Discuss FreshForex.com

[Volkov Yuriy]

SAVED BY THE GAVEL: BITCOIN'S STARK REVERSAL

Dear clients,

Bitcoin's gains from a U.S. court ruling bolstering the future prospects of funds targeting retail investors saved the cryptocurrency from a disappointing month and instilled renewed optimism about its long-term prospects.

The Securities and Exchange Commission's rejection of Grayscale Investments' proposal was "arbitrary and prejudicial", a federal court said Tuesday, giving the crypto asset manager a landmark victory.

The cryptocurrency surged more than 7% on the news, setting the course for its best day since March and cutting some of the heavy losses suffered over the summer.

Plagued by lower demand for risky assets caused by rising U.S. Treasury yields and a drop in volatility during quiet summer trading, bitcoin was on track for its worst month since November 2022 before the ruling, when confusion reigned following the liquidation of the FTX exchange. Its monthly losses are now around 5%.

Investors said Grayscale's victory will likely now factor into future SEC rulings on spot bitcoin fund ETFs filed by several major financial firms this year, including the world's largest asset manager BlackRock.

The emergence of spot bitcoin ETFs could help the cryptocurrency industry tap into a large amount of previously untapped funds from retail investors, which in turn would help boost the bitcoin price.

TRADING SIGNALS: NFP FOR AUGUST

Dear clients,

On September 1, we are expecting the publication of data on Nonfarm Payroll, a measure of U.S. manufacturing employment. The report significantly affects the movement of the US dollar and related instruments.

What indicators are expected this time, let's find out from our expert:

The leading employment indicators from ADP and ISM point to the release of weak Non-Farm Employment data, which is negative for the US dollar, as this situation allows the US Fed to keep interest rates at the current level. On Friday, consider selling USDZAR, USDCAD and buying AUDUSD, XAUUSD.

Get ready to harvest with 101% bonus!

CAUSE AND EFFECT: GRADUAL RECOVERY OF THE OIL MARKET

Dear clients,

Oil prices were about to break a two-week losing streak as they rose for the fourth consecutive session on Friday on the back of supply cuts and expectations that the OPEC+ group of oil producers will extend production cuts until the end of the year.

West Texas Intermediate (WTI) crude rose 21 cents, or 0.3%, to $83.84 a barrel, while Brent crude was up 26 cents, also up 0.3%, to $87.09 a barrel as of 0605 GMT. For the week, WTI is up more than 5% and Brent is up about 3%.

Analysts expect Saudi Arabia to extend a voluntary oil production cut of 1 million barrels a day for October, adding to cuts by the Organization of the Petroleum Exporting Countries.

"We continue to expect production cuts to be extended and prices above $90 per barrel (on a sustained basis) will be required to attract OPEC supply to the market, as well as incentivize U.S. shale oil producers to increase drilling activity," National Australia Bank said in a client note on Friday.

U.S. crude inventories fell by a more-than-expected 10.6 million barrels last week, government data showed Wednesday. Commercial crude inventories have fallen by 34 million barrels since mid-July.

Traders and investors often view changes in U.S. inventories as a proxy for changes in the balance of global production and consumption, and spot prices and quotes may rise if inventories continue to deplete.

"Signs of increased demand have also been evident in the commodities market, with implied gasoline demand rising for the first time in three weeks," ANZ said in a research note on Friday.

A weakening US dollar, which looks set to end a six-week winning streak, also helped prices. A stronger dollar puts pressure on demand for oil, making the commodity more expensive for buyers holding other currencies.

A survey showing renewed growth in Chinese factory activity and Beijing's measures to support China's weakened housing market also helped boost oil prices on Friday as traders hoped it would stimulate demand in the world's second-largest oil-consuming country.

 

[Volkov Yuriy]

TWO BENEFITS FOR THE PRICE OF ONE: 101%+CASHBACK

Dear clients,

Summer is over, but that's no reason to be upset, because we have a hot offer for you.

From the 4th of September for new clients for the first deposit 101% cashback is also available.

Message the support team the promo code — HOT, choose the cashback plan that suits you, and get an additional bonus for your deposit.

More amount, more bonus, more benefits! Increase your volumes and get even more net profit.

