Daily Brief for January 11, 2022

Daily commentary for market and investment insights

What Happened in the Markets?

U.S. stock futures were unchanged Tuesday morning, after the previous session’s intraday setback as traders consider increasing interest rates with anticipations of rising corporate earnings.

The Federal Reserve accelerated plans to reduce the amount of money pouring into the economy through quantitative easing at its December meeting. It will now reduce bond purchases to $30 billion a month and end the program early this year.

If there is a disorganized shifting in rates and the following tightening of financial conditions, the Federal Reserve may adjust the route. Investors are expecting Federal Reserve Chair Jerome Powell’s Senate Banking Committee hearing.

The higher implied volatility caused the options delta to increase, which directed to more selling as hedging pressures aggravated the weakness. Yesterday’s reverse trend in implied volatility decreased options delta value, which led to counterparty buying.

Calls and Puts 20220110 SpotGamma
Source: SpotGamma

Technology stocks are expected to have higher than average revenue and earnings growth. These stocks have been hurt recently as Treasury yields have increased, as investors expect the Fed to be more aggressive in raising rates.

Sequoia Capital and Paradigm have decided to invest $1.15 billion in Citadel Securities, a Chicago-based firm.

Powell said the Fed would take steps to ensure higher inflation seen over the past year won’t develop deep roots in the economy.

SPX Total Gamma 20220111
Source: BrightHedge

Disclosure: This article expresses my own views, and I wrote the article by myself. I am not receiving compensation for it. I have no business relationship with any company whose security is mentioned in this article.

Sources: FT.com, Bloomberg, MarketWatch, WSJ.com

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The investment information, comments and recommendations contained herein are not subject to investment advice. The comments and recommendations contained herein are based on personal views. These views may not fit your financial situation and your risk and return preferences. For this reason, based only on the information contained herein, investment decisions may not have the appropriate outcome.