Select the account you'd like to open

APAC Week Ahead: US inflation may set to cool further

Stock markets

  • A hint for you to start the week: The last few days’ market rally was led by a drop in the US dollar with an expectation that the US inflation may cool down further. This is indicated by the bond markets’ pricing where both the US 2-year and 5-year Treasury breakeven rates fall towards the Fed’s 2% target, suggesting that the Fed’s approach of “front-loading rates” may have successfully reined in inflation by softening demands. However, the Fed will double the balance sheet reduction amount from $47.5 billion to $95 billion this week, or a so-called “quantitative tightening” program, which may continue to keep markets under pressure with tightened liquidity.

  • Markets performance: Risk-on sentiment boosted the broad-based market rally, with the tech-heavy index, Nasdaq, and the highest leveraged small cap index, Russell 2000 leading gains, both up more than 4% for the week. However, the energy-heavy equity markets, including ASX 200 and FTSE 100, underperformed due to sharp falls in commodity prices. Chinese stocks were also under pressure due to extended Covid-lockdowns in some parts of the country. 

World major indices performances as of 11, September 2022

  • A highlight for the week: The US Treasury auctions on Monday may provide a clue to the yield trajectory. And the CPI data for August will be a key market driver this week. 

What are we watching?

  • US dollar loses strength: The dollar index finished lower for the week after hitting a fresh 20-year high, suggesting market participants start pricing in a peak of rate hike cycle by the Fed, though a 75 bps September rate hike is on cards. See the US dollar movements
  • Oil price under pressure: The recession fear-induced selloff in oil markets may not end just yet, with China extending its covid-lockdowns in Chengdu, and another possible 75 basis points rate hike by the Fed in September. Check on oil prices
  • Gold on the rebounding trend: Gold found the key support level of 1,688 at a week-low, a further drop in the US dollar may continue to lead the rebound. See the gold price
  • Bitcoin spikes: The biggest cryptocurrency sharply rebounded from a two-year low level of near 18,400, a bullish breakout of the 50-day moving average may take Bitcoin to surge further this week. Trade Bitcoin now

Economic Calendar (12 Sep – 16 Sep)

Disclaimer: CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.

Sign up for market update emails