MARKET TALK
What is a credit crunch?
When banks are not comfortable lending money because of increased economic risk
- Increasing interest rates are meant to “cool” an economy after a long period of economic growth because of low interest rates
- During periods of high inflation, such as the current situation, Central banks are happy to see a “credit crunch” because less borrowing can serve to help cool the economy
- The side effect is that some companies, including banks, may end up failing
A credit crunch can also be seen as a major economic turning point, and during these turning points, market volatility increases as investors adjust positions to the new situation
Today’s Economic Events
| Time: GMT+0 | Country/Region | Economic Indicator | Previous | Forecast | Actual |
|---|---|---|---|---|---|
| 10:00:00 AM | Germany | ZEW Economic Sentiment Index MAR | 28.1 | 19.1 | - |
| 12:30:00 PM | Canada | Inflation Rate YoY FEB | 5.90% | 5.20% | - |
Cross asset bullet points:
Gold trades above $2,000 psychological level, opens gate for further gains
- Gold hits fresh highs near $2,010 per ounce
- Increased prospects for a restart of the September - January uptrend
- Upside prospects could be seen towards the $2,075 area
- Downside support seen above the $1,912 area
WTI Crude Oil at fresh year lows
- Oil prices remain at risk of further downside, increased oil supplies and fears of global economic slowdown adds to the recent downside pressure on price
- Downside prospects increases after the support at $71 failed to hold
- Next important downside support spotted near the $58 lower extension
- Upside risk for short sellers seen above $78.60
Not investment advice. Past performance does not guarantee or predict future performance.
