Data a cause for concern?

Stock markets are enjoying a more positive end to the week, buoyed by earnings results and a surprise coupon payment by Evergrande.

Earnings have been a source of positivity at a time when so much focus has been on growth risks to the economy, of which there are many. The season is off to a promising start but it will have to continue that momentum if we're going to avoid falling back into the woes of what may be.

The results from Snap were a reminder of the indirect impact that global supply chain issues can have on businesses. In their case, it was advertising spending that will be inhibited as a result of firms suffering supply issues during a typically lucrative time for the industry. We're likely to see more examples like this as the season progresses.

The company's results are weighing on other platforms similarly exposed to lower ad revenues ahead of the open, with Facebook and Twitter particularly hit after Snap also warned on the impact of the changes to Apple's data collection rules. A big negative for advertisers and another blow to those heavily reliant on those revenues.

Evergrande reportedly made its $83.5 million offshore coupon payment just ahead of the end of the grace period tomorrow which lifted its stock price on Friday. The surprise move may spur some hope that it will also make its $47.5 million coupon payment by next week when that 30-day grace period ends. Beyond that, it's anyone's guess as the company can't scrape together these funds forever unless something fundamentally changes.

Data showing softness as central banks prepare to turn the taps off

Economic data is getting additional scrutiny at the moment as central banks around the world are forced into uncomfortable decisions as a result of supply-side inflationary pressures that are pushing headlines rates well above their targets. While many still argue that the price pressures are temporary, their expected duration and intensity are rising which is forcing policymakers to consider actions they'd clearly rather avoid.

While the recovery has been much better than envisaged earlier in the pandemic, which may afford central banks a little slack for modest tightening, the data is highlighting several weaknesses that tighter monetary policy will only exacerbate. As the PMIs have shown, supply-side issues are taking their toll on activity, which won't be helped by any surges in Covid cases as the northern hemisphere heads into the winter.

UK retail sales figures were also disappointing, which again raises questions over the Bank of England's plans to raise interest rates before the end of the year and multiple times next. It seems the squeeze on households and businesses is going to be made even harder which will weigh on the economy over the next year.

The retail sales number was seemingly made worse by the "fuel shortage" which may have been a blocker to people travelling to venues. Earlier festive season shopping may also boost retail sales figures over the next couple of months in anticipation of supply issues.

The US PMIs were a little better, with the services number rising to 58.2, way above expectations of 55.3. Given how important the services sector is to the economy and the progress made on the latest Covid wave, this is very encouraging going into the end of the year.

USD/RUB dips below 70 after CBR hike

The ruble rallied strongly after the Bank of Russia raised interest rates by 0.75% on Friday, surpassing expectations of a 0.25% or 0.5% hike. Clearly, unlike their Turkish counterparts, the CBR is taking the threat of inflation serious and is prepared to raise them further as it raised its inflation forecast at the end of the year to 7.4-7.9%, almost double its 4% target.

The announcement saw the dollar fall briefly back below 70 against the ruble for the first time since June last year. Higher rates and soaring energy prices have supported the currency in recent months and with more hikes and a possible winter crisis in the pipeline, it could remain in favour for some time.

Oil rally lacking momentum, again

Oil prices are on the rise again at the end of the week, with Brent and WTI adding around 1% on Friday. This comes a day after they pulled back off their highs as profit-taking appeared to kick in around $86 and $84, respectively. It's still early days but this rally appears to be suffering the same problems as the last couple, a lack of momentum.

That doesn't really change the medium-term outlook for oil prices, which remains fundamentally bullish, but perhaps we will see a slightly larger pullback over the next week or so. If we do, key support for Brent lies around $80-81, if $83.50 falls. Should momentum pick up with any rallies, we could see $90 oil soon enough.

Gold holding above $1,800

Gold prices have rallied above $1,800 and appear to be holding firm after as we've moved into the US session. The US PMIs appear to have boosted sentiment early on which has weighed on the dollar and given gold a kick through that big resistance level. If it can hold onto the $1,800 handle at the end of the week, it would be a bullish signal.

If that coincides with the dollar index breaking below 93.50 which could see the pressure build back towards 93 early next week, it would be even more bullish for the yellow metal which seems to be benefiting from central bank tightening ambitions outside of the US. The next big test for gold is $1,833, a level that's had the better of it on a number of occasions the last few months.

Buy the rumour, eventually sell the fact

We may well be seeing the fact being sold after all, with bitcoin prices falling 5% on Thursday and adding to those losses today. The launch of the ETF generated plenty of excitement in the space in the hope that it could lead to another hype surge as institutional money pours in.

It appeared that it was holding onto those gains shortly after the launch but perhaps we're seeing some profits being locked in which may weigh on cryptos in the near term, especially if $60,000 falls. The launch of the CME futures triggered a "sell the fact" reaction four years ago and we're probably seeing that again. Of course, that turned into a far more serious price crash, something that will probably be avoided this time around. Although when it comes to bitcoin, you never know.