Terms of promotion:

1. Within the framework of the promotion, new clients of the company can be eligible for a 101% bonus on the first deposit to the trading account with the Cashback promotion enabled.

2. You can take advantage of the offer within 7 days after registration with the company.

3. To participate in the promotion you need to:

3.1. Register and open a trading account;

3.2. Enable the Cashback promotion on your trading account in the Client Area;

3.3. Make a deposit from 101 USD;

3.4. Contact the personal manager with the code word HOT to credit the deposit bonus in the amount of 101%;

4. Bonus funds are used in accordance with the terms of the promotion Drawdown bonus 101%; crediting of spread refund in accordance with Cashback promotion terms.

5. In order to prevent abuse of the promotion terms and conditions, the Company reserves the right to refuse the client this offer without warning at any time at its discretion.

 

[Volkov Yuriy]

RATIO'D. UPDATED FORECASTS FROM MOODY'S

Dear clients,

Ratings agency Moody's on Friday raised its forecast for U.S. economic growth in 2023 but lowered its outlook for China next year, noting that while the risk of a U.S. recession has declined, China's problems are mounting.

"We have raised our forecast for U.S. economic growth to 1.9% in 2023 from 1.1% in our May forecast, recognising the strong underlying economic momentum," Moody's said in a report.

The agency, which is currently the only Big Three agency still holding a "AAA" rating for the U.S. after a downgrade by Fitch last month, maintained its 2024 economic growth forecast at 1%, saying high interest rates will drag on the economy.

"We believe it will be difficult for the Fed to achieve a sustained decline in inflation to the 2.0% target while current economic conditions persist," Moody's said in a statement. "In our view, several quarters of below-trend growth are needed to prevent overheating."

On the other hand, the agency said China faces "significant growth challenges" stemming from weak business and consumer confidence amid economic and political uncertainty, ongoing problems in the real estate sector and an aging working-age population.

Moody's maintained its growth forecast for this year at 5%, but cut its 2024 outlook to 4.0% from 4.5% previously. China's rating is at A1 with a stable outlook, four notches below the U.S.' top rating.

"Data from China suggest that the economic recovery from the prolonged zero-rate policy remains muted, as the momentum for renewed growth seen in March, April and May appears to be waning," Moody's said in the report.

"We believe low consumer confidence is restraining household spending, and economic and political uncertainty will continue to weigh on business decisions."

NO MIRACLE IN SIGHT. ECONOMIC DATA FROM CHINA

Dear clients,

Asian stocks fell on Tuesday as weak service sector data renewed fears of a faltering post-pandemic Chinese economy.

The MSCI was down 0.65% at 511.63, moving away from 515.37, the highest level since 11 August, which it reached on Monday.

Futures indicated that the gloomy mood is likely to spread to Europe, with the Eurostoxx 50 futures down 0.21%, Germany's DAX down 0.20% and the FTSE futures down 0.29%.

The recent rally in Chinese equities, fuelled by a series of government measures aimed at supporting the weakening economy, is quickly fading. The CSI 300 blue-chip index fell 0.58% and Hong Kong's Hang Seng fell 1.5% after these markets recorded their best day in over a month on Monday.

Optimism quickly faded after a private sector survey on Tuesday showed that China's service sector activity grew at the slowest pace in eight months in August as weak demand continues to haunt the world's second-largest economy and stimulus measures failed to significantly revive consumption.

Nevertheless, investors are hopeful that Beijing's drip-feed of stimulus will be enough to stabilise the Chinese economy.

In a rare piece of good news for China's crisis-hit property sector, a source close to Country Garden said the company made interest payments on two dollar bonds just as the grace period was due to end on Tuesday.

On Friday, China's largest private property developer received approval from onshore creditors to extend a 3.9 billion yuan ($536 million) private bond.

WEEKLY OUTLOOK: BTC, ETH, XRP

Dear clients,

The world of crypto is seeing some hard ups and downs lately, with both Grayscale ETF approval and SpaceX dumping their crypto assets. This time, we'll be looking Bitcoin, Ethereum and Ripple, what's going on with them now and what may happen further on.

Join us on September 6 at 12:00 GMT.

