Autumn may bring adjustments to the market

By 01/09/2021News

Gold  1813,995

EURUSD   1,1797

DJIA  35426,50

OIL.WTI  69,015

DAX  15816

The summer has come to an end, which is usually a rather sluggish period for trading. Volumes are down and traders are resting. There are usually no sudden movements at this time. But come September, investors somewhere are starting to get a little nervous about what lies ahead.



Where is this tension coming from? After all, everything has been going reasonably well up to this point. The tension comes from the forthcoming report on newly created jobs as well as unemployment, which is likely to be decisive for the Fed in deciding whether to cut QE. If the data comes out strong, it is very likely that the next meeting of the Open Market Committee will make important decisions on the current quantitative easing programme. Perhaps it will be the announcement of a timetable for when and how things will happen. Of course, they will start the stimulus rollback very smoothly so as not to worry the markets too much.
How might this affect the commodities market? Due to financial stimulus and the COVID-19 pandemic, the TRCCRB index, which includes 19 different commodities, has risen 31% since the beginning of the year. This is almost 10% more than the rise in the S&P500 index. It’s an interesting situation when US inflation is only 4.6% and the world’s major commodities have jumped to such magnitudes. The thing is that the Fed is very flexible in its calculation of inflation and tries to change the formula from time to time. For example, it is possible to ignore the cost of housing, which would immediately reduce the figure. These calculations always give an opportunity to maneuver. It is already evident that the commodities market is overheated and that in the near future we can observe a strong volatility, similar to what happened to the timber market.
What is in store for the oil market? First of all, it is the peak of the hurricane season. Hurricane Ida has already made adjustments to the production rigs and caused quite a bit of damage in the state of Louisiana. Power cuts and production curtailments will definitely have an impact on oil volatility in the near future.
Also in focus is the upcoming OPEC+ meeting where they want to once again revise oil production quotas downwards.
A very difficult month and the end of the year lies ahead. There could well be increased volatility in almost all sectors of the economy.

09.55 Markit Manufacturing Business Activity Index for Germany for August
14.15 ADP US private sector employment report for August
16.00 US ISM Manufacturing Index for August

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