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Erik Schafhauser Zürich Erik Schafhauser Zürich Erik Schafhauser Zürich

Morning Brew August 9 2024

Morning Brew 1 minute to read
Erik
Erik Schafhauser

Senior Relationship Manager

Summary:  Take Profit or add to positions?

Good morning,

Risk sentiment was strong yesterday with Indexes posing solid gains across the board, the Dow ends up 1.8% the S&P 500 up 2.3% the Nasdaq up 2.9% and the Russel gains 3%. It was a broad rally, key single stocks were Eli Lily and Under Armor which rose 9.5% and 19.2% after good earnings.

As trigger, decent initial jobless claims were given, in my view, the lack of further bad news lets traders and  investors see the recent levels as an attractive entry level. Volumes normalized to 12 billion shares on US Exchanges against 12.6  on average the last 20 days. Also International Indexes rose yesterday. This morning we are seeing a slight reversal, most indexes are red but less than 0.5%.

10 Year Yields are at 3.96 as Federal Reserve policymakers are increasingly confident that inflation is cooling enough to allow interest-rate cuts ahead, for the September meeting, we are trading 55% for 50 BPS hike and 45% for 25 BPS, for December we are at -105 BPS.

EURUSD is 1.0920, USDJPY 146.87, USDCHF 0.9458, GBPUSD 1.2750 Gold and Silver posted strong gains and are at 2422 and 27.60. Bitcoin is up 25% off Fridays lows at 60k.

The agenda remains thin, today we expect the German CPI and Canadian employment data after China`s CPI surprised to the upside.

Driver today will be overall sentiment that is difficult to predict – either we see a good mood like yesterday or traders will cut positions into the weekend.

The US Election, the middle east and Ukraine will be key factors.

  • Apparently, Donald Trump and Kamala Harris will debate on Sep. 10 on ABC and there may be even more debates as polls show Harris leading Trump by 5 points
  • The US, Egypt and Qatar are urging Hamas and Israel into talks on August 15
  • Ukrainian forces remain in Russia and cause gas prices in Europe to ruse.

The next key economic release is the US CPI  next Wednesday expected at 2.9% and 3.2% Core

Here key reads from our strats team

***Recent market volatility***

 

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

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    Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

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    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

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    FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

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    Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

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