1/ 2-day streak
2/ Super Swiss
3/ Inverted Yield Curve
4/ Financials Holds
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1/ 2-day streak
Gasoline futures have risen for the second consecutive day and are currently trading at around 2.33. For the second day in a row, we have observed a similar price trend. These trading sessions have been characterized by initial declines ranging from -1.44% to -2%, followed by swift recoveries that resulted in gains of over 2%.
Gasoline futures are now on the verge of closing the session in positive territory, marking three consecutive days of gains. Will we continue to witness this pattern for the remainder of the week?
2/ Super Swiss
The Swiss franc continues to appreciate against the euro and is poised to break through the annual base established by the currency pair after reaching 1.0615. Excluding the peak of 1.0583, which was reached in 2015 when the Swiss National Bank removed the minimum exchange rate of the Swiss franc against the euro, the pair is now approaching historically high levels.
The Swiss currency remains robust despite a euro that continues to display signs of weakness, and we may be witnessing a breakthrough of the resistance level, potentially leading to a continuation of the trend that has been in place since 2018.
3/ Inverted Yield Curve
The yield curve remains inverted while the S&P 500 attempts to maintain the 4,350 level. The chart below illustrates past instances of yield curve inversion and the subsequent impact on stock markets when the curve reverts from a negative state to normal.
Such an inverted curve is often interpreted as a signal that investors are anticipating an economic slowdown or even a recession.
It is also correlated with a decrease in stock returns, as investors may become more cautious and shift their focus towards safer assets, such as government bonds, rather than stocks. During periods of yield curve inversion, investors tend to seek out stocks from companies considered defensive, i.e., companies that tend to be less sensitive to economic fluctuations.
4/ Financials Holds
The financial sector clings to the previous pre-covid maximum, which now plays a support role and continues to oscillate sideways.
Banks have been forced to maintain liquidity and tighten lending standards, granting fewer, less risky and more expensive loans. Bulls will need to hold the support zone to avoid massive selling that could drag the price down to the 22-23 area, which is the price level with the highest volume.
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Originally posted 19th October 2023
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