The market is in the thinking and decision stage.
While it is a holiday in the US, the week started with red numbers on boards in the Asian season. After the central bank's decisions in the last two weeks, now policymakers' speeches will be in the spotlight to explain more in detail what they decided and why. However, we have the same drivers moving the markets, threatening high inflation, Stagflation concerns, and fears that the central banks will not be able to control the situation and just have the reaction, instead of leading the markets, so they are limited on what they can do!
- BofA Securities economists see roughly a 40% chance of a US recession next year, with inflation remaining persistently high. (Reuters)
- The business research firm found that 60% of CEOs expect the economy to contract in their primary area of operations in the next 12 to 18 months. Some 15% of CEOs say they believe their region has already entered recession. (Yahoo)
- The S&P 500 now implies an 85% chance of a US recession amid fears of a policy error by the Federal Reserve, according to JPMorgan Chase & Co. strategists. (Bloomberg)
Since markets have been falling sharply in previous weeks, and while most of the risks have been priced in the markets, it is so likely to see a breathing time in the market to see what policy markets have to offer before making any new decisions, therefore bears will slowdown in next days before following trends.
Due to holidays in the US, bond markets are closed today. In the first hours, we can see that the US dollar index decreased a bit towards 104.30 after recovering most of the decline following the FOMC and Chairman Powell's speech on Friday. Also, the US 10-year Treasury yields closed at 3.23% on Friday, with the 30-year yield at 3.28%. Oil prices are also hard to resist the impact of the Fed's strict monetary policy, falling more than 12% to $106.30 on Friday, but today they could recover above 108.40.
In Asian markets, Nikkei lost 0.74%, but Shanghai and Hang Seng are flat with no change. In the future markets, US leading indices increase by 0.4% on average.
In this situation, gold is also expected to move in a range with an uptrend tendency as markets make decisions as risks remain. Technically, we expect prices above 1,820 generally; however, above 1,865 needs more encouragement.
