Risk leans on, but risk remains
- FTSE +0.32%
- Dax -0.47%
- CAC -0.34%
- Bitcoin +2.77%
- Gold -0.14%
- US oil +2.95%
Markets started risk on to start the week with the absence of any immediate fear. The JPY pairs were all higher as Prime Minister Fumio Kishida’s said that he isn’t considering capital-gains tax changes at present. the USDJPY touched 113 before pulling back. the continued rise in US 10 year yields really helped add to the shove higher.
Oil markets kept pushing higher on the three main drivers of low inventories, rising demand, and skilled OPEC market communication.
Yields pushed higher and that could become a worry for stocks.
If yields are pushing higher on inflation fears a sudden surge higher will be a headwind for stocks. The VIX is recognising the risk and is currently sat at the key technical cross roads around 20. Close above 21.00 and stocks will start meandering lower again. Move back towards 18.00 and expect stocks to keep rising.
Could either be a sleepy next session with the US away or a ripper on the low volatility but lingering risk. All in all watch out for ballooning risk over the next 24 hours with so many worries around. Is it the energy crisis, inflation risk, Evergrande defaults, yields rising too quickly, or Brexit headlines? This is not the time to be heavy in risk. Be nimble.