Back to winning ways

Another positive session in equity markets as bargain hunters are tempted back in to cap off the first winning week in eight in the US.

It's been a rough ride and despite this week's performance, there could still be more pain to come. But at these levels, it's only natural that the vultures are circling. There isn't a huge amount to be excited about on inflation, interest rates and the economy but that doesn't mean there isn't value out there.

The US inflation, income and spending data today was a mixed bag. Income fell short of expectations while households maintained strong spending thanks to excess pandemic savings. That can be sustained for some time but whether it will is another thing. People don't mind digging into savings as a short-term measure but at some point, they'll either stop or demand higher wages. Either way, the economy will suffer.

The inflation data was a slight positive, with the core PCE price index slipping to 4.9% and the headline 6.3% - a larger drop than expected. While encouraging, there's still a lot further to go which means plenty more rate hikes.

Oil higher ahead of OPEC+ meeting

Oil prices have steadily moved higher this week as Shanghai has eased restrictions and the EU has worked towards an embargo on Russian crude. The OPEC+ meeting is the key event to watch next week but even if we get a commitment to increase targets - which is unlikely - that will only likely increase the amount to which they’ll fall short of them. The group is unlikely to take any heat out of the market for the foreseeable future.

Gold holds above $1,850

Gold has recaptured $1,850 this week as the dollar has continued to give back some of the huge gains from the last couple of months. The yellow metal has consolidated between $1,840 and $1,870 this week but further gains could be on the cards unless the dollar finds form once more and yields start rising again. Economic gloom has aided the recent moves and there’s little reason to expect that will change.

A worrying sign for bitcoin?

Bitcoin remains in consolidation as it has for the last couple of weeks. It is edging lower into the end of the week though which could be a worrying sign given its inability to generate any upside momentum above $30,000.