Senior Relationship Manager
Summary: Higher Yields and unclear middle east make traders nervous
Good morning,
Markets are in Limbo: The unclear situation in the middle east and an equally uncertain rate path leave traders undecided.
As the rate cut expectation for December falls 40 40 Basis points, 10 Year yields remains on the rise. They are currently at 4.66%, 0,8% higher than at the beginning of the year.
Indexes gave up some ground, but the US Indexes ended within 0.2% from Monday`s close. The US 30 is 37810, the US 500 5048 – right on support, the ger40 is 17760, the Japan 225 38010. Volumes were decent at 11.5 bio shares traded vs the average of 11 bio.
ASML reports Q1 earnings of $1.3 billion, worse than expected new bookings analysts had expected a net income at 1.1 billion euro and seen new orders around 5.4 billion euros. That could weigh on chipmakers as ASML is their biggest supplier.
The USD Index is higher at 106.40 with EURUSD at 1.0610 GBPUSD 1.2422 and USDJPY 154.60 as Business sentiment in Japan sours.
Oil, Gold and Silver are trading nervously, Oil is 84.50, Gold 2375 and Silver 28.25.
Focus remains on the middle East where Israel is looking for ways to retaliate against Iran without alienating it`s supporters and the international community is considering new sanctions.
As to data, the EU Inflation and Comments from central bankers should be key today.
Also, overall risk willingness will be crucial. We can see sharp moves without a clear cause as traders adjust positions in an unclear setup.
Wednesday
- Data Japan Trade, UK CPI, EU Inflation, EU-US Forum with many speakers.
- Earnings: ASML Volvo. CSX Kinder Morgan, Abott Laboratories, US Bancorp, Travelers
Thursday
- Data AU Labormarket, US Initial Jobless Claims, Philly Fed, Bostic, Lindner & Nagel speak
- Earnings: Nordea, ABB, Investor AB. Elevance Health, Netflix, Blackstone.,
Friday
- Data Japan CPI, UK Retail Sales, Golsbee & Joachim Nagel speak
- Earnings: American Express, Schlumberger, Procter & Gamble
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.