Erik Schafhauser Zürich Erik Schafhauser Zürich Erik Schafhauser Zürich

Morning Brew July 27 2021

Morning Brew 1 minute to read
Erik
Erik Schafhauser

Senior Relationship Manager

Good Morning,

Hopes US Inflation may have peaked lets US rates decline, weigh on the USD and boosts shares ahead of the ECB meeting and press conference. 10 Year yields fell by 20 Basis points letting the USD Index fall to below 1 again, EURUSD rose to 1.0913, GBPUSD to 1.3130 and USDJPY fell to 125.40 after rising above 126 yesterday. Gold and Silver rise to 1973 and 25.75. USDCAD fell 100 BPS after the BoC hikes rates by 0.5% yesterday.

US PPI grew by 11.2% as announced yesterday but it seems the market had expected worse, Equities can close friendly with the S&P and the Dow up 1% and the Nasdaq 2%.  Overnight, gains can continue by app. 0.3%.

For the ECB the most likely stance is no hike with a probability or 82% and a 0.1% hike with 18%, the main expectation is a firmer roadmap for the end of QE and beginning hikes. Inflation is at 7.54% but eh war in Ukraine has eaten up economic growth – putting the ECB in a tough spot. According to the Taylor Rule, the Central Bank rate is almost 7% too low.

Today there are 3 important data points, the ECB, the Turkish Central Bank Rate and US Retail Sales. We are also heading into the long Easter Weekend and could see some position reduction before, over the Easter Weekend many markets are closed and where trading is open, liquidity can be expected to be worse than usual.

Please find our holiday schedule on this page, just scroll down to the “Holiday Overview”. We will be back in the office on Tuesday.

China's race to stop the spread of COVID-19 is putting strain on global supply chains but it seems markets are more focused on the Chinese effort to stabilize markets.

Germany continues to struggle with the handling of the Ukraine war and is forcing unwelcome decisions on politicians. Several  Greens are willing to extend Coal usage for energy and supplying heavy weaponry to Ukraine and the SPD is forced to confront the Russia dependency  it allowed Germany to run into.

The Korean and Singaporean central banks tightened monetary conditions.

JP Morgan reported a 42% drop in profits, investment banking driving an overall revenue decline of 5%.

  • Thursday: China Northern Rare Earth Group, Fast Retailing, Ericsson, UnitedHealth, Wells Fargo, Morgan Stanley, Goldman Sachs, Citigroup, US Bancorp, PNC Financial Services, Coinbase, State Street
  • Friday: Hangzhou Hikvision Digital

Economic data:

  • Thursday: Sweden CPI, Turkey Rate decision, EU Rate decision and US retail sales
  • Friday: French and Italian CPI , NY Fed and Industrial Production

Trade safely

 

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.