Erik Schafhauser Zürich Erik Schafhauser Zürich Erik Schafhauser Zürich

Morning Brew July 7 2023

Morning Brew 1 minute to read
Erik Schafhauser

Senior Relationship Manager

Summary:  Fassten your seatbelts

Good Morning,

Much better than expected ADP Employment and PMI Numbers out of the US caused rates to jump and the key 2 and 10 year rates to breach the 5% and 4% respectively. This caused equities to fall and puts todays labor market data into the spotlight. If we see better than expected data and hawkish sentiment gets even stronger, we are looking at a paradigm shift. Peter describes in his note

Key points

  • Long-term bond yields are breaking higher with the US 10-year yield pushing above 4% introducing a new dynamic in the US equity market that most had been downplaying for months during the AI rally.

  • The VIX Index has jumped significantly today coming out of its hibernation and the VIX futures forward curve is getting closer to inversion signaling nervousness.

  • With the cost of capital on the rise the stakes have been raised going into the Q2 earnings season. Higher discount rate on cash flows can only be offset by higher growth outlook so the Q2 earnings season is now paramount maintaining the strong equity sentiment this year.

The Dow fell by 1% yesterday, the S&P and the Nasdaq 0.8% and the Dax lost 2.6% in the official close. At the moment we are trading at 15560 in GER40, the US 500 4408 and the USTECH 100 15084. The Vix gave a sign of life again at 15.6

The USD Index gained less than maybe expected, 103.03 EURUSD is at 1.0891, GBPUSD 1.2741 and USDJPY 143.70. Gold and Silver fell to 1913 and 22.70 in a volatile session.

10 year yields are at their highest in the EU, the UK and the US and the weekly closes will be closely watched – likely driven by the US Data at 14:30

  • Non-Farm Payroll expected at 225k
  • Average Earnings expected at 0.3%
  • Unemployment Rate expected at 3.6%
At 8:00  we expect the German Industrial output, the UK Houseprice Index and Swedish GDP, at 14:30 also Canadian labor market data. 

The rate path of the Fed now prices in more than one hike, the peak is seen at 5.44 in November, 36 basis points above current level, the ECO peak is traded for January, two and a half hikes away, the Bank England is expected to hike a whopping 6 times until May 2024.

In other news:

  • China is banning imports of foods from 10 Japanese prefectures officially due to fear of radioactivity
  • Janet Yellen is in China and meeting with officials today.
  • Meta`s Threads attracted 30 mio users on its first day
  • Samsung reports a fall in profits by more than 90% on weak chip sales – it expects pickup again in Q3 but the quarterly profit was the lowest since 2009.

Expect a volatile day that could see significant moves any way depending on the data.

Trade Safely.



The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.