Markets in rebound after hefty sell-off & record USD strength

Global equity markets are trying to recover after recent heavy losses and are rising from oversold territory in the short term. However, markets remain tense as investors are still weighing how severe the recession will be on a global scale. Gains in large-cap stocks are helping Wall Street recover some of its recent heavy losses in pre-market trading.

In the process, for the first time, Goldman Sachs and Blackrock, huge voices in the investment space were negative on stocks in the short-term time frame. Put positions were at record levels yesterday and look more likely to continue rising.

The USD weakened a bit but remains near its record high reached on Monday. The worst bond selloff in decades also drove U.S. Treasury yields to more than a decade high yesterday, with the 10-year U.S. Treasury hitting its highest level since 2010 yesterday. Yields on the more economically sensitive 2-year U.S. Treasury bonds even hit new 15-year highs.

UK markets and the GBP recovered some of yesterday's losses. Both UK Chancellor of the Exchequer Kwasi Kwarteng pledged to stick to his economic strategy that had triggered the market meltdown and the Bank of England tried to reassure markets by saying it would fight inflation – a scenario that continues to be confusing. The recovery we are seeing is due to the insane losses in UK equities and GBP rather than more confidence that the UK government is “getting it right”.

Volatility remains very high. I see the current counter-movements as a short-term rally out of heavily oversold territory, also triggered by technical traders who are seeing technical indicators in areas they have never seen before. The turmoil in the markets has so far had little impact on the Fed, which continues to stick to its hawkish rhetoric.

We are currently seeing what is likely a short-lived bear market rally. Warnings from S&P 500 companies, more worrisome economic data, and/or a further rise in the USD that continues to damage the global economy will push risk sentiment back down.

However, the gains in cryptocurrencies indicate a slight improvement in risk sentiment – quite an amazing sign of life. However, I expect further increases in bond yields to weigh on the growth sector, commodities, especially precious metals, but also cryptocurrencies.


🇺🇸 US Markets ↕️/↗️
Cyclical Stocks ↕️/↗️
Tech/Growth Stocks ➡️/↗️
Financial stocks ↗️
Energy ↗️

💱 Forex Markets
GBP ↕️/↗️ (short-term rebound)
AUD, CAD ➡️/↗️
CHF ➡️
EUR, USD, JPY ➡️/↘️

⚒ Commodity Markets ↕️/↗️
Oil prices ↕️/↗️
Natural Gas prices ➡️/↗️
Metal prices ➡️/↗️
Precious Metals ↕️ (short-term rebound then selling again)

⚡️Crypto Market ↕️

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

Yours, Robert 🌍🌪📉📉📈