During webinars, FreshForex analyst will answer your questions regarding the market situation and comment on the latest news.

If you missed the previous webinars, you can always find them on our site.

 

[Volkov Yuriy]

GOOD NEWS, BAD NEWS. THE POWER MOVE OF DOLLAR

Dear clients,

Global stock indices were mostly down on Thursday, with the S&P 500 and Nasdaq falling along with Apple shares, while the US dollar rose after weaker-than-expected US jobless claims data.

Initial jobless claims in the states for the week ended September 2 unexpectedly fell to 216,000 from a revised 229,000 the week before. The latest week's reading was the lowest since February.

A separate report showed that US labour productivity in the second quarter was not as strong as previously announced.

The latest data confirmed the view that the US economy remains resilient and that US interest rates may have to be raised for a long time to come.

China's yuan fell to a 16-year low against the dollar amid falling property prices, weak consumer spending and reduced credit growth in the world's second-largest economy.

China's trade data released on Thursday, while not as dire as economists had forecast, still showed a nearly 9% drop in exports and a more than 7% drop in imports.

In Japan, traders continued to watch for intervention as the Japanese yen struggled to make a sustained breakout against the steady dollar.

The dollar had earlier hit its highest since November at 147.875 yen and was last down 0.4% to 147.20.

The dollar declined on Friday but still remains on track for its longest weekly winning streak in nine years, helped by a steady run of U.S. economic data that also called into question the end of the Federal Reserve's aggressive rate hike cycle.

The U.S. Dollar Index, which measures the dollar against major currencies, was last down 0.1% at 104.93, but remained not far from the previous session's six-month high of 105.15. The index was on track to continue rising for the eighth consecutive week and is currently up 0.6%.

INVIGORATE YOUR TRADING WITH A POWERFUL DUAL OFFER

Dear clients,

We extend the summer and offer the hot promotion! Unprecedented benefit for new clients — activate Cashback and get 101% of the amount on your first deposit.

More funds — more trading volume and a higher chance of a big profit! And every week, the funds from trades will be returned to your balance within Cashback promotion.

How to use the offer:

1. Register on the company's website.

2. Write to the online support with the promo code HOT.

3. Choose any convenient cashback plan and get a powerful deposit bonus.

Done! You can trade in full force, open your best trades and get profit.

Terms of promotion:

1. Within the promotion, new clients of the company can be eligible for a 101% bonus on the first deposit to the trading account with the Cashback promotion enabled.

2. You can take advantage of the offer within 7 days after registration with the company.

3. To participate in the promotion, you have to:

3.1. Register and open a trading account;

3.2. Enable the Cashback promotion on your trading account in the Client Area;

3.3. Make a deposit from 101 USD;

3.4. Contact the personal manager with the code word HOT to credit the deposit bonus in the amount of 101%;

4. Bonus funds are used in accordance with the terms of the promotion Drawdown bonus 101%; crediting of spread refund in accordance with Cashback promotion terms.

5. In order to prevent abuse of the promotion terms and conditions, the Company reserves the right to refuse the client this offer without warning at any time at its discretion.

LET'S TALK ABOUT ECB MEETING

Dear clients,

On September 14, the European Central Bank will hold meeting, it will provoke strong fluctuations on the financial markets.

We will tell you how to earn with this event and which instruments can bring the most profit, as well as how the meeting will affect the euro and European indices.

Join us on September 13 at 12:00 GMT.

During webinars, FreshForex analyst will answer your questions regarding the market situation and comment on the latest news.

If you missed the previous webinars, you can always find them here.

 

[Volkov Yuriy]

ECB MEETING: WHAT WILL HAPPEN TO THE RATE?

Dear clients,

The next big event today is the ECB meeting. The European Central Bank is a global financial institution that regulates the entire Eurozone credit and financial policy. For this reason, the ECB Interest Rate Decision causes high volatility in the financial markets.

What will be the decision this time, and what instruments can be chosen? Our lead analyst says:

The ECB may keep the interest rate at 4.25% today and will signal to traders that it is ready to raise rates at the next meetings if necessary. Keeping rates at the same level is negative for the single European currency. Today, consider selling EURUSD, EURCAD, EURHKD.

