2022-05-19 09:25:00

Daily Markets VIew

Daily Technical & Fundamental View

The lesson from yesterday`s S&P rout 
(worst day for the S&P 500 since June 2020 ) is that the evidence of peak inflation may be needed for a sustained market recovery. Selloff in equities, while steep, had  sofar remained largely orderly -  that is why it  may be too soon to call a bottom raising the question of how much stress has been priced in.

Contagion from bellwether consumer earnings prints is sending stagflationary shockwaves through the market.What is  particularly troubling is that Target should  have been shielded by the USD strength as it’s a domestic-only retailer. Signs that the economy is pumping the brakes - the base case shifts to a mild recession.

Housing starts in April at 1.724mm.Tough  to differentiate the slowing rate of single family starts between slowing demand because of high prices and mortgage rates and  still challenging supply side situation.
USD index is evolving towards 109.24.

There was an idiosyncratic move in the Swiss franc after SNB chairman Thomas Jordan said they`re ready to act if inflation strengthens. (EUR/CHF plummets more than a hundred pips in minutes).It`s the first hint that they`re ready to join the rate-hike band wagon . If so, it would leave BOJ alone as the last holdout.

Eurozone HICP landed at 7.4% - hawkish ECB Speak as well keeps hopes of  July rate hike.ECB Meeting Accounts today. As expected 1.0575 held the corrective rebound and for now consolidation  1.0470 1.0540  before eventual plunge into abyess.

Shanghai outlined (slow) steps towards easing. The city has turned the corner it seems- fresh virus-led activity restrictions in Tianjin, the port city near Beijing. Faltering faith -  6.7500 6.7800 in USDCNY

More than inflation, Brexit jitters make  megative impact on sentiment as EU eyes punitive measures on UK to stop NIP alteration.Truss said that “we`re facing a very difficult economic situation.”  Way out is not easy . 1.2400 break ensures 1.2050 test .

Japan trade balance for April Y -839.2bn (vs. exp Y -1150bn) - 9th consecutive trade deficit.The huge import number, at +28.2% y/y hit a record in a month and hence downside in USDJPY limited.

USDINR nowadays plays out small intraday ranges  to  possibly escape attention and sneaks into the next  step in the ladder in the next session . If it was 77.40 77.60 yesterday, the logic says it should be 77.60 77.80 today . Technically ,77.64 close to validate 78.00 break