Macro: Sandcastle economics
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Morning Brew June 7 2024
Erik Schafhauser
Senior Relationship Manager
Summary: US Employment Data Key - Gold and Silver worth watching
Good morning
The Nonfarm payroll is expected at 14:30 CET, with a large variance in the estimates. The Estimate is 185k, the low 120 and the high 258. Last months reading was 195k. The Unemployment rate es expected at 3.9% and the average earnings also at 3.9%. With the FOMC up next week these data points are likely the last input ahead of the decision.
For the June meeting, any action would be a huge surprise, the probability of no action is 97% and the year and the rate is seen 0.5% below the current level, so two full cuts.
Ahead of the key data today, we also have the German production and trade data as well as UK House prices at 8:00 CET, the Swiss FX Reserves at 9:00 and the EU GDP at 11:00. At the same time as the US Employment data, Canada`s unemployment rate will be released, the expectation is 6.2%.
Equities were relatively calm yesterday, exceptions being Gamestop, up 47%, on the announcement that Roaring Kitty would hold a livestream today. Lululemon rose after numbers and Nio fell. The Dow closed up 0.20%, the S&P down 0.02%, the Nasdaq ended down 0.09%. Nvidia, Microsoft and OpenAI are likely facing an Antitrust probe.
ABB rose to all-time highs above CHF 50 and Novartis rose to 9 years highs and 95 CHF, this causes the SMI to be one of the strongest indexes this week and lets it catch up to it’s peers globally year to date. The CHF 20 is up nearly 3% for the week and 10% for the year.
US 10 year yields are at 4.3% and the USD Index 104.11, EURUSD 1.0890, GBPUSD 1.2788 and USDJPY 155.65. EURCHF is at 0.9693 and USDCHF 0.89.
Gold and Silver had a very good day yesterday with gold now close to test the 2400 and Silver at 31.40. If you are interested in trading Silver, be extremely careful, we have seen several Fridays where we saw huge swings in late European trading. Implied volatility in Silver is 31% but the realized is at 44% for the last month! Gold is the calm big brother at implied 13.8% and realized 17.
Trade safely!
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