To The Moon

Global assets fluctuate more, A precursor to global volatility in September?

Traders have begun to recalibrate expectations following FED Chair Jerome Powell's hawkish remarks at the Jackson Hole annual meeting , and investors have begun to weigh whether an aggressive rate hike line may remain unchanged.

There's a 70.5% probability of a 75 basis point hike at the September FOMC meeting.

Dollar

The US dollar index once refreshed a 20-year high. On August 29, the dollar hit a new high since 2002, and once rose above 109.40 during the session, setting a new 20-year high. The U.S. dollar index has risen more than 13.8% this year.

Government Bond

Investors now see a 72.5% chance of a 75 bps rate hike at the FED's September meeting, with rates reaching around 3.7% by year-end.

U.S. Treasury yields continued to climb. 2-year U.S. Treasury yields rose to a 15-year high near 3.50%, filling global markets with additional uncertainty and fear as investors rushed out of stocks and bonds.

 Equities

U.S. stocks fell for 2 days to hit a new one-month low, with technology and chip stocks leading the decline, making the $NASDAQ(.IXIC)$ among the top losers among major indexes. $S&P 500(.SPX)$ ，$DJIA(.DJI)$ .

VIX

The "fear index" VIX once rose above 27, the highest since mid-July.

European Stocks

Worried that European and American central banks will join hands to violently raise interest rates in September, European stocks fell broadly on Monday, with all sectors and major national stock indexes falling. German, French, Italian and Eurozone Stoxx 50 indexes fell more than 1% during the session.

Bearish Bets Rise

Investors are also ramping up bearish bets on some of the big-cap tech stocks that fueled a summer rally in U.S. stocks.

According to the Commodity Futures Trading Commission, as of last Tuesday, among such traders, mainly hedge funds, the net short position in S&P 500 futures contracts was more than 260,000 contracts, close to the June 2020 high.

Cryptos

Bitcoin  fell back below $20,000 for the first time in seven weeks, as Fed Chairman Jerome Powell’s more tightening rhetoric last week sparked a safe-haven sell-off.

BTC/USD 1-week candle chart (Bitstamp). Source: TradingView

Shares of cryptocurrency-related companies slipped on Monday, with $Coinbase Global, Inc.(COIN)$ down 3%, $Marathon Digital Holdings Inc(MARA)$ down 4.3% and $Riot Blockchain, Inc.(RIOT)$ down 4.4%. Among other companies with significant exposure to cryptocurrencies, shares of $MicroStrategy(MSTR)$ slipped 3.7% and $Signature Bank(SBNY)$ slipped 0.6%.

$Gold - main 2212(GCmain)$

Gold price fell slightly, with COMEX December gold futures closing down less than 0.01% at $1,749.70 an ounce.

$SPDR Gold Shares(GLD)$

$Light Crude Oil - main 2210(CLmain)$

U.S. oil $W&T Offshore(WTI)$ hit its highest level since August 1. International Brent may rise 4.4%, and November $Light Crude Oil - main 2210(CLmain)$ it a four-week high.

$Natural Gas - main 2210(NGmain)$

European natural gas futures tumbled 20% to €270/MWh late Monday, the biggest drop since April. The futures rose nearly 40% last week.

With the markets fluctuating so much, how will the market go in September?

As investors headed into September, the latest nonfarm payrolls report was the main focus of the U.S. stock market this week.

The U.S. Labor Department will release August employment data at 8:30 pm Beijing time on Friday, which is expected to show another strong month for the U.S. job market. Economists expect nonfarm payrolls to rise by 300,000 in August. The data may play a key role in the Fed's September meeting on interest rates.

Rob Carnell, head of research at ING, believes that the sharp sell-off in U.S. stocks since last Friday shows that the stock market has not fully priced in a recession.

Several Wall Street analysts, including Mohamed El-Erian, chief economic adviser at Allianz, pointed out that as central banks in Europe and the United States become more hawkish, financial market volatility will increase, and the United States may re-test the low of the year in mid-June.

For investors jittery over the Fed chair, JPMorgan analysts pointed out: Forget short-term direction and focus on value stocks. He recommends avoiding big tech stocks and bitcoin and selling cryptocurrencies.