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The week started in a relatively good mood. The S&P500 posted its first back-to-back gains this month, even though the US 2-year yield advanced to a fresh high since July with the 2 and 5-year treasury auctions hitting the highest yields since before the 2008 crisis. One would think that the Chinese stimulus measures have lifted up the sentiment across global equities, but the CSI 300 closed yesterday just around 1% higher. As such, yesterday was just another day the Chinese stimulus measures didn’t get the attention Chinese officials were hoping for.

Elsewhere, the softer US dollar gave some breathing room to other currencies yesterday. The EURUSD bulls won a battle near the 200-DMA, the USDJPY is steady around 146.50 and crude oil steadied above the $80pb with the news that the tropical storm Idalia could interrupt crude production in the Gulf Coast and put an additional positive pressure on oil prices. Gold is better bid above the $1900 thanks to a retreat in the US 10-year yield. But silver is even better bid!

Today, the US JOLTS data is expected to post a third month below 10mio job openings. A number lower than expectations would point to loosening jobs market and could soften the hawkish Federal Reserve (Fed) expectations, while a strong figure will keep the economists and the Fed officials in a state of confusion.

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The Federal Reserve (Fed) Chair Jerome Powell’s Jackson Hole speech was predictably cautious regarding inflation and interest rate policy. Short-term yields pushed higher, but major US indices closed the session, and the week higher.

This week will be busy with some important economic data from the US and beyond. Investors will focus on US growth and jobs data, and euro-area’s CPI estimate.

In China, the week started upbeat after the government announced measures to boost appetite for Chinese equities. Beijing halved the stamp duty on stock trades, while Hong Kong said it plans a task force to boost liquidity. The CSI 300 rallied more than 2% and HSI jumped more than 1.5%. But gains remain.

Energy traders remain little impressed with China stimulus measures. The barrel of US crude trades around the $80pb level, yet the failure to break below a major Fibonacci support last week – major 38.2% Fibonacci retracement on the latest rally, keeps oil bulls timidly in charge of the market despite the weak China sentiment. Oil trading volumes show an unusual fall since July when compared to volumes traded in the past two years.

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BRICS – which includes the world’s major energy-hungry nations like China and India, invited five countries - which happen to be the world’s top oil producers Saudi Araba, Iran, UAE, Egypt and Argentina - to join the bloc. This is an important step towards weakening the petro-dollar, though there are some important geopolitical barriers before BRICS becomes a solidly united union to challenge the Western dominance.

In the markets, those who expected the US dollar to tumble because BRICS are enlarging their alliance with top oil producers were disappointed yesterday. The US dollar extended gains to the strongest levels since the beginning of summer, as traders positioned for a hawkish speech from the Federal Reserve despite two Fed members hinting that the end of the Fed tightening is certainly near.

All eyes are on the Federal Reserve (Fed) Chair Jerome Powell’s speech at the Jackson Hole meeting today. Any hint of a higher neutral rate could wreak havoc in bond markets.

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Nvidia announced STUNNING results when it released its Q2 earnings yesterday after the bell. The company reported $13.5bn sales last quarter and said that it expects $16bn sales for next quarter, up from $12.6bn forecast last quarter. Earnings jumped to $2.70 per share, versus $2.09 expected by analysts, and the most-loved chipmaker of the year approved $25bn in share buybacks. Shares rallied 10% in the afterhours.

Elsewhere, the morose PMI data from Europe and the US pushed yields lower yesterday and kept US crude below the $80pb level, even though the US inventories dived more than 6 mio barrels for the second consecutive week. Trend and momentum indicators remain comfortably negative, and the market conditions are far from the oversold territory, meaning that there is room for a deeper downside correction in oil prices.

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The market mood turned sour again, and the S&P500 fell after a short relief. S&P’s bank rating downgrades weighed on bank stocks.

Elsewhere, the rising rates and declining purchasing power finally start showing in some retailers’ quarterly announcements. Macy’s for example sank 14% yesterday as Dick’s Sporting Goods slumped more than 24% on ‘elevated inventory shrink – in particular theft. Both companies gave a morose outlook for consumer demand moving forward.

The US 2-year yield pushes higher above the 5% mark, while the 10-year yield struggles near 4.30%, where it sees decent resistance, as Chinese efforts to prop up the yuan also weighs on US Treasuries.

The dollar index remains bid above its 200-DMA, the EURUSD is on a decidedly bearish path. The USDJPY is steady a touch above the 145 mark, while Cable sees resistance at its 50-DMA, a touch below the 1.28 mark.

Today, all eyes are on Nvidia earnings due after the closing bell. Investors will focus on whether Nvidia’s Q2 sales meet the $11bn estimate. Anything less than absolutely fantastic could trigger a sharp downside correction in Nvidia’s stock price which rallied 345% since the October dip.

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The week starts with weak appetite as Chinese banks cut loan rates less than expected; the 1-year LPR was cut by 10bp to a record low versus 15bp cut expected by analysts, while the 5-year LPR was left unchanged despite pressure from Beijing. Chinese banks’ decision to keep the 5-year rate steady is confusing for investors, in the middle of a property crisis. The Hang Seng index sank further into bear market, and the global risk sentiment is less than ideal as healthy economic data from the US, and darker clouds over China cast shadow on both stock and bond markets.

This week, investors will have their eyes and ears on Federal Reserve (Fed) Chair Jerome Powell’s Jackson Hole speech due Friday.

Elsewhere, the BRICS summit will take place this week between 22nd and 24th of August. A month ago, South Africa said that 40 more nations wanted to join BRICS, and 23 of them formally applied to become members including Saudi Arabia, Iran, and UAE. They would like to drop US dollar and eventually start using member-state currencies to settle their trade terms between them, and there are rumours that the BRICS countries could even issue a gold-based currency to replace the US dollar, as many nations are willing to free themselves from the risks of holding and using US dollars.

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The global selloff intensified yesterday, after the FOMC minutes released Wednesday highlighted that the Federal Reserve (Fed) continues to see significant risks to inflation. And if that’s not enough, Atlanta Fed’s GDPNow printed an eye-popping growth forecast of 5.8% for Q3 on Wednesday, up from 5% printed a day before. We see some respite in the US 2-year yield that bounced lower from the 5% mark earlier in the week, and the 10-year yield spiked above 4.30% before falling back to 4.25% this morning. But the selling spree in global bond markets continue, as the US dollar continues strengthening against major peers.

And note the upcoming changes in US Treasury bond and T-bill issuance may further weigh on US bond valuations, and market liquidity.

In this context, this simultaneous selloff in stocks and bonds indicates that the market liquidity is well draining and Bitcoin, which is a gauge of market liquidity, slumped more than 7% yesterday and traded close to the $25K level.

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FOMC minutes released yesterday showed that most Federal Reserve (Fed) officials see ‘significant upside risks to inflation that may require more tightening’. The US 2-year yield remained little changed at around the 5% mark, while the 10-year flirts with the 4.30% level, approaching last October’s peak, raising questions among investors on whether levels above 4% are a good entre point in the US 10-year papers, or could it go higher?

The US dollar extends gains, as the S&P500 and Nasdaq’s losses deepen.

In Europe, the latest data released yesterday showed that growth and industrial production slowed, but slowed less than expected, while employment deteriorated less than expected – giving the European Central Bank (ECB) a good reason to continue its fight against inflation. But on a microscopic level, news were less encouraging. The EURUSD remains offered below the 100-DMA yesterday, and the bears eye 1.0790, the 200-DMA.

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