Senior Relationship Manager
Good Morning,
Equities ended higher yesterday with the S&P 500 up 2%, the Nasdaq +2.8% and the Dow +1.3%, fueled by positive economic data, hopes of an end to the lockdown in China and a resurgence of hope the sell off my be overdone.
Jerome Powell reiterated his stance to fight inflation at an event, stating "What we need to see is inflation coming down in a clear and convincing way and we're going to keep pushing until we see that” but he was not more hawkish than before. His remarks strengthened the USD off the lows but not dramatically.
Expectations in rate futures markets remain that the Fed's target rate would reach at least 2.75% to 3.00% by year end.
Reuters reports the European Central is giving national central bank chiefs a bigger voice on policy , asking her own board to speak less and set aside more time for debate.
Over night, Indexes give up a little ground, the US500 is at 4080, the USTECH100 at 12520 and the GER 40 at 14210.
EURUSD gained to 1.0540, GBPUSD to 1.2480 and Gold and Silver are trading 1815 and 21.65. The USD Index tested the 105 again but fell to 103.36.
US 10 year yields are trading at 2.97 and the German at 1.03.
Markets are looking for the next catalyst either to the up- or the downside, that could be any change in rate expectations and or inflation, a change of circumstance in Ukraine or a renewed outbreak of corona in Shanghai – given the year so far, it can also be something off the radar the prodigious unknown unknown.
The most important data releases are the Austrian HICP at 9:00 and the EU one at 11:00, followed by the Canadian CPI at 14:30
Expiries
Physically Settled Futures:
CLM2 will expire 20th May at 15:00 GMT
PAM2 will expire 23rd May at 15:00 GMT
Expiring CFDs:
OILUSJUN22 will expire 18th May at 15:00 GMT.
PALLADIUMJUN22 will expire 20th May at 15:00 GMT.
Futures can be rolled online via the Futures Spread Trade Ticket. Any open positions will be closed after the mentioned times.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.