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Summary: USD weak after US CPI
Good Morning
The US CPI came as expected and traders had apparently expected an even higher number. US Inflation is at the highest since 1982! Despite this, Stocks rose moderately and the USD lost ground. The overall expectation is that with inflation running in line with expectations the FED will not be required to speed up tightening more than already priced in.
US indexes closed higher but none of the indexes rose by more than 0.3%. and markets are getting ready for the earnings season. Tomorrow Citigroup, JP Morgan and Wells Fargo will report earnings.
The USD index fell to 95 a new low since November as 10 year yields fell to 1.74, EURUSD rose to 1.1440 and out of the 1.12/1.14 range, GBPUSD rose to 1.37 further assisted by the pressure on Boris Johnson, USDJPY fell below 115 and Gold and Silver are at 1825 and 23.10. 1835 remains the line in the sand that needs to fall for significant potential.
Bitcoin gained to 44000, 10% off the lows.
Ole Hansen points out the strong start Industrial metals had to the new year
The industrial metal sector has, just like crude oil, started 2022 with strong gains led by
nickel and aluminum, and following months of sideways trading, copper is now also
showing signs of breaking higher. The prospects for rising electrical vehicle demand, tight
supplies and signs China is stepping up its policy response to a slowing economy have all
helped reduce some of the macro risks that has weighed on the market in recent months,
especially those stemming from China’s beleaguered property sector.
Copper broke the resistance at 450 and has significant upside potential if it can hold the level.
Boris Jonson is under pressure after he was forced to admit that he attended a party during the lockdown in December 2020 and the calls for his resignation are fairly loud.
Taiwan chip firm TSMC posted on Thursday a 16.4% rise in quarterly profit to a record, making apple look promising as they are a major supplier.
Today US Data at 14:30 is of significance, the usual employment data as well as the PPI are being releases. Over Night we will receive the Japanese Corporate Goods Prices and Chinese Trade data.
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist