Senior Relationship Manager
Good Morning
Strong economic data and hawkish messages from the Fed are putting investors and traders on edge. Initially the strong PMIs drove risk sentiment yesterday, Equities, EUR, Gond and Silver could gain but hawkish comments out of the fed brought us back to similar levels we traded yesterday morning. The Dow closed -0.21%, the S&P 500 -0.11% and the Nasdaq +0.13%. Dax trades at 15500, the USD Index 91.82, US 10 Year rates at 1.49 and Bitcoin at 32636. Gold and Silver tried to break higher yesterday but failed to hold on to the gains, watch for the 200d MA in Silver at 25.70.
Atlanta Fed President Raphael Bostic and Fed Governor Michelle Bowman both hinted at the inflation – while temporary – would remain longer than previously thought and that rate hikes may be necessary in 2022 not 2023. Janet Yellen expects inflation to normalize next year. I would expect the tapering discussion to gain traction soon if data remains as strong.
Todays Key Events are the German IFO Index at 10:00 CET, the BOE at 13:00 CET and US Data at 14:30, any hint at still rising inflation may pressure the FED to commit.
In the BOE Rate decision at 13:00, no rate change is expected (Probability 99%) but the two focus points will be the Central Banks stance on the QE Program and any hint at a shift in the schedule of interest rate increases, currently expected for May 22. Any surprise here can cause sharp moves in GBP Crosses.
Local Start Date | Local Time | Country/Region | Indicator Name | Period | Reuters Poll | Unit |
24 Jun 2021 | 06:30 | Netherlands | GDP Final SA QQ | Q1 | -0.5% | Percent |
24 Jun 2021 | 06:30 | Netherlands | GDP Final NSA YY | Q1 | Percent | |
24 Jun 2021 | 08:00 | Germany | Import Prices MM | May | Percent | |
24 Jun 2021 | 08:00 | Germany | Import Prices YY | May | 11.3% | Percent |
24 Jun 2021 | 08:45 | France | Business Climate Mfg | Jun | 110 | Net balance |
24 Jun 2021 | 09:00 | Spain | GDP QQ | Q1 | -0.5% | Percent |
24 Jun 2021 | 09:00 | Spain | GDP YY | Q1 | -4.3% | Percent |
24 Jun 2021 | 10:00 | Germany | Ifo Business Climate New | Jun | 100.1 | Index |
24 Jun 2021 | 10:00 | Germany | Ifo Curr Conditions New | Jun | 97.5 | Index |
24 Jun 2021 | 10:00 | Germany | Ifo Expectations New | Jun | 103.5 | Index |
24 Jun 2021 | 13:00 | United Kingdom | BOE Bank Rate | Jun | 0.10% | Percent |
24 Jun 2021 | 13:00 | United Kingdom | GB BOE QE Corp | Jun | 20B | GBP |
24 Jun 2021 | 13:00 | United Kingdom | BOE MPC Vote Hike | Jun | 0 | Number of |
24 Jun 2021 | 13:00 | United Kingdom | BOE MPC Vote Unchanged | Jun | 9 | Number of |
24 Jun 2021 | 13:00 | United Kingdom | BOE MPC Vote Cut | Jun | 0 | Number of |
24 Jun 2021 | 14:30 | United States | Durable Goods | May | 2.7% | Percent |
24 Jun 2021 | 14:30 | United States | Durables Ex-Transport | May | 0.7% | Percent |
24 Jun 2021 | 14:30 | United States | GDP Final | Q1 | 6.4% | Percent |
24 Jun 2021 | 14:30 | United States | GDP Deflator Final | Q1 | 4.3% | Percent |
24 Jun 2021 | 14:30 | United States | Core PCE Prices Fnal | Q1 | 2.5% | Percent |
24 Jun 2021 | 14:30 | United States | Initial Jobless Clm | 19 Jun, | 380k | Person |
24 Jun 2021 | 14:30 | United States | Cont Jobless Clm | 12 Jun, | 3.458M | Person |
25 Jun 2021 | 00:45 | New Zealand | Imports | May | NZD | |
25 Jun 2021 | 00:45 | New Zealand | Trade Balance | May | NZD | |
25 Jun 2021 | 00:45 | New Zealand | Annual Trade Balance | May | NZD | |
25 Jun 2021 | 00:45 | New Zealand | Exports | May | NZD |
(Refinitiv)
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