Wall Street – What was even more surprising was the reaction of the index-linked bonds

by time news

Amir Kahanovich, The Phoenix-Excellence


When the strategists on Wall Street prepared their list of threats for 2022 the Corona was not really there. * In the latest Bank of America survey, for example, fund managers ranked the corona only in fifth place * (after inflation, interest rate hikes, the slowdown in China and asset bubbles). It’s not that they did not think more variants could come, but that the world is prepared to navigate through them. So what happened when the market did not remain indifferent? Some blame the robots:

* Blame the robots, but humans it’s no better – * New movement restrictions in the world began to sharply lower the price of oil and when it dropped below the technical levels of an average moving to 100 followed by 200 days robots left to trade on Thanksgiving began selling stocks .. As these also crossed technical levels, banks and options traders came into action and began to close positions and make the move even worse. Many expect / hope that on Monday when mostly humans return to trading they will explain to robots that it is a deadly virus and that they have nothing to fear from it. Humans will make sure that the cartridges of policymakers are pretty empty, entering the last alignment of the year with markets after sharp rises and bullish positions towards 2022, * so tactically they have more to lose. The VIX, has jumped by 54%, the sharpest in ten months, to 28 points) and not many want to be there right now, which will make it difficult for the market.

* What interest rate increases? – * Those who were not surprised by the risk of a new variant (except of course Ayalon Musk who has already exercised it) were the Bank of Israel, which often warned that it was too early to talk about interest rate increases while the flow of variants continued to reach uncertainty in the medium term. Now * the new variant can convince him of his rightness and delay further interest rate hikes even in a scenario where this variant turns out to be under control. Only in September.At least the intention …

* What was even more surprising was the reaction of the index-linked bonds – * Many Wall Street economists predicted that the negative real return would begin to rise towards “normalcy” in 2022, as the central bank cooled inflation expectations by raising interest rates. Friday has surprisingly led to a decline in real yields. The nominal.

* Wow, it turns out that the shekel does know how to weaken – * A fly rides an elephant looks back and says “look how much dust we make”. The Bank of Israel has been struggling for months with purchases of tens of billions of dollars in an attempt to weaken the shekel, including probably several hundred million in the last week, and then a 2% drop in the S & P500 crushes it. So maybe instead of buying foreign securities that strengthen the markets there, it would be better if the Bank of Israel. And seriously, it just underscores how inefficient his forex purchases are and that if they really want to weaken the shekel only an interest rate cut knows how to do the job.

* What else is expected this week? What does it matter? * – Purchasing executives’ surveys and employment data will be published in the US, but with the variant narrative they all fall into the category of “rear view” data.


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