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

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.

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

Contact Saxo

Select region

International
International

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

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