Summary of the Impacts of Releases
19 September 2022 – 23 September 2022
Impact of Economic Releases:
The major economic releases of this week include the PPI in Germany and the FOMC Rate Decision in the United States.
Europe
- In the last week, interest rates around the globe has taken a hike again causing prices to across the stock markets and bond prices to fall; The Bank of England hiked interest rates by 50 bps to 2.25%, the Swiss National Bank raised interest rates by 75 bps to 0.5%, and Norway raised by 50 bps to 2.25%
- The hawkish Fed has impacted the Europe by delivering yet another super-sized interest rate hike which has caused many of the European stock index futures to fall on Thursday shortly after its announcement
- Bond yields from multiple Eurozone countries hit record highs; German 2-year yield reached 10 bps higher at 1.858% and 10-year yield hit 1.991%, highest since 2014; Italy’s 10-year yield also rose 6bps to 4.191%
- Energy prices remain as the Eurozone’s biggest concern as the prices of oil remains uncertain due to the ongoing war; The European Commission is working on more solutions to maintain the sky-high prices as increasing pressure from the energy firms calls for emergency measures
- Britain has lifted a ban on fracking for shale gas considering the energy demand crunch, Business and Energy Secretary Jacob Rees-Mogg says that all sources of energy needs to be explored to increase domestic production
- Germany’s trouble with energy has sent fears to manufacturers and producers with the possibility of facing insolvency for some of these firms; As part of their efforts, Germany has nationalized its country’s largest importer of Russian gas Uniper in hopes of relieving the winter energy crisis.
U.S.
- Fed announced another 75 bps rate hike on Wednesday (21 Sep), lifting target interest rate to 3.00%– 3.25% range; Powell acknowledged the forecasted economic turmoil but insisted on bringing inflation down to 2% target; policy makers also casted doubts on prospects on “soft landing” and signaled more large hikes are upcoming
- U.S. dollar surged to the two-decade high after Fed’s rate decision; The dollar index hit 20-year high of 111.81 on Thursday (22 Sep); Other major currencies depreciated following the strong dollar dominance; However, Japanese Yen experienced its first weekly gain in months as Japanese government intervened in the FOREX market
- U.S existing home sales dropped 0.4% in August, marking seventh straight monthly decline; Median house price has risen to 7.7% YoY while housing supply has not changed at 1.28 million; Main driver of declining home sales is the rise of mortgage rates to 6.29%, the highest since 2008, due to policy rate hike
- Surprisingly, U.S jobless claims increased for the first time in six weeks; The unemployment claims rose 5,000 to 213,000, but the figure was still lower than previously forecasted 217,000 applications
- All major indices finished more than 1.7%; NASDAQ and S&P 500 closed at their lowest point since July, continuing their weekly losing streaks; The October VIX futures rose 0.28 points against the November futures: the price inversion of front month contracts implies short-term concerns outweigh long term expectations.
All timings here are based on SGT/HKT time zone
Learn more: https://www.eurex.com/ex-en/
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