Market Update – August 22 – US 10 year yield hits decades-long high, Tech rallies

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Futures are marginally higher this morning after US100 and US500 snapped a four day negative streak yesterday with the tech heavy index posting its biggest advance of the month (+1.65%) boosted by Tesla and Nvidia‘s performances. The chip maker rose 8.47% after being upgraded by HSBC (target price $780) and only 2 days before the much-anticipated earnings report that will come out Wednesday after the bell when we’ll find out whether the company’s revenue forecast – which was 50% higher than Wall Street estimates – will come to fruition. The Tech rally held despite yields on US Treasuries spiking again with the 10Y closing at 4.342% – its highest level since November 2007 – the 2Y trading above 5% and 10Y real rates shortly hitting 2%. Typically higher rates are negative for tech and growth stocks as they affect their future flows discount (despite of their cost of financing) but this was not the case yesterday. On the stock side, Softbank’s chip unit ARM is set to list at Nasdaq, becoming the largest IPO of 2023. Also, Zoom shares climbed around 4% after the close after reporting earnings that beat expectations.

• FX – USDIndex is trading at 103.04 right now (-0.16%), EURUSD is north of 1.09 (1.0918, +0.21%) and trading between its 50 and 200 MAs as CABLE is doing (1.2784). USDJPY is pulling back (145.89) after having touched 146.50 overnight.
• Stocks – US and EU Futures marginally higher (+0.07% US30/+0.15% US100/+0.16% GER40); JPN225 rose 0.9% on tech strength while China slipped on Miners weakness.
• Commodities – USOil -0.15% at $80.76 after having pulled back from $82.44 yesterday; Copper is catching a bid (+0.7% at $374.5) as are other metals (Palladium +0.62%, Platinum +0.82%).
• Gold – Shy of $1900 despite higher rates.
  

Today: EU current account, Richmond Fed Index, speeches from Fed’s Barkin, Bowman & Goolsbee.

Interesting Mover: Nvidia rose 8.47% to $469.67, jumping above its 50-day MA and putting its recent highs ($480) in sight. Seems to have found support on the lower bound of an extremely steep channel; RSI heading higher and not overbought.

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Marco Turatti

Market Analyst

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