20 Sep 2022

Last night, the three major U.S. stock indexes opened lower and moved higher, and closed up in shock. As of the close, the Dow rose 0.64%, the Nasdaq rose 0.76%, and the S&P rose 0.69%. The yield on the 10-year U.S. Treasury bond rose 1.129% to close at 3.492%, a difference of about -45 basis points compared with the yield on the two-year Treasury bond. The fear index VIX fell 2.05%. Brent crude closed down 1.29%. Spot gold closed up 0.01% at $1,675.7 an ounce. The dollar index remained high, closing at 109.59.

The NAHB housing market index in the United States recorded 46 in September, continuing to hit a new low since May 2020. The index's one-way downward trend from the start of the year isn't rosy, but it's not surprising given the surge in mortgage rates. Demographically, the number of households in the U.S. has exploded and housing is undersupplied, so demand is there, but price shocks are a big problem right now.

According to the websites of two German natural gas pipeline operators, the gas purchaser issued a gas supply request to Russia's "Nord Stream-1" natural gas pipeline to Germany on September 19. But German Deputy Chancellor and Economy Minister Habeck said he did not believe Russia's Nord Stream 2 gas pipeline would play a role in Germany's energy security for the foreseeable future. Earlier, German Chancellor Scholz said that Germany's first LNG terminal will be commissioned in January 2023, and from the end of 2023, the country will be able to import LNG from four locations. It is reported that this will make Germany independent of Russia's gas supply. Separately, Germany’s Rheinland Group RWE and German energy giant Uniper will reach a long-term agreement to buy liquefied natural gas from Qatar in the coming weeks.

Saudi crude exports rose by 188,000 bpd in July to 7.38 million bpd, a 27-month high. The U.S. Department of Energy said the U.S. will release 10 million barrels of crude from the Strategic Petroleum Reserve for delivery in November. U.S. used-car prices fell 2.3 percent in the first half of September to a one-year low, data from Manheim Auctions, the world's largest used-car dealer, showed. This is good news for inflation and the stock market. Trend data shows that wholesale used car prices should continue to fall in the second half of the month. Used car and truck prices make up about 4% of the total CPI and have been fluctuating recently. The August CPI report showed little change in used car prices. While many expected a sharp drop, the index fell just 0.1%.

Wall Street Journal reporter Nick Timiraos said in his latest article published today that the August CPI report reinforced Wall Street analysts' expectations that the Federal Reserve will raise interest rates by another 75 basis points at this week's meeting on interest rates. Futures market traders see little chance of a 100 basis point rate hike by the Fed. Market analysis believes that the article did not suggest that the Fed may raise interest rates by 100 basis points at this week's meeting. That could cause any rate hikes above 75 basis points to be priced in to fade away. The latest level of overnight index swaps, which correspond to the Fed’s rate meeting date, showed the Fed will raise rates by 79 basis points, down from around 82 basis points at the beginning of last week. Earlier, Nick Timiraos published an article on September 14 saying that the Fed will raise interest rates by at least 75 basis points this week.

According to CME's "Federal Reserve Watch": the probability of the Fed raising interest rates by 75 basis points in September is 82%, and the probability of raising interest rates by 100 basis points is 18%; by November, the probability of raising interest rates by 125 basis points is 23.4%, and the cumulative rate hikes are 23.4%. The probability of 150 basis points is 63.7%, and the probability of a cumulative rate hike of 175 basis points is 12.9%.

Apple rose 2.51% and plans to solve the camera shake problem of the iPhone 14 Pro next week.

Microsoft fell 0.09% as Azure Space provides cloud connectivity via satellite in remote areas.

Google rose 0.21%, and the US streaming media share surpassed cable TV again, with Netflix and YouTube leading the way.

Amazon rose 0.91% after it suspended construction of new warehouses in Spain as e-commerce business slumped.

Tesla rose 1.89%, Tesla China expanded production again, the Shanghai Gigafactory production line optimization project was completed; the Texas Gigafactory in the United States has produced 10,000 Model Y vehicles.

Nvidia rose 1.39%. Recently, the company placed a "super urgent" order for TSMC with a total of about 5,000 pieces to produce some products originally planned to be shipped next year in advance.

Sources from: Investing.com; Reuters.com

Louis Yap

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