Market Update – May 12 – Tech Trounced as Inflation Possibly Peaks

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USD rallies to new highs following much volatility after US CPI data for April was lower than March but higher than expected, rekindling concern that aggressive central bank action will weigh on growth.  Stocks sharply into the red, Yields spiked sharply higher as talk of Treasury rout also cools with 10-yr back under 3.00%. Oil jumped after Russia sanctioned 31 companies & on recession fears. Gold slightly up, but holds below $1860. Bitcoin tumbled to new 16-month low. UK economy shrinks in March, grows 0.8% in Q1. Nomura estimated this week that 41 Chinese cities are in full or partial lockdowns, making up 30% of the country’s GDP. Reuters: “Property developer Sunac China missed a bond interest payment and will miss more as China’s real estate sector remains in the grip of a credit crunch.” New Zealand inflation survey steady.

USDIndex spiked to 104.20 & holds its bid trading at 104 now.
EquitiesUSA500 slid below the 4000 level before bouncing back, into the green with the USA30. But all of the indexes crashed into the close, paced by the USA100’s -3.18% plunge. Nikkei dropped 1.8%, the ASX also -1.8%.
Yields had jumped to 2.839% and 3.07%, respectively, in the immediate aftermath of the data. 10-year rate closed 6.5 bps lower at 2.920%, with the 2-year up 3 bps to 2.64%.
Oil breached $106.23 before reversing to $103.46 (PP of the day).
Bitcoin fire-sale of risky assets as rate hikes gather steam, fell 7% to $26,673
FX marketsEURUSD down to 1.0489, USDJPY drifted further on EU open to 129.25, & Cable retests 1.2210.  AUD & NZD at 2 year lows.

Today – US PPI & Initial Claims, Speeches from BOC Gravelle.

Biggest FX Mover @ (06:30 GMT) ETHUSD (-12.47%) Down to June 2021 low, at 1787. MAs aligning lower, MACD signal line & histogram extend lower, RSI 27 OS, H1 ATR 90.59, Daily ATR 236.65.

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Andria Pichidi

Market Analyst

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