Morning BrewApril 5 2023

Good Morning,

The next Morning Brew will be on April 13^th due to holidays.

The lesson yesterday was never to predict a quiet day...

Normally the JOLTS Job Opening Numbers are no something with a huge market impact,  but... Yesterdays report showed 9.9 mio open positions vs 10.4 mio expected. This caused an interesting market reaction with initially letting interest rates fall, which in turn caused the the US dollar to drop and technical levels were breached, amplifying the reaction. The 2 year rate fell to below 4% and is now 3.9%, the probability of a further hike at the next FOMC is at 50/50.

Most interesting is that the despite Powell’s insistence the Fed would not lower rates in the near future, traders are fully pricing in cuts by 60 basis points in December.

The reaction was especially strong in precious metals where Silver gained more than a full dollar to trade near 25 and gold broke above the psychologically important 2000 level and is at 2020. The next significant levels would be 25.50/70 and 2065.

The USD Index fell to 101.60, EURUSD is at 1.0960, GBPUSD at 1.2485 and USDJPY 131.60. Bitcoin rose to 28500.

Equities gave up some ground yesterday as recession worries took precedence over lower rates. All three US Indexes lost app 0.5% and the usual culprits moved relatively little compared to recent swings. Tesla fell 1.45%, Amazon gained 0.8%, Nvidia fell 1% and Apple 0.1%. Volumes show the upcoming holiday at 20% below the one month average.

As tomorrow, holidays start in several countries, expect lower liquidity than usual and possibly very sharp moves. This is especially true for Friday afternoon when the Non Farm Payroll is released on Good Friday, often taking the market by surprise and hitting extremely low liquidity. The expectation is for 240k a, the unemployment rate at 3.6% and average earnings +0.3%.

Headlines:

UBS holds their shareholder meeting a day after that of Credit Suisse

Donald Trump was charged with 34 felony counts yesterday but there was less turmoil than feared.

Samsung is releasing Q1 results Friday and Analysts see a 90% decline in profits.

Trade Safely.

Economic Data

Wednesday
International PMI

German Industrial OrdersThursday:

German Industrial Output
Swiss FX reserves
US Jobs data

Friday:

 Good Friday
Non Farm Payrolls