing in equities less attractive relative to bonds.
European PMIs were weak across sectors and countries. For the past few months, traders have wondered whether services would catch down to manufacturing as is typically the case or if the divergence could continue given the oddity of the post-Covid cycle. Based on today's prints, the risk of services catching down has gone up markedly, and as problematic, the press release stated that high inflation and tight financial conditions were weighing on demand.
Stocks in Asia traded lower Friday, and most markets in the region were down for the week, with Hong Kong's Hang Seng losing almost 6% on the week -- a reflection, perhaps, of investors' concerns about the lower growth trajectory of China and the lack of meaningful stimulus on the horizon.
Across asset classes, 10-year US Treasury yields are lower, oil futures are selling off yet again, and the US Dollar is stronger vs most peers -- all indicating a bit of a risk aversion into the weekend.
SPI Asset Management provides forex, commodities, and global indices analysis, in a timely and accurate fashion on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.
Our publications are for general information purposes only. It is not investment advice or a solicitation to buy or sell securities.
Opinions are the authors — not necessarily SPI Asset Management its officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.
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EUR/USD recovers modestly and trades above 1.0400 after setting a two-year low below 1.0350 following the disappointing PMI data from Germany and the Eurozone on Friday. Market focus shifts to November PMI data releases from the US.
GBP/USD falls to six-month lows below 1.2550, eyes on US PMI
GBP/USD extends its losses for the third successive session and trades at a fresh fix-month low below 1.2550 on Friday. Disappointing PMI data from the UK weigh on Pound Sterling as investors await US PMI data releases.
Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark
Gold price hits a fresh two-week top during the first half of the European session on Friday, with bulls now looking to build on the momentum further beyond the $2,700 mark. This marks the fifth successive day of a positive move and is fueled by the global flight to safety amid persistent geopolitical tensions stemming from the intensifying Russia-Ukraine war.
S&P Global PMIs set to signal US economy continued to expand in November
The S&P Global preliminary PMIs for November are likely to show little variation from the October final readings. Markets are undecided on whether the Federal Reserve will lower the policy rate again in December.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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