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Market Update – August 29 – Stock markets supported by China hopes and falling yields

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Trading Leveraged Products is risky

Treasuries and Wall Street rallied to kick off the last week of the month for what’s been a pretty bearish August. The same stands so far today. Rate hike fears amid a “higher for longer” policy stance, supply concerns, worries over spillover from slowing growth from China, mixed earnings, and fading AI enthusiasm helped knock bonds and stocks lower through August. But with yields having climbed to 16-year highs and much of the threat from still-hawkish monetary policy priced in, shorts covered and dip buyers emerged.

Treasury yields declined across tenors, with the 2-year dropping to slightly below 5%. The auctions of 2- and 5-year Treasury notes Monday drew the highest yields since before the 2008 financial crisis, a reflection of the US bond-market selloff that deepened last week in anticipation of another rate increase by the Federal Reserve. This is the first 5% handle and the highest award rate since July 2006.

This morning, the Japan unemployment rate for July came in higher than expected & German GfK consumer confidence dropped to the lowest level since May. Pessimists far outnumber optimists and the full breakdown, which is only available until August, showed that the assessment of income expectations deteriorated markedly. Not a positive report and the disappointing numbers tie in with the weakness in business confidence readings. Overall GDP growth is expected to contract this year and political headlines at home are not helping to lift the mood. The ECB seems to be expecting a soft landing though, so those numbers don’t necessarily mean that the ECB will pause next month, as the hawks seem to favor getting any additional hikes that may be needed out of the way.

  • FX – USDIndex weakened against the G10 and dipped to 103.73 overnight, EURUSD spiked to 1.0837 (strong resistance area at 1.0840) , GBPUSD holds gains at 1.2617 and USDJPY sideways at 146.27-146.75. – Goldman sees Yen falling to 1990 levels if BOJ stays dovish!
  • Stocks – The US100 advanced 0.84%, with the US500 up 0.63% on broadbased gains. Of note, this is the first back-to-back gain for August. The US30 was up 0.62%. NVDA +1.78%, Alphabet +0.87%, 3M +5.22%, GS +0.84%, DIS +0.96%, AAPL +0.88%, AMD +0.35%. European stocks made a positive start today, tracking positive momentum around the world.
  • Commodities – USOil up by 0.35% to $79.55.
  • Gold – rose 0.2% to $1,925.75.
  • BTCUSD rose 0.3% to $26,054.53, ETHUSD rose 0.2% to $1,649.81.

Today: US Housing Price Index, Jolts & Consumer Confidence.

Interesting Mover: EURAUD (-0.26%) broke below 1.6800, with a bearish cross of 10- and 20-period EMA extending lower.

Click here to access our Economic Calendar

Andria Pichidi

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 prior written permission.

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