US equities were little changed Wednesday, with S&P down 0.3% heading into the close. But there was a more significant move in rates: with US10yr yields down 12bps to 3.41%..And  Oil is down another 2.3%. From an investor's perspective, bonds and oil are where the recessionary wake-up calls are ringing. Last week's firm Payrolls number plus this week's surprisingly robust ISM Services survey have continued raising doubts about the path forward for inflation, rates, and the Fed. And with a relative dearth of new macroeconomic information and sentiment still drenched in recession angst, investors continue orienting out of stocks and into bonds and gold as they contemplate the prospect of a still too-strong US economy and if a soft landing is anywhere near achievable. And looking under the hood at critical market recession gauges, be it the yield curve inversion or closely watched  Oil benchmarks, investors are reactively more concerned about the potential of a more severe recession than previously anticipated. Oil bulls are feeling the discomfort of a macro-led environment where the prospects of a  2023 global recession are front and centre. And as China heads for the zero-Covid off-ramp,  darker days loom as Covid cases are bound to surge.

A mixed affair for markets today has seen the DAX and Nasdaq underperform. Meanwhile, the Bank of Canada has lifted rates once more, although the recent rise in variable mortgages will likely limit future hikes. Markets stabilise after recent declines "Equity markets have provided a welcome break from the incessant selling pressure that has dominated the week, although today's mixed session has still seen the Nasdaq and DAX in the red. With the recent losses attributed to last Friday's earnings rise, this coming Friday provides yet another inflation indicator in the form of the PPI factory pricing figure. Nonetheless, with China starting to moderate their Covid restrictions, there is a hope that the economic suffering in the West will be counteracted by a Asia-led rebound in growth. " Bank of Canada raises rates, but look unlikely to do much more "The Bank of Canada opted to raise rates by another 50-basis points this afternoon, with the committee maintaining their pledge to drive down inflation further despite recent declines. Much like the US, we have seen Canadian CPI track lower over recent months, but the degree to which this will play out remains to be seen. From here we are likely to see the BoC approach their terminal rate, with markets predicting that a 25-basis point hike in January could be the final move before they sit back and await the repercussions. With the UK Halifax HPI index showing a whopping 2.3% collapse in house prices last month, the Bank of Canada will be very wary of tightening further given the implications for the 50% of homeowners on variable mortgages. "

Most currency pairs look ranged for now. Dollar Index can trade within 106-104 while Euro can remain above 1.04 with limited upside to 1.06. EURJPY can trade within 145-141 while Pound and Aussie can test 1.20 and 0.66/6650 respectively before again bouncing back to higher levels. Dollar Yen can test 138 before falling back to 135-132 while USDRUB has fallen from just below 64. USDCNY is bearish while below 7.05 and could slowly move towards 6.90/88. USDINR can rise to 82.75-83.00 before coming off from there while EURINR can test 87-88 while above 85. The US Treasury yields have fallen back again. We retain our view that the upside could be capped and there is more room to fall before a reversal is seen. The German yields have come down failing to get a strong follow-through rise. The yields are likely to fall more from here. The 10Yr and 5Yr GoI are moving up gradually. While there is room to move further up, key resistances have to be breached to become bullish and completely negate the chances of a fall-back again. The Reserve Bank of India's monetary policy outcome is due today. Dow has declined further and any break below 33500, if seen, can lead to a test of deeper support at 33150-33000. DAX has fallen below 14350 and a further fall from here can drag the index lower in the coming sessions. Nikkei remains range bound. Shanghai needs a strong break above 3220-3225 to strengthen its bullish momentum. Nifty has scope to rise toward higher levels while above support at 18600-18500. Most of the commodities looks ranged. Brent and WTI continues to fall and has scope to test key support at $77.55-75 and $70-68 respectively in the near term. Gold, Silver and Copper looks range bound for a while. Learn more about HYCM

The US dollar steamrolled every other major currency this year, capitalizing on a perfect storm of widening interest rate differentials, safe-haven flows, and an absence of attractive alternatives. This ferocious rally could extend into next year, as most economies will likely fall into recession long before the US does. Nonetheless, the second half of the year might see a reversal in this trend. Could the yen come from behind to be the winner of 2023, in case the dollar rally comes off the boil? 

Inflation concerns remain as equities head lower, with UK the housing market coming back in focus says. US markets lead the losses "The recent pullback in global stocks has continued apace today, with tech stocks leading the decline thanks to a growing concern that inflation may be difficult to control as wages push higher. Friday's 0.6% monthly gain for average earnings did little to help sentiment, with traders fearing that the uptick in wages will ultimately lead to price increases for businesses. The fact that we have seen the Nasdaq lead the declines does serve to highlight the growing fears that this downturn in inflation may stutter to the detriment of interest rate expectations." UK construction growth under the microscope  "UK housebuilders are back in focus today, with the construction PMI survey collapsing to a three-month low. While both the manufacturing and service sectors have been in contraction territory of late, it has been construction which has been bucking the trend. However, the incessant rise in interest rates at the Bank of England appear to be taking a toll, with business optimism in the sector falling to a two-and-a-half-year low. Interestingly, the decline in materials seen over recent months has helped drive cost inflation to a 22-month low, with investors shifting their focus on to borrowing costs. The sector looks likely to remain at the forefront of investors' minds, with tomorrows Halifax House Price index expected to post a fourth decline in five-months."

Good Morning! Some recovery is seen in most currencies as Dollar Index bounces from 104 dragging down Euro from resistance at 1.06 as expected. EURJPY can test 145 before pausing while Pound and Aussie can test 1.20-1.1850 and 0.66/6650 respectively before again bouncing back to higher levels. Dollar Yen can test 138 before falling back to 132 while USDRUB seems to be slowly moving higher and can test 63-64 on the upside. USDCNY has bounced slightly but is bearish while below 7.05. USDINR can rise to 82.00-82.25/30 before coming off from there while EURINR can test 85 before again moving back towards 86.50 or higher eventually. The US Treasury yields have risen back sharply but have resistances ahead that can cap the upside and keep the broader trend down. The German yields will need a strong follow-through rise from here to avoid a fall back. The 10Yr and 5Yr GoI are attempting to bounce but have to rise past their key resistances in order to turn the outlook positive. Else they can fall going forward. Dow has fallen below 34000 but while above the support at 33500 bias remains bullish for a rise to our expected level. DAX too has declined a bit but overall view remains bullish to see a break above 14600 and rise further on the upside. Nikkei looks ranged. Shanghai is attempting to break above its crucial resistance at 3220. Nifty may continue to remain bullish while above the support at 18600-18500. Brent and WTI may remain bearish while below the crucial resistance at $90 and $85 respectively. Gold has fallen back failing to break above 1820-1825. Silver too has fallen back but while above the support at 22.10-21.70, bias remains bullish for a test of crucial resistance on the upside. Copper is likely to trade within 3.7-3.90/3.93 for a while.