War, COVID-19, US-China tensions, inflation, market panic [Video]

Ipek Ozkardeskaya Swissquote Bank Ltd

Risk sentiment is morose this week with the escalating tensions in Ukraine, rising Covid cases in China, mounting tensions between US and China, the selloff in US and other treasuries, the relentless appreciation in the US dollar and the drop in safe haven currencies.

The Swiss franc lost ground against the greenback and the USDCHF rose above parity. The Japanese yen continued its historic fall as well, the dollar yen advanced to 145.80.

Gold fell for the fifth day to $1660 per ounce, and is set to dive deeper toward the $1600 level on the back of a relentless rise in the US yields and the dollar.

And the US yields press higher on the back of hawkish Federal Reserve (Fed) pricing, despite a couple of less hawkish comments from some Fed members at the start of the week.

The US 2-year yield advanced to 4.35%, and activity on Fed funds futures price 77.5% chance for a 75bp hike at next FOMC meeting. Even the UK yields shot higher despite the Bank of England’s (BoE) announcement of more measures to calm down the Truss-hit gilt market.

At least, the avalanche of bad global news has been successful in pulling oil prices lower yesterday. The barrel of American crude eased to $90 this morning, after having flirted with $94 a barrel on Monday.

US earnings season kicks off in a dark and depressed environment. According to data from FactSet, the EPS growth of the S&P500 companies should fall by 2.6% to below 10% in the Q3.

Author

Ipek Ozkardeskaya

Swissquote Bank Ltd

Ipek Ozkardeskaya began her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high-net-worth clients.

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