Sources: Bloomberg
HIGHLIGHTS
Last week, stock market recorded the largest daily gain and daily drop of the year. The Fed has implemented 50-bps rate hikes. Wheat prices spike around 40% this year as Ukraine’s exports is squeezed ECB is expected to raise interest rates 2-3 times this year.
MARKETS
Nasdaq | 12,144.66 | -1.40% |
S&P 500 | 4,123.46 | -0.56 |
Dow | 32,899.96 | -0.30% |
10-Year | 3.13% | +6.2 bps |
Bitcoin | 36,012.66 | -0.87% |
*Data as of market close. 5-day change ending on Friday.
VIEWS FROM THE STREET
BOND MARKET
J.P. Morgan: 50 bps rate hikes is confirmed, and quantitative tightening is coming. We expect two more 50bps hikes in June and July.
Deutsche Bank: It is not dovish even the result of rate hikes is 50bps(actual) vs 75bps(consensus) as the Fed is expected to continue with a 50bps pace several times in the coming meetings.
COMMODITIES
J.P. Morgan: Oil is expected to reach supply-demand equilibrium at the end of this year. Without the import from Russian crude oil, there is a shortage in the global oil market. Non-OPEC is expected to fill the gap in the future.
Deutsche Bank: Surge in food price due to Russian invasion of Ukraine and potential poultry shortage from bird-flu.
Credit Suisse: The aggressive price forecasts of commodities are stemming from Russia invasion to Ukraine and China COVID policy. Iron ore output is affected by Ukraine war, which has been dragged back to deficit. The price of coking coal from China will soar due to the domestic shortfall which leads to a tighter market. Thermal coal’s price is expected to be went higher as EU is planning to end reliance on the energy supply from Russia.
CURRENCIES
J.P. Morgan: Dollar strength is not derailed by the Fed’s recent hawkish policy. The slowing growth of the world economy is also contributing to the strong US dollar, for example, China growth and the regional risks in EU.
ECONOMY
Deutsche Bank: Typically, stocks, bonds and currency cannot all rally at the same time for a prolonged period of time. For two of them rally, one has to sell off. The word “typically” is emphasized. Everything sells off if the economy falls into stagflation. This is an even bigger challenge to the Fed given the ongoing rise in volatility.
CHINA
Credit Suisse: Given the depreciation of CNY, companies with large oversea sales and assets should benefit. At the same time, companies with large external debts denominated in other currencies (especially USD) will be hurt.
Important Information:
The Weekly Market Update is published every Friday, after market close.
This is for informational purposes only and should not be interpreted as specific investment advice. Investors should make investment decisions based on their unique investment objectives and financial situation. While the information is believed to be accurate, it is not guaranteed and is subject to change without notice.
Investors should understand the risks involved in owning investments, including interest rate risk, credit risk and market risk. The value of investments fluctuates and investors can lose some or all of their principal.
Past performance does not guarantee future results.
Market indexes are unmanaged and cannot be invested into directly and are not meant to depict an actual investment.
Diversification does not guarantee a profit or protect against loss in declining markets.
Systematic investing does not guarantee a profit or protect against loss. Investors should consider their willingness to keep investing when share prices are declining.
Dividends may be increased, decreased or eliminated at any time without notice.
Special risks are inherent in international investing, including those related to currency fluctuations and foreign political and economic events.