Stock Market Today
US and European futures are trading lower as traders are hesitating to back riskier assets ahead of big tech earnings week and Fed’s monetary policy decision. The Fed has shown that it wants to tame inflation at any cost, and a threat of a recession isn’t going to deter them from their current plan. The 10-year Treasury yields are most likely to peak from 3.4% to 3.7% over the next seven months or so.
In terms of the European markets, the Stoxx Europe 600 index is on track to record its biggest monthly gain since December. Traders will keep a close eye on the index as the month ends very soon.
Bitcoin
Bitcoin prices will be highly edgy this week as the Fed will announce its monetary policy decision. It is widely anticipated that the Fed will increase the interest rate by 75 basis points, and during past events when the Fed increased the interest rate this year, we saw the bitcoin price fall. Traders have started to believe that this fundamental for Bitcoin is quite strong as there is clear evidence.
In addition, remember Elon Musk also said when Tesla reported its earnings that he wanted to increase the company’s bitcoin holdings at a lower price.
From a technical price point, the bitcoin price is struggling to stay above 50-SMA on the daily time frame, meaning the bulls are losing ground, and if the price drops below this average, the path of the least resistance will likely be skewed to the downside.
The Big Question
The big question for investors and traders will be if we see the final sight of the hawkish Fed, meaning if this will be the last time that the Fed will increase the interest rate by 75 basis points. There are some indications in terms of economic data and oil prices that we have seen a peak in inflation in the US, and if this holds, then it is highly likely that the Fed will slow down its dice roll. If, in the upcoming meeting, we hint that the Fed will slow down the interest rate hike, we are likely to see a strong rally in the equity markets, especially for the tech stocks, as they are massively cheap.
UK Election
This week is important for UK politics as Rishi Sunak and Liz Truss will hold their first tv debate today. Both have already shown their concerns about illegal immigration, national security, and economic conditions. It is clear that Rishi Sunak has a much stronger track record in handling the economy in tough times such as the covid-19 period, and he is more favourable on that front. Speculators believe that it is highly likely that we will have a much stronger relief rally for the Sterling, which is currently being battered on recession fear if Rishi Sunak wins the election.
Soft Commodities
The future soft commodities contracts will likely remain in focus among investors and traders this week. We saw a spike in what futures surged over 4% as Russia attacked Odesa’s sea port. The timing of the attack is quite interesting as both countries, Ukraine and Russia, agreed on a deal on soft commodities in Turkey only last week. The strike on Odesa’s sea port has undoubtedly raised some concerns that if the tensions do not defuse, we are highly like to see a worrying situation in the grain market.