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Foreign exchange news - VIX panic index soared 20%! What happened? International oil prices fell significantly, and the release of bearish technical signals needs to be vigilant

发布时间：2022-08-25 浏览：120

Abstract: the hawkish remarks of the Fed have caused the market to worry about the recession of the U.S. economy in the next 12 to 24 months. However, the real risk may lie in emerging markets;

The international oil price released a bearish technical signal, and the future trend focused on this level.

VIX panic index soared, US stocks fell, and the market measured between economic recession and high inflation

On Wednesday (May 18), the VIX panic index surged 20% to a intraday high of 31.49, ending six consecutive falls. The three major stock indexes in the United States fell collectively, and the Dow Jones Industrial Average fell 3.57%, the largest decline since June 11, 2020; The Nasdaq composite index fell 4.73%, the largest decline since May 6; The S & P 500 index fell 4.04%, the worst one-day performance since June 2020.

The reason is that Jerome Powell, chairman of the Federal Reserve, reiterated the determination of the Federal Reserve to fight the highest inflation in 40 years in an interview with the Wall Street Journal on Tuesday (May 17).

It suggests that the Federal Reserve will raise interest rates by 50 basis points at the next two meetings in June and July, and will raise interest rates above neutral levels if necessary, but this may be at the cost of the lowest 3.6% unemployment rate since the late 1960s.

Undoubtedly, when inflation continues to be high, the Fed's statement highlights the urgency of policymakers to deal with inflation. According to a recent poll conducted by Capitol Hill, 40% of the respondents believed that the president's policies should be responsible for high inflation.

Considering that the mid-term election is approaching, the U.S. government will undoubtedly take reducing inflation as its first goal. However, the Fed's overly aggressive pace of raising interest rates and shrinking tables is likely to trigger market concerns about the U.S. economy falling into recession next year.

On Wednesday (May 18), David Solomon, CEO of Goldman Sachs Group, said that the U.S. economy is facing recession risk. He estimated that the risk of U.S. recession in the next 12 to 24 months is at least 30%.

S & P will reduce the U.S. economic growth by 80 basis points to 2.4% due to rising energy and commodity prices, longer than expected conflict between Russia and Ukraine, and accelerated normalization of monetary policy.

Emerging markets may bear the brunt of the accelerated tightening of policies by major central banks

Looking forward to the future, the market will measure between inflation and economic recession. As the Fed has not yet begun to formally shrink its table, the overall market risk aversion has not been fully released, and the future market does not rule out the possibility of further deterioration.

However, considering the beautiful performance of the economic data released by the United States recently, it is expected that the impact on US stocks will be limited in the short term.

However, it should be noted that the major central banks are accelerating the tightening of policies, which poses increasingly severe challenges to the capital markets, local currency exchange rates and monetary policies of developing countries and emerging market economies.

It is worth noting that the United States earlier hinted that it would prevent Russia from cashing bonds to U.S. investors, which may force Moscow to default on its first overseas debt in a century.

According to credit default swaps (CDS), Russia has a 90% probability of sovereign debt default within one year, which was 77% on Tuesday (May 17).

Ronnie Collins, director of the Brazilian Institute of China Studies and economist, said that after the Federal Reserve raises interest rates, the United States can transfer the costs and costs of the crisis it faces through the inflow of international capital.

At the same time, the currencies of many emerging market economies may depreciate, thereby affecting the world economic recovery.

WTI crude oil releases a bearish signal, and it is necessary to be alert to further decline in the future

In the "world economic situation and outlook in 2022" recently released by the United Nations, the global economic growth rate in 2022 was reduced to 3.1%, lower than the 4% growth rate expected in January 2022.

Therefore, if a more serious credit crisis breaks out in emerging markets after the contraction, it is expected to have an impact on global oil demand.

On the trend, WTI crude oil once again fell below the key level of 111.0, and formed a "top sub type" bearish signal.

Once WTI crude oil fails to effectively recover the 111.0 level in the short term, it is necessary to be alert to the end of the rise in oil prices since April 11, and to further fall in the future to test the $103.0 or even $100 level.