Senior Relationship Manager
Summary: Dovish Barkin boosts Risk Sentiment
Good Morning,
Thomas Barkin stated on Frida that inflation is "likely past peak" boosting risk sentiment at the same time as hedge funds were reported to hold the biggest ever short position in two-year U.S. Treasuries futures. This meaning they are betting on higher rates. That will make for very interesting markets in the near future.
For now, doves seem to dominate as the probability of a 50 bps hike fell to below 20% and the peak rate to 5.44%, 2 year yields drop to 4.85% ant he 10 Year below 4 again.
The USD Index is below 104.50 EURUSD 1.0645, GBPUSD 1.2030 and Gold and Silver soared to 1854 and 21.25 after the first green week in a while.
On Friday, the Dow gained 1.2%, the S&P 1.6%, and the Nasdaq 2%. The Ger40 rose to above 15600, the Nikkei hit a three month high.
The overall topic will remain the Fed`s rate path and global recession or soft landing worries, this week we will see some rate decision, key data and Powell will speak two times so we should see some interesting movements.
China set a relatively modest economic growth target of around 5% at the the annual session of its National People's Congress so there might be less stimulus than previously hoped.
Watch Credit Suisse today as Harris Associates which formerly held 10% has sold all shares acc to Reuters due to the high cost and lack of progress in splitting off the Investment bank.
Hedge funds entered February holding their biggest ever short position in two-year U.S. Treasuries futures.
Monday: US Factory Orders
Data: JP Leading Indicator, EU Consumer Confidence, US Durable Goods Orders
Earnings: Trip.com
Tuesday
Data: AU Trade Trade Balance, China Trade Data, AU Rate decision, Powell Speaks
Earnings: Chocoladefabriken Lindt & Spruengli Ashtead Group Sea Ltd Crowdstrike Ferguson
Wednesday:
Data: EU GDP Revised YY, US International Trade, CA Trade Balance,, Ca Rate decision Powell speaks, Beige Book
Earnings: Legal & General adidas AG Brown-Forman Geberit AG Thales SA China Unicom China United Network Ping An Bank
Thursday
Data: Japan GDP, China PPI, CPI, US Initial Jobless claims
Earnings Wheaton Precious Metals Ulta Beauty Hannover Rueck Deutsche Post PRADA Contemporary Amperex
Friday
Data: DE HICP, UK GDP,US Nonfarm Payrolls,
Earnings: Daimler Truck Holding DiDi Global Inc ZTE BNP Oracle JD.com
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.