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Week in Review: 22-26 August 2022

An important week, with the Jackson Hole economic symposium at the top of the interest of the market participants. The Fed seems determined to bring down inflation - the markets got scared on Friday afternoon. Will the trend continue next week? Probably.


The FED is Serious...So He Says!


Video: Federal Reserve Chairman Jerome Powell speaks at Jackson Hole — 8/26/2022

Channel: CNBC Television



OIL
 
 
WTI crude futures traded above $93 per barrel on Friday, gaining 3% on the week as investors weighed on uncertain supply levels against the outlook of lower energy demand. Earlier in the week, Saudi Energy Minister bin Salman flagged the possibility that OPEC+ nations could cut production to counter the “disconnect” in the oil market and potential return of crude exports from Iran. Also, data from the US showed a decline in crude inventories while pointing to record levels of oil exports. Further gains on the week were capped by increasing signs of bearish demand for energy. In a speech in the Jackson Hole symposium, Fed Chair Powell noted that inflation is still too high and that the Fed's tightening cycle is far from done, cooling expectations among investors of rate cuts to take place this year. Further, Reuters reported that ECB policymakers consider a 75bps rate hike in its next meeting, as surging energy costs drove inflation expectations to remain high.



Natural Gas
 

US natural gas futures were trading around $9.6/MMBtu, not far from an over 14-year high of $10/MMBtu touched earlier this week, supported by continued robust domestic and overseas demand. A series of heatwaves this summer across the United States has sent demand from gas-fired power plants to all-time highs as electricity generators boost production to meet the need for additional cooling. On top of that, expectations of increased demand for US LNG exports amid growing concerns of European shortages added to the bullish tone. Russia's Gazprom said it would halt flows through the Nord Stream 1 pipeline to Europe for three days of maintenance at the end of August, putting pressure on the region as it seeks to refuel ahead of winter to avoid a natural gas shortage. Meanwhile, Freeport LNG announced that it would delay the restart of its Quintana export plant to November, backtracking previous statements of an October restart and limiting further upside momentum.

 
 

 
Markets
 

US stocks plunged on Friday, fully erasing August gains after Chairman Jerome Powell reassured markets that the Fed will keep interest rates at a restrictive territory until inflation is brought down to the 2% level. In his speech at the Jackson Hole symposium, Powell noted that restoring price stability could require a sustained period of lower growth and that labor market conditions will likely soften. In the meantime, personal spending figures for July missed expectations, further reducing hopes that the Fed can achieve a soft landing as policy tightens. The Dow plummeted 1,000 points, while the S&P 500 and the Nasdaq tanked 3.4% and 3.9%, respectfully. Tech giants booked the sharpest losses, closing at one-month lows with a near 9% plunge for Nvidia and 5% drop for Alphabet. On the week, the three main equity averages lost more than 4%, notching the second consecutive weekly decline.




Crypto
 

Bitcoin US Dollar traded at 19992 this Sunday August 28th, decreasing 654 or 3.17 percent since the previous trading session. Looking back, over the last four weeks, Bitcoin lost 16.52 percent. Over the last 12 months, its price fell by 59.02 percent. Looking ahead, we forecast Bitcoin US Dollar to be priced at 19331 by the end of this quarter and at 14168 in one year, according to Trading Economics global macro models projections and analysts expectations.

 



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