 Very good morning to you. It is Friday the 9th of July. I hope you're doing well and As per always at the end of the week just a reminder to check out the market watch Podcast by Amplify. You just need to go on Apple podcast or Spotify, whichever platform you prefer and just search for Amplify Live Market Watch new episode coming out later on today where Piers the head of trading and I will have a chat about some of the main things that happened in markets this week and certainly It's been quite an interesting and important week because we've had a considerable movement in a lot of different asset classes Yesterday the US equity indices as you saw came under some considerable selling pressure But I don't think it's yet room to quite panic At this present point in time because in the greater context of things again when you look at the daily chart on The S&P even a pullback back down here to 42 69 on the quarter Which would be a pretty decent as strong area support at that level and the market got close to that But we've managed to rebound and we're trading firmly back a 4300 handle at the moment and You know, why is this happening? There was a couple of different things that people are looking at For one prospects for the global economy have somewhat been paired back We have seen some economic data earlier this week that seemingly acted as a bit of a catalyst Which was that ISM services PMI figure it was considerably lower than expected the employment Subcomponent was in Contractionary territory after quite a significant decrease against the prior month and it's kind of feeds into Perhaps a couple of data points just rolling over a little bit from that sharp acceleration that we were seeing and people I've started to unwind a little bit of that reopening trade and then layer in with that this idea that COVID And the Delta variant is still very much globally Spreading at this point in time and I'll talk about an update in the US. We're obviously seeing that in the UK The health secretary said G Javid has been very clear that we are going to push ahead There's going to be the the reopening of the economy as planned on the 19th of which if England win the euros could also be a bank holiday Is what some people are talking about But the point being there is he said the cases are going to go up at least into 50,000 in a few weeks time and then possibly up to a hundred thousand Elsewhere as well and underdeveloped countries the same thing happening and in the Far East COVID is also seeing case rate uptick So perhaps a bit of our prevention and we know that so far vaccine still remain largely effective However, various studies have also circulated this week suggesting that definitely your how immune you are to Symptomatic a reaction to catching COVID If you've only had one vaccine is quick is reportedly much lower than if you've had a double shot and so yeah, there's definitely things to consider and there's quite a bit of Subsequent knock-on effect from a correlation point of view and US yields in fact Treasuries they have paired a little bit this ramp that they've seen really initiated from Tuesday This is the move that we can see here Which was around the Tuesday nizy open and the ISM figure I just mentioned since then yields have just been collapsing Technically important around beginning of the week The US 10 year yield broke through the June support area and that that kind of triggered a deeper move down to the February Lows that we're training at the moment in US 10 years yields But you can see here the 10 years backed off so you'll just coming off the floor a little bit But still on course one of the biggest weekly slides in US 10 year yields Since June of last year to put that in comparison and so from a sector perspective We've seen mega cap tech benefit and financials Have been one of the worst performing so very much a reflection of the reversal of the general reopening trade that we were seeing Just a few weeks ago in fact And then elsewhere overnight in Asia the Chinese yuan rebounded overnight So with some of that yield move Yields picking up that is in the overnight session late yesterday the dollars also just picked up a touch And so the Chinese yuan Has rebounded overnight as well from a two and a half month low But it's still set for a sixth straight weekly loss, of course The South Korean Cosby was weaker overnight as well impacted by the virus New record cases in fact in South Korea for a second consecutive day Resulting in raising of restrictions in sold to the highest level for nearly two weeks Beginning from the 12th of July. So, yeah, definitely quite a bit going on But what I would say is that that's pretty much been the theme for the week actually as far as this morning is concerned I'd say things have stabilized to a large degree. And so yes Probably one of the most pronounced moves is the UST note Which is actually down about 10 ticks at the moment going to the European Open Which is a decent drift south in the overnight session, but otherwise currency markets are pretty flat You've had a false Move to the downside here through 7 a.m. This morning just gone in the British pound which had a short For a belief the overnight Asia pack