Despite volatile FX action with the USD breaking out to fresh record highs and US inflation rising to a whopping 9.1%, prompting markets to shift towards a 100bps hike Fed hawks maintain the view that 75bps is the base case, which helped equity markets close out last week on a firmer note, halving their weekly losses. 

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This is quite noteworthy that equities have taken the recent news in its stride. That said, as I have stated previously, the bias remains to fade bear market rallies. This week sees a slew of major risk events from Europe, notably the Nord Stream decision, as well as the ECB meeting, where the focus is firmly fixed on the Anti-fragmentation tool. S&P 500 topside resistance is situated at 3945-50 and 4015 ahead.

Probability of a 100bps Hike Falls to 30%

Source: CME

S&P 500 Chart: Hourly Time Frame

Source: Refinitiv

BAC Q2 Results

• EPS $0.73 vs Exp. 0.75
• Revenue $22.79bln vs Exp. 22.86bln
• Trading Revenue $4.00bln vs Exp. 4.01bln
• IB Revenue $1.13bln vs Exp. 1.31bln

BAC shares are down 0.3% pre-market at the time of writing

GS Q2 Results

• EPS $7.73 vs Exp. 6.65
• Revenue $11.86bln vs Exp. 10.67bln
• Trading Revenue $6.47bln vs Exp. 5.82bln
• IB Revenue $1.79bln vs Exp. 1.88bln

GS shares are up 3% pre-market at the time of writing

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