The traders anxious about inflation | 26 August 2022

The traders anxious about inflation


#SP500:


The traders anxious about inflation and what the Federal Reserve will do to combat it. U.S. central bank officials have "a lot of time still" before they need to decide how large an interest rate increase to approve at their Sept. 20-21 policy meeting, Richmond Federal Reserve President Thomas Barkin said. The U.S. benchmark 10-year Treasury yield rose to a month high of 2.9776%, just shy of the 3% threshold it crossed in May for the first time since 2018 as investors worried about the U.S. Federal Reserve's plan to tighten monetary conditions. This is a negative signal for the U.S. stock market.


Trading recommendation: sell 4215 and take profit 4055.


The traders anxious about inflation


#GAS:


European natural gas futures extended their gains to a record-high settlement as an energy-supply crunch continued to batter the region, amid signs that the is fuel becoming too costly for industrial use and power generation. The benchmark contract settled 6.7% higher at $2,700 per thousand cubic meters, above the previous record in early March. According to Gazprom's management, natural gas prices in Europe will reach $4,000 per thousand cubic meters in autumn against the backdrop of low gas reserves in underground storage facilities, which implies a 48% increase from current levels. Increased demand for hydrocarbons in Europe will drive up gas prices in the United States.


Trading recommendation: buy 9.30 and take profit 9.88.


The traders anxious about inflation


#WTI:


Global oil markets face a high risk of a supply squeeze this year as demand remains resilient and spare production capacity dwindles, the new head of OPEC said. Fears over slowing consumption in China and the wider world - which have pushed crude prices 16% lower this month - have been exaggerated, OPEC Secretary-General Haitham Al-Ghais said. At the same time, producers in the Organization of Petroleum Exporting Countries and beyond are running out of extra supplies they can bring to market. The crunch has arisen from years of underinvestment in the global oil industry, both in developing new supplies and building the refineries and other infrastructure to process them. The OPEC+ alliance surprised traders earlier this month by agreeing on a token production increase of just 100,000 barrels a day, despite calls for extra supplies by US President Joe Biden, who made a landmark trip to group leader Saudi Arabia in July.


Trading recommendation: buy 85.55 and take profit 87.80.

 

David Johnson
Analyst of «FreshForex» company
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