Market Update – January 6 – Hawkish Fed – Rate hikes on the way

‘A “very tight” job market and unabated inflation might require the Federal Reserve to raise interest rates sooner than expected and begin reducing its overall asset holdings as a second brake on the economy, US central bank policymakers said in their meeting last month.’ – Reuters

Stocks tanked, Yields spiked and the USD held firm as EM & commodity currencies sank.

USD (USDIndex 96.30) holds gains supported by higher yields – pressuring the commodity complex in particular. US stocks tanked (Dow & S&P) down -1% & -1.94% respectively with NASDAQ losing 522 points -3.34%
US Yields 10-yr rocked up to close at 1.70% trades higher again at 1.73% now.   
Equities – USA500 -96 (-1.94%) at 4700  TSLA -5.35%, AT&T +2.22%. As value stocks gained and growth stocks were hit the hardest, USA500 FUTS now 4691.     
USOil – spiked over $78.00 trades at  $76.84 inventory drawdown not as big as expected and a big build in gasoline storage
Gold – down to $1800 sagain after test & rejection of 1830.
Bitcoin sinks under holds over 45,000, trades at 43,200 now.
FX marketsEURUSD back to 1.1285, USDJPY off 5-yr highs under 116.00 at 155.90, Cable tested 1.3600 aback to test  1.3500 now.

Overnight – Chinese Services PMI’s & German Factory Orders both better than expected. Asian share followed US lower –

European OpenRisk-Off – The March 10-year Bund future is down -38 ticks, underperforming versus Treasury futures. Overnight and mounting concern of an accelerating tightening schedule in the US has been adding to pressure on stock markets overnight. DAX and FTSE 100 futures are currently posting losses of -1.5% and -1.4% respectively and US futures are down -0.3-0.6% with the NASDAQ future underperforming as tech stocks continue to struggle.

Today – Preliminary German inflation data for December, Eurozone PPI, final UK Services PMI, US Weekly Claims, ISM Services PMI and US Factory Orders.

Biggest FX Mover @ (07:30 GMT) AUDJPY (-1.10%) RISK OFF Fed inspired tank to Sank to 82.90 from 84.34 yesterday. MAs aligned lower, MACD signal line & histogram lower & well below 0 line. RSI 16.06 and significantly OB,  H1 ATR 0.1820 Daily ATR 0.8000.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our written permission.