WEEKLY SUMMARY: A tug of war between earnings growth and rates fears
It was another volatile week for risk assets. US large-cap equity indexes ended the week lower with the Nasdaq faring worse. Healthy earnings growth was offset by fears over monetary tightening. Warnings from U.S. officials that a Russian invasion of Ukraine might be imminent may have also contributed to a late-week sell-off. US CPI numbers (reported on Thursday) advanced 7.5% y/y, more than consensus expectations and its highest annual gain since February 1982. The upside CPI surprise, combined with hawkish comments from St. Louis Fed President Bullard, sent short-term rates racing higher on Thursday, resulting in a flattening of the yield curve. The 2-year U.S. yield reached its highest level since January 2020 as investors priced in expectations for an accelerated rate hike scheduled by the Fed. Meanwhile, the 10-year U.S. yield surpassed 2.00% for the first time since the summer of 2019. Shares in Europe rallied (+1.6%), buoyed by strong corporate earnings. Chinese stocks rose amid supportive official comments and a perception that the country’s regulatory crackdown cycle had peaked. Oil and Gold rallied on the back of Russia-Ukraine tensions. Cryptocurrencies were volatile.
Disclaimer
This marketing document has been issued by Bank Syz Ltd. It is not intended for distribution to, publication, provision or use by individuals or legal entities that are citizens of or reside in a state, country or jurisdiction in which applicable laws and regulations prohibit its distribution, publication, provision or use. It is not directed to any person or entity to whom it would be illegal to send such marketing material. This document is intended for informational purposes only and should not be construed as an offer, solicitation or recommendation for the subscription, purchase, sale or safekeeping of any security or financial instrument or for the engagement in any other transaction, as the provision of any investment advice or service, or as a contractual document. Nothing in this document constitutes an investment, legal, tax or accounting advice or a representation that any investment or strategy is suitable or appropriate for an investor's particular and individual circumstances, nor does it constitute a personalized investment advice for any investor. This document reflects the information, opinions and comments of Bank Syz Ltd. as of the date of its publication, which are subject to change without notice. The opinions and comments of the authors in this document reflect their current views and may not coincide with those of other Syz Group entities or third parties, which may have reached different conclusions. The market valuations, terms and calculations contained herein are estimates only. The information provided comes from sources deemed reliable, but Bank Syz Ltd. does not guarantee its completeness, accuracy, reliability and actuality. Past performance gives no indication of nor guarantees current or future results. Bank Syz Ltd. accepts no liability for any loss arising from the use of this document.
Related Articles
The Dow Jones and the S&P 500 Index moved to record highs, as investors appeared to celebrate new stimulus measures in China. Chemicals and materials stocks were particularly strong. Copper prices also increased. Tech stocks outperformed as well, helped by reports of a possible takeover of Intel and news that NVIDIA’s CEO had ceased sales of his own shares in the company. In addition, chipmaker Micron Technology surged and seemed to provide a general tailwind for the sector following its upbeat outlook for AI demand. Some benign inflation data helped spur an early rally Friday; the Fed’s preferred inflation gauge, the core (less food and energy) personal consumer expenditures (PCE) price index, rose only 0.1% in August, a tick below expectations.