It's a good time to top up with the 101% promotion: that way you'll have more funds to trade with.

DOUBLE BENEFIT WHEN TRADING BITCOIN!

Dear clients,

For two weeks, commission costs will be half off when opening Bitcoin trades (BTCUSD).

Until September 28, there is a 50% discount on spread and swap when depositing from $399. This is a great opportunity to earn more! Open trades intraday or for a longer term, you will save significantly either way.

In addition, you can save even more if you fund your account with cryptocurrency! We will credit 10% of the deposit amount without limit.

 

[Volkov Yuriy]

NEXT TO THE STAGE. BANK OF JAPAN MEETING

Dear clients,

In Asian trading on Monday, the US dollar barely moved, even sterling rose, but the yen fell as a Japanese holiday and a slew of upcoming central bank meetings sucked the air out of the markets.

The Bank of Japan meeting on Friday will be the highlight of the week in Asia, after Bank Governor Kazuo Ueda sparked speculation of an imminent departure from ultra-soft policy.

This has highlighted the Japanese central bank in a week packed with central bank meetings, with a hawkish pause expected from the US Federal Reserve on Wednesday and the Bank of England possibly raising rates for the last time on Thursday.

The yen was unchanged against the US dollar at between 147.63 and 147.88 per dollar, while markets in Japan were closed due to a public holiday. The yen fell 1.3% in the days following Ueda's announcement that he would soon move away from negative rates, with losses for 2023 exceeding 11%.

Economists at Commonwealth Bank of Australia expect yen exchange rate volatility ahead of the policy meeting and believe investors may have misinterpreted Ueda's comments. Recent weakness in Japanese wages and possible prices could also soften and push the BoJ away from its inflation target, so the case for the BoJ to tighten policy is not yet strong.

CRYPTO BLUES: STABLECOIN'S HEAVY SHARE OF LOSSES

Dear clients,

Bitcoin is not the only asset experiencing a late summer downturn.

Stablecoins, cryptocurrencies typically pegged to real assets such as the US dollar, have fallen to their lowest market capitalisation in two years as low trading volumes and a buzzing dollar put pressure on the market for these tokens.

In fact, they are suffering the most.

While the entire cryptocurrency ecosystem has bounced back from 2022 lows, the market capitalisation of the stablecoin sector is set to decline for the 18th consecutive month, according to research firm CCData. It's down by almost a tenth this year and stood at $124.4bn as of 14 September.

Not everyone is keeping pace, though: The largest dollar-stablecoin, Tether, is bucking the downward trend. It hit a record high of $83.8bn in July, according to CoinGecko, after being worth less than $80bn in the first three months of this year, its volume has since fallen to around $82.9bn.

While stablecoins make up only a modest portion of the cryptocurrency market, they play a key role for traders, allowing them to hedge against price spikes in other tokens, such as bitcoin, or to store idle cash without having to transfer it back into fiat currency. Some enthusiasts also envisage using stablecoins as a means of payment.

However, the market for these tokens has been in the doldrums since last year's collapse of the algorithmic token TerraUSD, which was once the fourth-largest stablecoin token and was the first domino in a series of dramatic industry failures.

The market has also suffered losses for Binance's dollar-linked token BUSD, which is down about 89% from its all-time high reached in November. In February, the New York Department of Financial Services ordered issuer Paxos to cease issuing the token, which was once the third-largest stablecoin.

The market value of USD Coin (USDC), the second-largest stablecoin, has fallen more than 53% from its record high reached last June and now stands at more than $26bn.

 

[Volkov Yuriy]

TRADING SIGNALS: US FED MEETING

Dear clients,

On September 20, the US Federal Reserve System, the body that performs the functions of the Central Bank of America, will hold a meeting. The decision on the interest rate will determine further market movement, which is what makes traders involved.

Our expert tells us how the situation with the rates will develop now:

The US Fed may keep the rate at the previous level of 5.5% today, but will signal to traders about the possibility of raising rates at the next meeting on November 1, as fuel prices have risen strongly in the United States, which is fraught with rising inflation. The future rate hike is positive for the dollar, thus consider buying USDCAD, USDZAR and selling AUDUSD, XAGUSD on Wednesday.

Make your arrangements and get up to 10% bonus on your account for each deposit with cryptocurrency!

'WHAT A TWIST' FOR BANK OF ENGLAND

Dear clients,

The Bank of England will announce on Thursday whether it is halting its series of interest rate hikes, a day after signs that a turnaround is in sight in the UK's handling of high inflation.

As soon as official data showed an unexpected drop in the rate of price growth, investors began betting on Wednesday that the Bank of England would keep the Bank Rate at 5.25%. By Thursday, the figure had already reached 5.5%

Goldman Sachs and other banks abandoned their earlier expectations of another rate hike, and investors put the Bank of England's pause at around 50%, up from 20% on Tuesday.

Other analysts said they still see a final Bank of England rate hike as the most likely outcome following the recent surge in global oil prices, but emphasised that it could go either way.

Bank of England Governor Andrew Bailey and his colleagues on the Monetary Policy Committee have been heavily criticised after consumer price inflation topped 11% last October.

In recent weeks, Bailey and other officials have emphasised that while they may be close to reaching the peak of their series of rate rises, they may have to keep borrowing costs high for some time, dashing hopes of a rapid rate cut.

Whether or not the Bank of England raises rates again, it is likely to face the challenge of convincing investors that it will stand by its judgement and not rush to cut rates even as the already fragile UK economy shows signs of weakening.

The Bank of England is concerned that wages are still defying a slowdown in the wider economy and are rising at a record pace, threatening to derail its attempts to bring inflation down.

As well as the rate decision, the central bank is expected to unveil details of the next phase of a programme to reduce the stockpile of government bonds it has built up over a decade and a half to help the economy during the global financial crisis and the COVID-19 pandemic.

 

[Volkov Yuriy]

CHIP AND FAIL. A TROUBLED MONTH FOR THE SEMICONDUCTOR INDUSTRY

Dear clients,

Shares of Nvidia and other U.S. semiconductor companies are starting to slowly lose lustre after a stunning rally into 2023 as investors weigh high valuations, rising Treasury yields and signs of industry worries.

At the start of the year, shares of chip companies soared, with the Philadelphia SE Semiconductor (.SOX) index surging more than 50% through July. No stock has embodied the chip industry's success more than Nvidia, whose shares tripled in 2023, when the company's market value topped $1 trillion, driven by excitement around the central role of the company's products in artificial intelligence applications.

However, the group's performance has stalled. SOX is down more than 7% this month, compared with a 2.3% fall in the broad S&P 500 index, while Nvidia shares — the driver of this year's broad market rally — are down more than 14% in September.

Investors said the group is also being impacted by industry concerns, including ongoing tensions between the U.S. and China over semiconductors. Washington is considering imposing restrictions on the sale of artificial intelligence chips, after export controls last year cut China off from some semiconductor chips made anywhere in the world on US equipment.

Another blow came from Taiwan's TSMC, which asked its major suppliers to delay shipments of high-tech chip-making equipment as the world's top contract chipmaker grows increasingly nervous about customer demand. Shares of several TSMC suppliers fell after the announcement.

Meanwhile, the excitement following last week's initial public offering of Arm Holdings has died down, and shares of the chip developer have fallen for the fifth consecutive day.

Still, the sentiment among investors is still quite positive. Many chip stocks have risen significantly over the year, and this month may prove to be only a temporary setback.

FREE POWERFUL TRADING ANALYTICS IN METATRADER 5

Dear clients,

Last week the MetaTrader 5 platform was updated to the Build 3950 version.

Let's get straight to the main thing. The trading history report has been redesigned and completely updated - now it is more clear. The developers have revised the approach to information presentation and converted dry statistical reports into interactive charts and diagrams. The work is still in progress, but you can already evaluate the changes. To view trade statistics, click "Reports" in the "View" menu.

Available reports:

Summary - summary information about your activity over time: account details, profit and loss totals, deposit and withdrawal amounts, balance, growth and dividend graphs, and other data.
Profit/Lost - historical information about profitable and losing trades. It is divided by type of trading (manual, copy-trading and algo-trading), can be analysed in terms of trades, percentages or money by days, months and years.
Long/Short - report on Buy- and Sell-orders in specified time intervals.
Symbols - detailed analysis of deals by financial instruments. Ratio of the number of deals, comparison of different types of trading and historical data for individual symbols or whole groups.


This innovation will help traders of any level to trade more efficiently — the statistics section has been redesigned, now it is a serious tool for analysing your own trading history. Beginners and professionals will find in the updated section everything they need to optimise their portfolio. You will no longer need third-party services to monitor trading results: the necessary information is built into the platform and is available at a single click.

Right now the update is available only for the desktop version of the platform with an operating system not lower than Windows 10. In the nearest updates this feature will be added to the web and mobile versions of MetaTrader 5.

No extra effort or cost — the solution is built into the trading platform and comes free of charge!

Try out the new stuff together with our unique offer — 50% discount on spread and swap when trading bitcoin!

 

[Volkov Yuriy]

HEATING FUEL PRICES

Dear clients,

Oil prices rose on Monday as investors focused on the prospects of tightening supply after Moscow imposed a temporary ban on fuel exports, but at the same time are wary of further rate hikes that could dampen demand.

Brent crude futures rose 69 cents, or 0.7%, to $93.96 a barrel by 06:46 GMT after falling 3 cents on Friday. West Texas Intermediate continued to rise for a second session and traded at $90.57 a barrel, up 54 cents, or 0.6%.

Both contracts went on a tear last week, breaking a three-week winning streak, after the Federal Reserve's hawkish stance caused concern in the global financial sector and boosted demand for oil.

Prices had risen more than 10% in the previous three weeks amid forecasts of a large oil supply deficit in the fourth quarter after Saudi Arabia and Russia extended additional supply cuts until the end of the year.

Moscow last week temporarily banned petrol and diesel exports to most countries to stabilise the domestic market, adding to fears of low supply of the commodity, especially heating oil, as the Northern Hemisphere enters winter.

In the US, despite higher prices, the number of active oil rigs fell by eight last week to 507, the lowest since February 2022, Baker Hughes showed in its weekly report on Friday.

Expectations of better economic data this week from China, the world's biggest oil importer, also helped boost sentiment. However, analysts said oil prices face technical resistance at the November 2022 highs reached last week.

According to analysts at Goldman Sachs, China's manufacturing sector is expected to return to growth in September, with the manufacturing business activity index expected to exceed the 50 mark for the first time since March.

On the positive side, Chinese oil demand rose 0.3 million bpd to 16.3 million last week, partly due to a gradual recovery in demand for jet fuel for international flights, they added.

"THERE'S NO HURRY": INDEX GAINS AMID MARKET SLOWDOWN

Dear clients,

Wall Street's major indices rose on Monday, including Amazon.com and energy stocks, as Treasury yields continued to rise and investors awaited economic data and speeches from Fed policymakers later in the week to get clarity on the future path of interest rates.

Investors are struggling with benchmark Treasury yields rising to 16-year highs after the Fed gave a hawkish outlook for long-term rates. The S&P 500 index rebounded Monday after last week's weekly decline was its biggest since March.

The Dow Jones Industrial Average (.DJI) index rose 43.04 points, or 0.13%, to 34,006.88; the S&P 500 index (.SPX) added 17.38 points, or 0.40%, to 4,337.44; and the Nasdaq Composite index (.IXIC) added 59.51 points, or 0.45%, to 13,271.32.

With the end of the third quarter approaching, investors have noted that until companies report quarterly results in the coming weeks, market movement may be relatively muted.

The S&P 500 index is down about 5.5% since the end of July, but is up about 13% for 2023.

According to analysts, there is no need to actively buy pullbacks during a period when rates remain higher-for-longer, and that is what the market will have to deal with in the coming months.

Investors will be watching data throughout the week, including durable goods and personal consumption expenditure price index for August, gross domestic product for the second quarter, and speeches from Fed policymakers, including Chairman Jerome Powell.

Chicago Fed Chairman Austan Goolsbee told CNBC on Monday that keeping inflation above the Fed's 2% target remains a greater risk than the central bank's tight policy slowing the economy more than necessary.

 

[Volkov Yuriy]

SEPTEMBER HARVEST

Dear clients,

September has come to an end, so it's time to share the results and recall the results of the first weeks of autumn.

So, here is what this month has brought to our traders:

GBPCAD, GBPNZD (Sell) and WTI, NZDCHF, CADCHF (Buy) ended up as the most profitable instruments.

The Heatmap will tell you more about these and other instruments.

September, though traditionally quiet, was not without events:

Autumn was greeted with summer mood and double profit with Cashback+101% promotion.
Double minus yield a plus for clients who traded bitcoin with a 50% discount on spread and swap.
Metatrader 5 terminal has got an update, now with more efficient and visual statistics.


And of course, our regular promotions — +10% for cryptocurrency deposit and 101% bonus.

October is a special month for us, so stay tuned: the company's birthday is just around the corner.

QUARTERLY RETORT

Dear clients,

Budgetary concerns and fears of a prolonged period of higher interest rates caused government bonds to fall in the third quarter, and some investors believe more weakness lies ahead.

US and German government bond yields were set to end September with their biggest quarterly gains in a year. Fund managers had already hoped for relief after the historic losses suffered by bonds in 2022, when the US Federal Reserve and other central banks raised interest rates to curb soaring inflation.

While bond yields, which move inversely to prices, seemed to have peaked earlier this year, renewed hawkish sentiment from central banks has led to a fresh rise in recent weeks.

In the US, for example, the benchmark yield on 10-year Treasuries is currently at a 16-year high of 4.55% and some investors believe it could rise to 5%, a level not seen since 2007. According to Bank of America Global Research, Treasuries have posted their third consecutive year of losses, an event without precedent in U.S. history.

The jump in yields is having a negative impact on equities, which in the U.S. and Europe are poised for their first quarterly decline of the year. Monetary policy expectations have been a key factor: last week, the Fed surprised investors with its hawkish rate forecasts, according to which borrowing costs will remain at current levels for most of 2024.

Investors had to quickly readjust: traders are now betting that the Fed Funds rate, currently at 5.25%-5.50%, will fall to 4.8% by the end of 2024, well above the 4.3% they forecast in late August.

Similarly, investors have pushed back expectations of a rate cut by the European Central Bank as policymakers stick to their course of keeping rates high for a long time. Prices in currency markets indicate that traders see the ECB deposit rate at around 3.5% by the end of 2024, up from 3.25% at the end of August.

Rising yields have not only hit bond investors, but also hurt equities, creating investment competition while raising the cost of borrowing for corporations and households.

The S&P 500 index (.SPX) fell 3.4% in the current quarter, its worst drop in a year, though it is up 11.3% since the beginning of the year. Europe's Stoxx 600 index (.STOXX), meanwhile, is up 5.6% this year but has lost 2.9% over the past three months.

OIL BOIL: A POWERFUL SURGE IN FUEL PRICES

Dear clients,

Oil prices hit one-year highs on Thursday, while global equities faced their longest losing streak in two years as fears of continued high interest rates intensified. This is causing investors to seek shelter under the influence of a rising US dollar.

Currency markets saw a brief respite from the dollar's strength, but it was a significant drop in US crude oil inventories on Wednesday that shook nerves over fears of another supply shock just when the global economy needs it least.

The price of U.S. crude hit $95 a barrel for the first time since August 2022, while Brent crude prices rallied again in early trading in London after hitting a one-year high of $97.69.

The yield on ten-year US Treasuries, the benchmark for global borrowing costs, topped 4.6% for the first time since 2007, having started September at 4%.

Germany's AAA bond yields went up again, while Italy's announcement on Wednesday that its budget deficit was widening again drove its short-term two-year bond yield to a new 11-year high. Traders were also watching U.S. lawmakers try to avoid another government shutdown in Washington.

With European stocks down 0.4% (.STOXX) and U.S. futures on the S&P 500 index, MSCI's main global index tracking 45 countries was on track for a 10th straight day of declines not seen since 2021.

MSCI's index for Asia-Pacific shares hit a 10-month low and Japan's Nikkei index fell 1.5% as investors preparing for the end of Q3 got rid of stocks that have run out of dividends.