Senior Relationship Manager
Summary: 4th of July, expect thin volumes in nervous markets
Good Morning,
Friday was a decent start into the third quarter for Equities overall, US Indexes gained app 1% in fairly slow trading. Outlier was the chip sector that came under severe pressure on a warning by Micron Technology that demand was slowing. This dragged the sector down by app 4%.
The USD Index hit a high of 105.63 on Friday and receded to 105..02 now on 10 year yields in the US falling to 2.90. German Yields also fell with the Bund future gaining. EURCHF remains near parity and EURUSD at 1.0436, GBPUSD traded below 1.20 on Friday but gained to 1.2100.
Commodity weekly: Copper and cotton crushed on galloping recession fears
Gold and Silver came under severe pressure, Gold seems to have found a bottom at 1780 again, Silver seems to have room to the downside until 18.40 technically.
Bitcoin remains below the 20k and ETH at 1050.
The main question at the moment seems to be if a recession or hints thereof causes central banks to shift their rate expectations or if the current hawkish expectations remain anchored. Hi Inflation in the EU calls for a hike by the ECB on the 21st, currently futures price in a 10 bps hike. For the FOMC on the 27th, a 75% probability for a 75bps hike is traded.
German Trade data came worse than expected this morning with the Trade balance at -1 bio vs a surplus of 2.7 bio expected.
At 8:30 we are expecting the Swiss CPI and at 9:00 that of Turkey, EU Sentix Index at 11.
Remember that the US is closed for the 4th of July.
Tomorrow international PMI will be closely watched, Wednesday EU Retail Sales and US PMI and Friday the US Nonfarm Payroll will be the key event.
Expect thin liquidity and somewhat nervous trading today as may market participants are off.
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.