The Fed aggressively tightens monetary policy | 15 July 2022

#SP500:

The Labor Department's closely watched monthly report showed, pushing non-government-sector employment above its pre-pandemic level to a record. Though the leisure and hospitality sector remain 1.3 million jobs below its February 2020 level, jobs elsewhere have surged well above, including transportation and warehousing, which now has three-quarters of a million new positions more than it did pre-pandemic. In manufacturing, where Baker works, employment has also moved above its pre-pandemic level. Wages, overall, continue to rise, and there is no indication that companies are cutting hours either. Friday's report showed the number of people working part-time for economic reasons, a category that swells during recessions, hit a 21-year low in June. And yet, recession fears have grown in recent weeks as other economic data, including consumer spending and surveys of manufacturing activity. Inflation at 40-year highs is also doing little to staunch consumer fears of a downturn.

Trading recommendation: sell 3925 and take profit 3755.

XAUUSD:

Central banks around the world are raising interest rates to tame inflation, spurring fears that rising borrowing costs could stifle growth, while mass COVID-19 testing in Shanghai this week caused worries about potential lockdowns. U.S. non-farm payrolls data showed the economy added more jobs than expected in June, a sign of persistent labor market strength that gives the Federal Reserve ammunition to deliver another 75-basis-point rate hike this month. The U.S. economy has been on recession watch as the Federal Reserve aggressively tightens monetary policy to tackle inflation. This is a negative signal for gold.

Trading recommendation: sell 1755 and take profit 1705.

#Exxon:

Wall Street remains bullish on energy shares despite a wave of price target cuts on oil stocks. Two-thirds of the companies in the S&P 500 Energy Index have buy rating, according to data compiled by Bloomberg. It’s one of the best-rated industries in the market, behind information technology and real estate. Traders see an average 31% return for stocks in the energy index, compared with 26% for the broader S&P 500. Crude also could get a lift from the reopening of China’s economy from severe Covid restrictions and its massive stimulus spending plan. The recent decline in oil prices is driven by speculation rather than fundamentals. Oil and gas companies are hedging less of their production and therefore aren’t as active in oil futures trading, leaving the market more prone to speculative swings, he said.

Trading recommendation: buy 84.70 and take profit 90.10.