low and that came as the latest UK GDP number came out from May month to month 0.8% Versus expected 1.5% so quite a bit weaker than expected. However, that move not being able to be sustained at this point in time Um, otherwise, yeah, the currency pair is pretty quiet gold's basically unchanged sitting at the $1800 handle at WTI crude and Yeah, nice nice technical move yesterday Just looking at the trend line from the week to date High that we printed going back to beginning of the week We got retested there midweek and then yesterday we broke above And then you can see acted as nice support off that level to then see a bit of recovery late to the US session A bit of volatility overnight the APAC session and still quite a bit of concerns overnight in Asia about Economic slowdowns. There's some inflation numbers we'll look at in a moment. There's still a lot of friction between the US and China And then the crackdown that's going on with some of those tech names The car hailing firm DD being the one in focus this week, of course As the Chinese authorities look to control more and more the data from some particularly these us listed Chinese firms, but it stabilized since at all at all You know, we're decent amount off the lows that was seen Only in yesterday's session this time yesterday We are training, you know well over two dollars above that current price So a bit of reversal being put in there for the crude oil market Which is not unusual after quite quite a decent down week Of course that we've seen in the crude space with the fallout generally with some of the OPEC in decision that we've seen So let's get let's get to it. Let's talk about some of the news and what's going on And from a data perspective, I thought I'd talk about Chinese inflation first We had the CPI number overnight and perhaps just to give you a bit of a Visual queue so both PPI CPI slowed slightly from their levels in May as you can see here The CPI number for june came in year and year 1.1 percent below the expected 1.3 And and down from the previous 1.3 and the PPI was in line at 8.8 percent But a slight moderation from the peak of 9 percent that we saw last month The pullback quite a few people are saying may well create a bit of a chance for authorities to ease ie ease policy And that was because speculation yesterday of course was rife about the reduction potential of the reserve requirement ratio with commodity prices mostly flat in june after rallying for more than a year and of course commodity price pressures have been one of the reasons why Perhaps it would have restricted the ability for the chinese authorities to Counteract that with higher rates. And so the fact that in june commodity prices have have moderated The gap between PPI and CPI is narrowing and part of the reason is regulators measures that we've seen of course in recent weeks In china to stabilize commodity prices And there's but there's also the fact that consumer demand still remains relatively weaker as well so Definitely something to watch as we go further forward Chinese economic data again like like that global description that I was saying has been moderating But if commodity prices now start to come off the boil Definitely this idea of kind of focused on the more hawkish side of inflation Given market movement we've seen this week is Is deteriorating the strength of that view as it plays more into the hand then that perhaps we go full tilt back into that idea of the chinese looking to To keep momentum going by finding ways to further support the market The other thing that came out overnight continued friction of course between The biden administration who are set as early as today to add more than 10 chinese companies to his economic blacklist over the alleged human rights abuses And high tech surveillance in zhejiang according to two sources the streak of his royalties in the overnight session So just the latest Their development that's going on But chinese equities luch with the general asia region were lower following the handover from the us Which we did come off the lows of course Um, and so we didn't finish at the worst point of the day by by a clear margin But we were down around point nine percent in the s&p Point eight percent of the down point six percent in terms of the nasdaq interestingly and almost as a joke Some of the traders of the community talking this morning that you know is amazon the new kind of safe haven and uh obviously benefiting earlier this week from the um pentagon contract being dropped with microsoft and that could potentially play into the hands of amazon that's a multi double digit billion dollar contract but the idea being that The new yield environment that's been developing over recent days plays favorable to big tech And big tech have deep pockets and can navigate kind of economic volatility And so of all the companies, you know even in a low yield environment Is it the fact that you know corporates are good investments opportunities in that respect? So big tech has really had a a good couple of days in in that respect The other thing is of course is covid as i mentioned and us covid cases are up Around 11 percent against the previous week almost entirely