STATE OF THE MARKETS

Thin markets amid US Labor Day. With the US markets closed on Monday for Labor Day, markets were left thin with only Europe, Tokyo and Sydney trading. Equities markets closed mixed with Nikkei down 0.11% while FTSE UK up 0.09% as global bond yields continue to climb higher as major central banks work to hike rates. The UK 10Y yielded +0.03% higher to 2.94% as London closed. Inversion with the shorter 2Y note (3.20%) remains at 26 basis points. Dollar jumped to 110.25 in offshore trading before settling around the 109.80 barrier as London closed.

In the commodities market, crude edged higher after OPEC+ announced its production cut despite Russia resistance, in a move to stabilize price. The black gold settled around $88.60/bl as London closed. Gold was little changed in thin trading and settled below $1,710/oz and iron ore continued to drift lower to $95.50/tn as demand concerns continue to plague the markets.

In the FX space, sentiments were mixed as demand for Dollar and Swiss remained elevated while Yen pulled back. Kiwi seized the helm of demand in the medium term while Aussie was sent to offers and Loonie pulled back. Short term traders seemed to be bidding the oversold sterling while keeping Euro in offers.

On Tuesday, investors expect a cautious trading as markets reopen while looking for earnings reports from UiPath (PATH), GitLab (GTLB), Guidewire Software (GWRE), Coupa Software (COUP), and Kingsoft Cloud (KC) as well as the latest numbers on Markit services PMI and ISM index.

OUR PICK – No New Pick

We decided to stay on the sideline. A lot of trades are still developing with no ready point of entries at this point in our view. We see heavy flows into US oil (USO), Silver (XAG/USD) and Bearish Dollar (UDN). It seems that markets are gearing for commodity trades again as equities and bonds continue to fall.