Fed tightening remains sentiment killer; UK markets plunge

Global bond yields continue to rise on expectations of tighter monetary policy and a sharp slowdown in the global economy. The US dollar rose to another record high against its peers and US government bond yields hit new 11-year highs.

UK equities and sterling in particular have fallen sharply as investors are unsettled by the Bank of England's further tightening of monetary policy and the government's large tax cuts, which are leading to much higher debt levels – at a time when interest rates are rising and the cost of debt is therefore much higher. I echo the analysts' concerns and see the UK economy slipping into an ever-increasing burden of its huge mountain of debt, while the country suffers badly from a slump in consumer spending, an unprecedented cost of living crisis and a dramatic gap between rich and poor.

Europe's Stoxx 600 index has fallen to its lowest level since December 2020. The losses are broad-based – cyclical stocks have fallen sharply, but losses in energy and commodity stocks have led the losses today.

Goldman Sachs (finally!) lowers its year-end target for the S&P 500 to 3,600 (from 4,300). The world's largest investment bank thus admits massive errors in its market analysis and forecasting. Many other investment banks have not yet changed their targets. We have been bearish on risk markets since September 2021 – this shows how much we are ahead of the markets. Further downgrades will lead to more panic selling and investment banks are likely to reduce their equity holdings. 

The yen fell again as analysts do not believe that FX intervention will have the desired effect (following our assessment from yesterday). The CHF recovered after heavy losses due to safe haven demand – as we expected. Investors continue to flee into cash, preferably into the USD, which will massively weigh on all riskier asset classes, especially cyclical/growth stocks, gold, cryptocurrencies, etc. Commodity prices will also come under pressure from the strong USD. Oil prices remain bearish on expectations of a severe global recession. The EUR will benefit from the plummeting GBP.


👁 ROB'S MARKET OVERVIEW:

🇺🇸 US Markets ↘️
Cyclical Stocks ↘️
Tech/Growth Stocks ↘️
Financial stocks ↘️
Energy ↘️

💱 Forex Markets
USD, EUR ↗️ 
CHF ➡️/↗️
JPY ➡️
CAD ➡️/↘️
GBP, AUD ↘️

⚒ Commodity Markets ↘️
Oil prices ↘️
Natural Gas prices ↕️/↘️
Metal prices ↘️
Precious Metals ↘️

⚡️Crypto Market ↘️


(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)

Yours, Robert 🏦📉🌪🏭🥵