Morning Brew June 10 2024

Good morning,

At times, when I warn about  a highly volatile day, I wonder if I am not crying wolf, then comes a day like Friday. Fx Markets and precious Metals in particular showed how much they can move if the setup  is right.

The headline Nonfarm Payroll number surged and beat the highest estimate, leading to increased yields and a stronger US dollar. The first full rate cut is now anticipated only in December. The USD Index climbed to 104.92, EURUSD dropped to 1.08, GBPUSD to 1.2720, and USDJPY rose to 156.70. Gold and Silver experienced significant declines following news that China did not purchase more Gold in May, coupled with hawkish US data. Gold fell by 3.4% to below 2300, and Silver dropped by 6.8% to 29.20. Copper also experienced a 4.8% loss. Overnight, we are witnessing a slight recovery: Silver could rise to 29.60 and Gold to 2996. The key question remains whether Friday's slump indicates a trend reversal or presents a buy-the-dip opportunity.

Over the weekend, the European election revealed a stronger far-right presence than anticipated, prompting France to call for an early election. European indexes are trading approximately 0.3% lower, and the Euro has weakened by 0.5% against the USD. Equities traded relatively flat on Friday in low volumes. For the week, the S&P 500 gained 1.3%, Nasdaq rose by 2.4%, and the Dow added 0.3%. In addition to economic data releases, we are expecting major events:

• Nvidia will commence trading approximately 90% lower today due to the 1:10 split, and it is worth monitoring as historically shares have gained after a split.
• Tesla: The ratification of Elon Musk's pay package is up for consideration at the AGM, with the Norwegian Wealth fund announcing its intention to vote against the 56 billion package.
• Apple kicks off its developer conference today, running until Friday, with expectations for news on iPadOS 18, visionOS 2, Apple AI, watchOS 11, macOS 15, and most importantly, Apple AI.
• GameStop fell by 39% after "Roaring Kitty" held his first livestream in three years but failed to inspire buyers.

Our Strats team provided an insightful summary on shipping and freight rates, a topic somewhat overlooked but not unimportant:: China/Hong Kong Market Pulse: Container Shipping Rides High the Geopolitical Waves and Geoeconomic Tides

This week, Wednesday will be the key data day, with the US CPI and the FOMC rate decision set for release. While it is almost certain that the Fed will not change rates, the press conference is likely to be the focus. Additionally, Israel managed to rescue four of the hostages held by Hamas on Saturday, redirecting attention to military action in Gaza. U.S. Secretary of State  Blinken will visit Egypt and Israel to  increase pressure on Hamas and Israel to reach a ceasefire in Gaza. 

Key Data:

Monday

• Data: Japan Trade & GDP

Tuesday

• Data: UK Labor Data

Wednesday

• Data: China CPI & PPI, DE HICP, UK GDP, US CPI, US Rate Decision

Thursday

• Data: US Initial Jobless Claims

Friday

• Data: EU Trade Balance, US Import Prices, University of Michigan Sentiment