Stocks were sold globally in Mondays session as risk appetite took a hit on civil unrest and increasing Covid cases in China dashing re-opening hopes. Adding to this was the reset of the “Fed Pivot” narrative with a quartet of Fed governors throwing cold water on that idea, re-iterating the Fed was in for the long haul in their quest to tame inflation.
The market took these comments to show an imminent pause looks unlikely, and a pivot even less likely, sending risk-assets lower. Also a sharp re-pricing in Fed fund futures trying to predict the next size of the Feds rate hike, yesterday it was sitting at 75% of 50bp, 25% a 75bp hike, after these Fed member comments the odds are now 66% to 34%, a huge move.
The US dollar saw a large intraday swing as markets re-priced, after initial weakness the US dollar index skyrocketed to recoup losses and then some.
Crude oil was another market that had a rollercoaster ride, with China inspired growth concern gap down on the open, retraced sharply on comments from Eurasia Group that OPEC might be discussing more production cuts, not hikes.
Todays calendar is fairly light again, though it does feel like the calm before the storm as a slew of top tier releases will start on Wednesday.
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