The tightening | 13 May 2022

#SP500:

The U.S. benchmark 10-year Treasury yield hit nearly a 3-1/2-year high of 3% last week after reports last week showed rising U.S. consumer spending in March and surging labour costs in the first quarter. After an expected 50-basis-point hike to the central bank's benchmark overnight interest rate, Fed Chair Jerome Powell ruled out raising rates by 75 basis points in a coming meeting, although he made clear the rate increases the Fed already has in mind were "not going to be pleasant." The gyrations come as investors are faced with an array of potentially combustible factors, chief among them whether the Federal Reserve will be able to tame surging inflation without driving the economy into recession. Over the last five sessions, the index has marked two of its biggest one-day drops since the pandemic roiled markets two years ago, leaving the benchmark index down 14% so far in 2022.

Trading recommendation: sell 4140 and take profit 4010.

#WTI:

In the near term, the fundamentals for oil are bullish. The EU sanctions proposal includes phasing out imports of Russian refined products by the end of 2022 and a ban on all shipping and insurance services for transporting Russian oil. The looming EU embargo on Russian oil has the makings of an acute supply squeeze. In any case, OPEC+ is in no mood to help out, even as rallying energy prices spur harmful levels of inflation. Ignoring calls from Western nations to hike output more, the Organization of the Petroleum Exporting Countries and allied producers, a group known as OPEC+, stuck with its plan to raise its June output target by 432,000 barrels per day. However, traders expect the group's actual production rise to be much smaller as a result of capacity constraints.

Trading recommendation: buy 105.44 and take profit 109.87

#DAX30:

German industrial production fell more than expected in March as pandemic restrictions and geopolitical tensions in Eastern Europe disrupted supply chains, making it difficult to fill orders, official data showed. The Federal Statistics Office said industrial output fell 3.9% on the month after a downwardly revised increase of 0.1% in February. The last time there was a sharper decline was at the beginning of the coronavirus crisis in April 2020, it said. The German economy is likely to stagnate in the second quarter, despite easing pandemic restrictions. Industrial companies received 4.7% fewer orders in March - the sharpest monthly fall since last October - driven mainly by a reduction in orders from abroad.

Trading recommendation: sell 13834 and take profit 13395