Erik Schafhauser Zürich Erik Schafhauser Zürich Erik Schafhauser Zürich

Morning Brew May 3 2023

Morning Brew 1 minute to read
Erik
Erik Schafhauser

Senior Relationship Manager

Summary:  US Rate decision out today - Hawk or Dove?


Good Morning

The Probability of a hike tonight is priced in with a probability of 86% and the remaining 14 are in favor of no action. The year end rate is seen at  40 Basis points below the current level at 4.43%. This means Interest rate traders see one hike and 2 and a half cuts before year end.

If we accept the hike as given, the press conference will be the key event and any comments Powell will make regarding the impact of the banking crisis. At the last meeting he stressed the fact that tighter credit by banks due to  the crisis would have the same impact as rate hikes and that could lead him to be less hawkish than called for by the inflation. Ordinarily inflation is declining but not enough to signal a pause.

Yesterday Indexes lost app 1% as banks came under renewed pressure and worries about a US debt crisis. This fueled  risk off sentiment. The Regional Bank index lost 5.5% and energy 4.3%.

Overnight, indexes rise again by app. 0.3%, the GER 40 is back at 15800, the US 500 at 4127 and the US tech 100 at 13.115.

The 2 Year yields trade at 4% ant he USD Index at 101.80. EURUSD Is trading at above the 1.10 again, GBPUSD near 1.25 and USDJPY 136. Gold broke above initial resistance to trade at 2015 and Silver 25.20.

Volumes were very high yesterday at almost 20% above average.

Imlied volatility remains low and if you are worried about a risk off move today, consider buying options as insurance. 

 Besides the FOMC there is a decent amount of earnings out today but the rate decision will be key. Technical level will be interesting to watch after todays close.

  • Today 
    Data: Australia Retail Sales, Turkey CPI, EU Unemployment, US PMI, FOMC Rate decision
    Earnings:  Barrick Gold, Orsted, Airbus, BNP Paribas, Deutsche Post, Enel, UniCredit, Lloyds Banking Group, Qualcomm, CVS Health, Estee Lauder, MercadoLibre, Kraft Heinz

  • Thursday: 
    Data: International S&P PMI, ECB Rate Decision. US Labor Market,
    Earnings:  National Australia Bank, Anheuser-Busch InBev, Shopify, Novo Nordisk, Maersk, Volkswagen, BMW, Infineon Technologies, Uniper, Rheinmetall, Zalando, Shell, ArcelorMittal, Equinor, Apple, ConocoPhillips, Booking, Regeneron Pharmaceuticals, Zoetis, Becton Dickinson, EOG Resources, Ferrari, Fortinet

  • Friday: 
    Data: DE Industrial Orders, CH Fx Reserves, US Nonfarm Payrolls
    Earnings: ANZ, Macquire Group, Enbridge, Canadian Natural Resources, Adidas, Intesa Sanpaolo, CaixaBank, Cigna Group

 

Expiries

 

Physically Settled Futures

EMBK3 will expire 02 May 2023 at 14:00 GMT

CK3 will expire 05 May 2023 at 09:00 GMT

FPK3 will expire 10 May 2023 at 15:00 GMT

 

Expiring CFDs

GASOILUKMAY23 will expire 09 May 2023 at 15:00 GMT

 

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • 350x200 peter

    Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • 350x200 althea

    Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • 350x200 peter

    Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • 350x200 charu (1)

    FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • 350x200 ole

    Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.