Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Chief Macro Strategist
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Morning Brew January 3 2023
Erik Schafhauser
Senior Relationship Manager
Summary: Hopes on China starting into 23
Good Morning and a Happy New Year
Let us hope for a better 2023 than 2022. We are starting the year on the expectation that we are heading into a recession and central banks will lower rates at one point. For the US this is seen to happen in June/July. Currently the peak rate is being traded at 4.95% in June and by year end, the expectation is at 4.55%
The ECB is expected to peak in September at 3.47 and to end the year at 3.27. 10 Year rates are at 3.82 for the US and the EU at 2.46.
While we are starting the year quite friendly, the technical setup still looks challenging for equities as our Kim Cramer Larsson points out in his technical outlook: S&P 500 is looking at 3,200, Nasdaq 100 below 10K, DAX 11,450, , FTSE 100 Range bound and Hang Seng towards 11K.
The USD Index is trading below 104 at 103.69 and the Yen is trading below 130 against the USD again for the first time in 7 Months, EURUSD is 1.0650 and Cable 1.2060. Gold and Silver surged 1841 and to 24.40. Oil broke above 80 USD.
At the moment all eyes are on China where the PMI remained below 50 but came higher than expected and the big question is if the stimulus provided by the reopening of the society outweighs the impact of corona infections.
In Terms of economic data we are expecting international producer and consumer price indexes: Switzerland at 9:30, Germany 14:00, Canada 15:30 and the US at 15:45.
Tomorrow will be dominated by PMI releases through the day, and the highlight of the week likely to be the Fed minutes Wednesday
Liquidity is still low and sharp moves not unlikely, trade accordingly and safely.
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