Senior Relationship Manager
Good Morning,
Just out: ECB to hold unscheduled meeting to discuss market rout it is believed the interest spreads will be the subject
The probability of a fed hike by 75 Basis points has risen to 90% if calculated based on interest rate futures. Last week we were at 4% and markets are slowly digesting this shift it seems.
The whole US Yield curve shifted higher, the mid-range from 2-10 year is 50 bps above the beginning of the month. This is pulling the USD higher, the USD Index is trading at 105.35 after a high of 105.66, EURUSD is at 1.0425, Cable is testing the 1.20 to the downside 1.1950 could offer some support, then there is little to offer before sub 1.15.
The statement from the BOF that the yen was uncomfortably weak faded away and USDJPY broke above 135. USDCHF is trading above parity
Equities changed relatively little yesterday and are stable overnight, reminding of a dear in the headlights, the S&P fell 0.38%, the Dow gained 0.5% and the Nasdaq rose 0.2%.
The Dax closed below the 13380 support and thus loos in danger of reaching the 13025 before a close of Mondays gap.
Implied Vol is on the rise with the 1 Month ATM EURUSD Option at above 10% now.
Cryptos remain under pressure and Bitcoin is neat 20k, Gold and Silver are at 1816 and 21.16 waiting for an impulse.
Chinese Data came better than expected. Industrial output rose 0.7% instead of falling by that amount, retail sales “only” fell 6.7% vs a feared7.1%.
All eyes are on the FOMC and Powell’s conference tonight, with the rate released at 20:00 CET and the press conference at 20:30. The fed adjusted rates by more than 1% in the past but that was in the early 80s and we had a fully different level of rates at that time.
The BOE will announce rates tomorrow and for now a hike of 25bps is expected but he probability of a 50BPS hike is rising (currently 45%)
Australia warns inflation is too high, 'decisive' action needed; RBA governor expects CPI to hit 7% by year-end from current 5.1%
This morning at 11, the EU Industrial production will be released at 14:30 the US retail sales but unless there is a real surprise it will not have a dramatic impact.
Thursday: Australian GDP and Employment data over night and US Labor market data
Friday EU CPI and US Industrial production
Friday is also quadruple witching Friday
Fasten your seatbelts and Trade safely, sharp jumps are likely today.
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