Daily Market Update May 6
Price action overnight was almost a mirror of the prior session as equities gave back all of the Fed-induced gains. The SPX barely spent any time at the 4300 level before dropping right back to around 4150 - a decline of over 3.5%. An all green day was followed by an all-red day with Discretionary and Tech names seeing severe selloffs of around 5%. The VIX moved back up to a 32 handle as vol appears to be here to stay for now.
The US yield curve moved higher with the 5Y and 10Y also moving past the 3% mark now. No change in the hikes priced in for the rest of the year with the Fed Funds futures seeing the implied rate north of 2.75% at the end of the year.
We also had hikes from the BoE (+25 bps) and an unscheduled one from the RBI (+40 bps) with both central banks visibly concerned over inflation and the consequent impact on growth prospects.
Bitcoin briefly touched the 40k mark before freefalling back to 36k and Gold fell below the 1900 level once again. Crude was a beacon of stability though, with OPEC+ sticking to planned increases of close to half a million bpd in June and also revising demand estimates lower owing to the China lockdowns.
Price action tonight is likely to be determined by how the NFP comes out - expectations are for 380k jobs added in March and the unemployment rate dipping to 3.5%. No surprises from the weekly unemployment numbers overnight.
Have a nice weekend.
“When you invest, you are buying a day that you don’t have to work.”
Aya Laraya