18 Aug 2022

The three major U.S. stock indexes closed lower last night. As of the close, the Dow fell 0.5%, the Nasdaq fell 1.25%, and the S&P fell 0.72%. The yield on the 10-year U.S. Treasury bond rose 2.77% to close at 2.902, a difference of about -38 basis points compared with the yield on the two-year Treasury bond. The VIX, the fear index, closed up 0.13%. Brent crude closed up 0.77%. Spot gold closed down 0.77% at $1,762.24 an ounce. The dollar index remained high, closing at 106.66.

The monthly rate of US retail sales in July recorded 0%, slightly lower than the expected 0.10%, and the previous value of 1.00%. U.S. retail sales were little changed last month, with lower fuel and auto prices overshadowing better performances in other retail categories, the agency said. For many Americans, a sharp pullback in gasoline prices has boosted confidence and could free up cash to spend elsewhere. Even so, widespread and persistently high inflation is eating into workers' wages, forcing many to rely on credit cards and savings to make ends meet. That puts lasting pressure on consumer resilience in the months ahead.

U.S. jobless claims rose again, near the highest level since November last year, and the number of U.S. jobless claims rose for a second week in a row, near the highest level since November last year, indicating a continued slowdown in the labor market. Initial jobless claims have been rising as more companies, especially in the tech sector, have announced layoffs and hiring freezes amid economic uncertainty. Demand for labor may fall as the Federal Reserve raises interest rates, but so far employers have largely struggled to keep existing workers amid widespread labor shortages.

In the minutes of the Fed meeting, members pointed out that the recent data on inflation expectations was "consistent" with the long-term forecast of 2%, and the pace of interest rate hikes will slow down at some point. Many members believe that there is a tightening of monetary policy more than necessary. Risk, the probability of the Fed raising interest rates by 50 basis points in September is 64.5%, and the probability of raising interest rates by 75 basis points is 35.5%; the probability of raising interest rates by 75 basis points in November is 49.6%, and the probability of raising interest rates by 100 basis points cumulatively The probability is 42.2%, and the probability of a cumulative rate hike of 125 basis points is 8.2%.

In terms of energy, Brent oil hit a new low since late February; U.S. crude oil exports rose to a record level as Europe sought to replace Russian oil; some analysts at Goldman Sachs believe that if Iranian crude oil returns to the market, the price of Brent crude oil in 2023 will be affected. The forecast will be lowered from US$125/barrel to US$10/barrel; data released by the Japanese Ministry of Finance shows that Japan imported oil from Russia again in July; OPEC Secretary-General believes that there may be a tightening of oil supply this year; still optimistic about oil demand this year. The three major stock indexes closed lower.

Apple rose 0.88% as Apple is in talks with Macbook to manufacture watches in Vietnam for the first time.

Amazon fell 1.85% as Amazon's Thursday night football game will be included in Nielsen's weekly TV ratings report.

Tesla fell 0.84%, Musk clarified his previous "acquisition of Manchester United" remarks: "Buying Manchester United" has always been a stalk on Twitter, I will not buy any sports team.

Sources from: Investing.com; Reuters.com

Louis Yap

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