US Session (01/03/2022)

Equities in the United States reached a new high, but treasuries extended losses, as traders braced for the start of a potentially tumultuous year and three rate hikes from the Federal Reserve.

The S&P 500 climbed 0.6%, following European equities to an all-time high, but trading activity remained weak with some countries still closed for holidays. The yield on the 10-year US Treasury note climbed 13 basis points to 1.64%, its worst start to a year since 2009, while the dollar surged.

Among notable stock changes, Tesla Inc. rose 14% as the manufacturer negotiated supply-chain difficulties to achieve record fourth-quarter deliveries. Apple Inc. increased in value, bringing its market capitalization to $3 trillion. In Hong Kong, property shares fell, while China Evergrande Group suspended trading.

In other developments, oil futures in New York traded at $76 per barrel after news that Libya's crude output is set to plummet to its lowest level in more than a year. Bitcoin sank to $45,900 as gold fell.

Tesla plans $25,000 electric car for 2023, but without these crucial parts

Asia Session (01/03/2022)

Asian stocks traded mixed, with Chinese equities falling as the central bank net drained money from the banking sector. Treasuries continued to lose money. The yen plummeted to its lowest level versus the dollar since 2017.

Japan and Australia advanced after reopening following the holiday. Chinese equities tumbled after the PBoC net drained short-term funds, raising fears about the financial system's support. Even though trade volumes remained small, US futures were little altered after the S&P 500 ended at a record.

After increasing throughout the curve, benchmark Treasury rates have leveled off. The 10-year note's yield exceeded 1.6% in the worst start to a year since 2009, as investors braced for Fed rate hikes in 2022. The yen fell versus all of its G-10 counterparts, falling to 115.63 against the dollar.


Europe Session (01/03/2022)

In the first trading day of 2022, US equity futures rose while European markets set a new high. The price of oil rose as Libyan supply tightened ahead of an OPEC+ summit.

Volumes were modest elsewhere, with markets such as the United Kingdom, Japan, and China closed for the holidays. Futures on the S&P 500 increased by 0.7%, while the STOXX 600 in Europe increased by 0.6%. Property shares fell in Hong Kong, and China Evergrande halted trading.

All eyes are on the omicron variety of COVID, which is fast spreading but appears to be less severe than some earlier variations based on hospitalization rates. Investors are also paying attention to the Federal Reserve's and other central banks' policy paths through 2022, particularly as inflation remains a concern.

OPEC expects a tighter first quarter as it examines the next increase in oil production.

The proposed 400,000 BPD increase will be implemented in February - Three OPEC+ Sources

A drone attack struck the US base at Baghdad International Airport. - Kurdistan24


Tuesday FX Options Expiries

USD/JPY: 114.00 ($1.15B), 116.50 ($1.13B), 115.50 ($947M)
EUR/USD: 1.2385 (EU392.4M), 1.1400 (EU374.6M), 1.1170 (EU347M)
AUD/USD: 0.7120 (AUD669.9M), 0.7600 (AUD364.5M), 0.7900 (AUD358.2M)
USD/CAD: 1.2750 ($355M)
USD/MXN: 20.83 ($524M)