Senior Relationship Manager
Summary: Central Banks today - FX Ignores Powell
Good Morning,
Powell`s continued hawkishness weighed on markets yesterday and continuing through the night, stocks as well as precious metals are falling and Silver is down 5.6% on the week. Gold is holding up better at a minus of 0.6%. Bitcoin surged to above 30k again not least on Powell stating it was here to stay.
Big Tech also had a negative day with Tesla -5.5%, Apple -0.6%, Nvidia -1.7%and Microsoft -1.3%.
Opposed to precious metals and stocks, rates are relatively stable an the USD weak at 102.10, EURUSD 1.0980, GBPUSD 1.2750 and USDJPY 141.80. 2 Year US Rates are relatively stable at 4.73%.
This a-synchronicity seems a bit overdone and makes for likely interesting moves – Watch out
Today, focus will be on the 4 central Bank decisions
That aside we are awaiting a second day of Testimony by Powell at 16:00 and the usual labor market data at 14:30. Everyone with an eye on AI technology should watch the Accenture earnings!
Thursday June 22
Swiss Rate decision
UK Rate decision
US Jobless Data, Existing Home sales
Jerome Powell speaks in the Senate
Earnings: Accenture PLC, FactSet
Friday June 23
Japan CPI, PMI
UK Retail Sales
DE, NL PMI
EU PMI
US PMI
Earnings: Oracle
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach