2022.03.14 Weekly Note

NEWSFLOW

MARKETS

‘There’s just no way’: Analysts say alternative supplies wouldn’t be able to fully replace Russian oil (CNBC) Vandani Hari says only some Russian supplies could be swapped with that of OPEC members, but they would have to “simultaneously stretch themselves to their maximum capacity.”

UKRAINE WAR

Sky turned red’ as missiles hit Lviv military base (BBC) Russian jets fired around 30 cruise missiles at the site, also known as the International Peacekeeping and Security Center, at least 35 people were killed and 134 injured in the attack on the Yavoriv base; US journalist Brent Renaud is shot dead in the town of Irpin outside Kyiv, the first foreign reporter to die in this conflict.

COVID…

South Korea, Germany, Vietnam account for 41% of weekly cases (UPI) South Korea gained a world-high 1,993,625 infections, a 44% spike in the past week; Germany set a daily record with 300,270 cases Thursday and added 1,303,308 cases at a 20% rise last week; Vietnam reported 1,108,498 new cases at a 35% increase; Also setting daily records in the past week were Austria at 49,323 Friday and New Zeland at 23,936 Tuesday.

LAST WEEK’S ACTION

EQUITIES

RATES

Credit cracking…9th straight week of big outflows from IG + HY bonds
EM capitulation…largest outflows from EM debt since Mar’20

COMMODITIES

Bloomberg Commodities Index (Orange) vs DXY (Green, inverted)

CURRENCIES

US10yr Yield vs DX

TRADE VIEWS/IDEAS

  • Staying short Nasdaq EURUSD and EURJPY — I’ve not taken any profits last week and have only been adding shorts particularly to EURUSD and NDX. I may live to regret it but my P&L and average prices are still massively healthy and still don’t see any reason to turn back on the trade.
  • Staying short AUDNZD and AUDJPY — This is still a small position I’ve been very slowly building a position into. Reasons have been outlined in previous weeks but to summarize the themes: AUDNZD a rates and policy divergence play, AUDJPY risk-off and commodities pullback while China sentiment has turned more negative.
  • GBPAUD short — swing trade for the week initiated earlier about 4hrs into the week. Mixing up the themes behind AUDNZD and AUDJPY trades with a hawkish BOE in mind this week.

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