among young people who have not yet been vaccinated and this of course is one of the Those things that we're likely to see in other western developed nations as we go through this period of unlocking from the final parts of the like what we've seen in the uk the final step to Dropping of a lot of the social distancing measures and other restrictions that have been in place And so no doubt that that that case rates will pick up amongst the young particularly down vaccinated With covid and with the delta variant very much in focus How much of a surprise is that well as i said earlier, it's not really a surprise The fact of the matter is is that most people are anticipating these numbers to go north I mean as kind of prepared From the health secretary in the uk But if you run the numbers in the us and you're modeling that of the delta variant which is more advanced in the uk And trying to extrapolate those numbers and translate it into america Where america's probably got another three or four weeks worth of case rates going up So that increase of 11 percent of the previous week is not surprising It probably will continue to go up considerably in the period ahead At the moment the markets as you can see it's it's part of the variables that have weighed on sentiment this week for sure But one thing i would definitely be keeping an eye on as well going forward is the fact that The vaccination rates have been moderating in the us You know the curve of the vaccinations has been plateauing after that very fast Um kind of pick up that we saw just three or four months ago. And so from that from that perspective There definitely will be a new wave in america. It's just a case of how high is that number and how affected do these vaccines remain And what what does that look like in terms of the ability for the country to do to go through this reopening phase? Which is obviously economically very important on the back of this The other thing then it is uh fence daily who is a voter But a well-known leaning dove did come out and say like in an ft interview this morning That low rates of vaccinations in some regions of the world pose a threat to the us as well as the global economic recovery So yeah, kind of a far cry from a lot of the hawkish commentary We were hearing last week You know very interesting in fact that this week if you think about the fed rhetoric you've had this week It's been very quiet. And if you think about the week before it was hawks talking every day about the idea of we should be tightening Policy talking about tapering inflation Nothing this week And that's because the world has changed to a certain degree as far as investors see it reflected in market prices at where we are at the moment And it would be much more in-fitting with what daily is saying at the moment And this goes a large way to explain them why you know as far as fed tightening is concerned or panic about that Being accelerated. I think has been put to bed at least for the time being The other thing of course that came out last night, which was definitely quite interesting Pfizer plans to request you best imagine the authorization as soon as next month for a third booster dose of its COVID-19 vaccine Based on early data showing it can sharply increase immune protection Against the coronavirus. So the company has received initial data from the early human study Showing that a third dose of its existing coronavirus vaccine is safe It can raise neutralize neutralizing antibody levels by five to ten fold Against the original vaccine. So booster shots has always been something that's been mentioned for a while I think the CDC it was who said last night That at the moment they're not recommending a booster shot because at the moment the vaccines that exist Are doing the job in terms of their efficacy rates But I would anticipate authorities to really be saying that type of messaging in order to keep confidence high When there's still a large portion of the population unmaxulated And so booster shots, yeah great. I mean this this This data would suggest that For sure increasing neutralizing antibodies by five to ten fold I mean that would be fantastic if that is the case and certainly would then be more preventative for further mutations beyond that of the delta variant Looking at the calendar for today. It's really quiet. In fact, the UK data out of the way We do get the ECB minutes, which have been delayed and will be coming out 12 30 later on today There's some CAD jobs data coming out 130, but no major US data really today We do have ECB's Christine Lagarde Speaking at an OECD conference from 11 a.m. London time And a group of G20 pilots ministers the central bank is going to be meeting in Venice today As well. So maybe look out for some comments over the weekend, but that is it. So I'll leave it with you. Good luck to the England football team, of course kicking off against Italy on Sunday night Not only to to win the first time in a major tournament. It's 1966, but the fate of potentially having a An unprecedented UK bank holiday on the day of which lockdown finishes on the 19th is all in the hands of the boys So good luck. Enjoy the game. Have a great weekend. Thanks very much guys