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Good vibes only – US stimulus package revision – Market Overview – October 6

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Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
The market continues with a slightly optimistic risk sentiment after yesterday's events, especially the return of President Trump to regular activity.

The market continues with a slightly optimistic risk sentiment after yesterday's events, especially the return of President Trump to regular activity.

However, the possible effects of contagion are still entirely unknown.

Talks about reaching an agreement on the fiscal stimulus package continue between Democrats and Republicans.

The market seems to be leaning towards a possible positive outcome, even if only at minimal levels. It is more a desire than a conviction; the uncertainty is high in this sense, especially if we take into consideration that both parties are immersed in the electoral period.

The result in the stock markets is reflected in a lateral movement, with alternate days of losses and advances without any of the leading indices being able to break in any direction.

TECH100 failed to break above the 11,500 zone after several failed attempts in recent weeks.



Stock indices need confirmation of more significant stimulus from governments, more specifically in the United States, to resume their upward path.

New cases, new lockdowns

The uncertainty about the evolution of the pandemic with a new lockdown in major cities around the world needs financial support to return to normality.

The Central Banks have previously stated that in the field of monetary policy, they can do little more. The sole exception is the ECB, as we could see in the future some adjustment in its asset purchase policy if the European economic situation does not advance, or the results are uneven, as President Lagarde commented today.

As a result of the improvement in risk sentiment, North American treasuries have suffered a substantial price drop. This is a rebound in yields, which in the case of the 10-year bond, has reached almost 10 bps.

This movement leads us to anticipate a potential fixed income bubble that may increase as the financing needs of governments are more significant as a result of the spending caused by their fiscal policies. It would be especially relevant in the case of the United States and especially if the Democrats won the elections.

Tnote10 has suffered a drop in price of more than 50 points since yesterday, and technically it is already below the 100-day SMA line that opens its way to the support located at 138.50, below which losses could precipitate towards the 137.70- 138.00 zone.

With an almost unlimited bond purchase QE program by the Federal Reserve, a turnaround in US bonds is unlikely, but we could see significant corrections from current levels if market sentiment improves and implement new fiscal stimulus packages.

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.