Sunset Market Comment


Financial markets were more or less ready for Russia’s military presence in the Donbass region earlier this week, but much to the detriment of the current Ukrainian territory, perhaps with the aim of speeding up pro-Russian rule in Kiev. Major activities took place during the Asian trade, but continued during European hours. Judges remain in the US session direction, but early indicators suggest better relief. We begin the market summary on stock markets. Since the beginning of the year, they have encountered a bumpy road. Firstly because of the regularity of international monetary policy. Second, when geopolitics enters the game. In addition to the energy markets and Russian assets, the stock markets are still the most vulnerable. Major European stocks are currently losing 3% to 5%. EuroStoxx 50 dropped below 3867 pre-covide highs. A confirmed break this weekend suggests a return to 3608 (38% re-take in the 2020-2021 rally). US stock markets are weak about 2 percent. The S&P 500 extends the sell-on-optics pattern and also descends below the neckline of the bear head and shoulders (<4140). As we move into the commodity market, Brent crude raises dramatically from $ 97 / b to $ 106 / b. The highest level since August 2014. European gas prices rose by 50% a day. The Dutch TTF natural gas is trading at around € 125 / Mwh around € 75 earlier this week. Soft products such as corn or wheat increase by up to 5%. Both exacerbate European / global inflation and exacerbate policy problems for central banks. Metal prices increase by 3% -5%. Gold prices rose from $ 1912 to $ 1965. The 2020 maximum is at $ 2063. Despite bad weather this year, core bonds have generally been weak. It says a lot about the strength of the basic trend. Today, we think that profits could have been huge. American treasuries outweigh German bonds. European assets are expecting some extra risk premium today. US profit margin increases by sliding from 8.1 bps (30-year) to 10.9 bps (2-year). U.S. 10-year production tested a low of 1.84% this week, but no break. German bull market slows down from 3.6 bps (2-yr) to 6.4 (10-yr). Bands are more flexible. Production declines on the European swap curve are limited to 2.3 bps and 4 bps. Better a poor horse than no horse at all. Products below Greek (+8 bps) are widely distributed with Germany up to 4 bps. TUS Dollar and Japanese Yen maintain good balance in FX markets after JPY tried earlier to achieve better results. USD / JPY is currently trading around 115 digits. EUR / USD is now down from 1.13 to 1.1150. YTD: Low 1.1121 The line in the sand remains. EUR / GBP initially weakened against the USD, but eventually won a safe bet. EUR / GBP failed to force the EUR / GBP 0.8282 support test and rebounded towards 0.8360. EUR / CHF trades below 1.03 for the first time since the summer of 2015.

It is clear that Central European markets are having the greatest economic and financial consequences. Conflict between Russia and Ukraine. With negative growth prospects and central banks struggling to keep pace with high inflation since H2 2021, they feel the dilemma. And the Polish Central Bank has finally been able to secure financial support for its policy strengthening because of its market reliability. This help from FX-Channel evaporated in a short time The Czech Coruna fell 3.5% (against the Euro) this week, the Polish Zloty 3.5% and the Hungarian Forint 4.75 percent. Looking at short-term interest rate pricing contracts, markets esIn particular, MNB and NBP are under increasing pressure to keep pace with weakening currency fluctuations and rising inflation. Hungarian and Polish currency prices are rising between 35 bps and 20 bps, respectively. Although markets consider the policy rate to be around 4.75% or even 5.0%, check rates are very limited. Markets are in the forefront of the storm and will need a new balance in the coming days. However, for the MNB and NBP, in particular, there is a ‘unwanted rebound’ to today’s market growth, which has gained some market confidence in the recent rise in anti-inflation.


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