1 Minute Market Rundown – 29th September 2022
BOE Steps in to Clean Up the Mess
Squeeze on Yields
USD Longs Endure Nasty Squeeze
Where to start? A quietish morning was rudely interrupted by the Bank of England deciding, 24 hours after it said it would wait for its next policy meeting, to intervene in the markets to shore up the bond market. It announced and bought long term gilts in an ongoing operation to calm the markets amid rumours of pension funds in danger of being margin called. This is a complete turn around from a bank that was planning to unwind its QE programme and that has now been pushed back to next month (and likely further IMO). What a damning indictment of the UK governments new economic package but one that was frankly needed. Our new Prime Minister has been doing a fine impression of Do Kwon and has yet to be seen nor heard. This will change this morning as she is slated to appear on various broadcasters, so expect more turmoil as she simply can’t/won’t roll back policy yet.
The USD went on a wild ride yesterday with cable at the helm. GBP traded from 1.0650 to 1.0840 then down to 1.0540 before a late move to 1.0900 left everyone hiding under their desks. The late move saw Euro rally 200 points and even USD Yen give back a cent. Global yield markets all took a tumble in sympathy with the UK intervention which sparked the move and even saw equities have their first real rally in 7 sessions. Overnight the USD weakness has been somewhat eroded leaving us mid recent ranges at the open.
Correction or turn is the simple question? Well for me not a lot has changed barring the market will be more cautious in getting carried away at these levels. I cautioned against adding into the lows yesterday and I will heed to the same advice today. The trends remain unchanged. Timing remains key and I expect more volatility to be the main theme over the next few trading sessions rather than huge directional moves.
Crypto remains a side show in this environment with little change to recent ranges or tactics. I still like higher as the next significant move as long as 17,500 and 1150 can broadly hold. The move is still on hold though as we wait for these boring old Trad Fi markets to sort themselves out!
As always, good luck out there!
Richard Usher – Head of OTC Trading
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