Cracking the Code of Last Week's Dollar Dynamics
Market Commentary
Based on our latest observations, last week the market saw some notable performers and underperformers. The outperformers were Silver, Gold, and CHF, with returns of 2.68%, 1.89%, and 1.67% respectively. On the other hand, the underperformers were HSI, USD, and CAC, with returns of -1.74%, -0.78%, and -0.0% respectively.
In terms of treasury yields, they have slightly decreased compared to last week, but the differences in yields appear to be relatively small.
When looking at the risk/reward ratios, NDX has the highest ratio at 3.0, followed by SPX at 1.82 and DAX at 1.49. These securities show potential for higher returns relative to the level of risk involved. On the other hand, HSI, CSI300, and JPY have the lowest risk/reward ratios, with -0.81 and -0.65 respectively, indicating a lower expected return for the same level of risk.
In terms of correlation, securities with the lowest average correlation with other assets include Gold, Silver, NK225, STI, and Brent, suggesting they may provide diversification benefits to reduce overall portfolio risk.
In global markets, several events occurred last week. Some teenage members of the hacking group Lapsus$ were sentenced to indefinite hospital confinement for high-profile attacks, a former Apple employee shared suggestions on how to properly charge iPhone batteries, and Apple released an ad highlighting the long battery life of the iPhone 15 Plus. Best Buy also held a 24-hour flash sale with discounted prices on Macs and Nintendo Switch games. In addition, last-minute holiday deals included significant discounts on Apple Watch, AirPods, and iPads.
Looking ahead to next week, some of the upcoming economic data that we should watch out for include the S&P/Case-Shiller Home Price YoY, continuing jobless claims, initial jobless claims, pending home sales MoM, and the current account. Any surprises towards the upside or downside in these data points should be monitored closely as they may cause fluctuations in the market.
Overall, the market showed some mixed performance last week with both outperformers and underperformers. Treasury yields have slightly decreased, but the differences are relatively small. Certain securities have higher risk/reward ratios while others have lower ratios, indicating potential for higher or lower returns for the same level of risk. Some securities may provide diversification benefits due to their low correlation with other assets. The global markets saw various events, including legal actions, product releases, and sales. Looking ahead, attention should be paid to upcoming economic data for potential market impact.
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