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Australian dollar rocked as recession 2023 hits markets

au.investing.com/analysis/australian-dollar-rocked-as-recession-2023-hits-markets-200539002
Australian dollar rocked as recession 2023 hits markets
By David Llewellyn-Smith   |  Dec 08, 2022 10:42
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AUD/USD
-0.08%
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DXY was soft overnight:

 
DXY
DXY

AUD firmed:

AUD
AUD

Oil is a falling meteorite. $70 support here we come:

BRENT
BRENT

Dirt loves China:

COPPER
COPPER

But miners (NYSE:RIO) fell with iron ore:

EMs stocks (NYSE:EEM) too:

EEM
EEM

But EM junk (NYSE:HYG) is still warm:

HYG
HYG

As US yields sink with oil:

YIELDS
YIELDS

As do stocks:

SPX
SPX

This week has seen a major phase shift in market dynamics. Oil is beginning to price US and global recession. This is triggering a sizable bond bid and falling yields as inflation expectations fall, and we approach the next US CPI which is likely to be soft again at the headline level.

Until this week, this would have also triggered a stock bid. But we are now toying with a recessionary regime and stocks are falling on worries over earnings on top line weakness (recession), as well as falling inflation (crushed margins).

In short, good news is bad news and bad news is bad news.

This is not a market regime in which the AUD will do well but DXY may do even worse, at least until it gets unruly, which is my expectation.

Hang on to your hats. We have begun to price global recession 2023.

Australian dollar rocked as recession 2023 hits markets
 

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Australian dollar rocked as recession 2023 hits markets

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