According to oil and gold, we are going to have one hell of a recession
20 March 2023
The weekends are usually rather quiet on the market, but it was not the case this time. On Sunday, we learned that UBS is buying Credit Suisse for $ 3,2 billion, with the SNB providing an additional loan of up to $108 billion to support the takeover. Shortly afterwards, we received a joint statement from Janet Yellen and Jerome Powell: “We welcome the announcements by the Swiss authorities today to support financial stability. The capital and liquidity positions of the U.S. banking system are strong, and the U.S. financial system is resilient. We have been in close contact with our international counterparts to support their implementation.” The party in the banking sector does not stop!
The markets during the Asian session were not thrilled. Almost all of them are flashing red, and the same goes for the futures in Europe and the US. Traders are afraid of risky assets again. DAX is currently on the lowest levels since January 6 and the price is breaking key support on the 14800 at the moment. Dow Jones is only a few points from making the new yearly lows. It does not look good at all.
There is, of course, one instrument that is enjoying this wild ride. Gold is finally acting as a proper safe haven and is currently skyrocketing, breaching the psychological barrier of 2000 USD/oz as we speak. The recent chart looks more like one of the pumped cryptocurrencies, rather than an old-school safe financial instrument. It will be interesting to see if buyers have what it takes to reach the March highs. On the other side of the spectrum, we have oil, who is pretty much forecasting a deep recession, sliding to the lowest levels since the end of 2021. WTI has just 2 USD to reach the key support from 2021, which may ease the pain that buyers are currently experiencing. I guess that everyone is now waiting for the same bearish move on the petrol stations.
On the currency market, we can see a slightly weaker Dollar. On Wednesday, we shall learn the interest rate decision - traders might be skeptical about FED having the guts to rise this time. Today’s calendar is empty but, overall, this week will be extremely busy and crucial for many instruments. We will have it all - interest rate decisions, inflation, and PMIs.