Erik Schafhauser Zürich Erik Schafhauser Zürich Erik Schafhauser Zürich

Morning Brew May 30 2023

Morning Brew 1 minute to read
Erik
Erik Schafhauser

Senior Relationship Manager

Summary:  Yields and debt-ceiling struggle boosts USD


Trading is a bit choppy into the last week of May.

While there was a general agreement on the debt ceiling, several prominent republicans including Ron DeSantis stated they would appose the deal. This causes equities to pause.

The yield curve is starting to look a bit crazy with the 1 month at 5.8% and the 10 Year a full 2% lower – the expectation for the June meeting has turned in favor of a 25 BPS Hike with a probability of 60%.

The combination of risk averseness and higher yields boost the USD to the highest since early March, the USD Index is at 104.50, EURUSD 1.0685, GBPUSD 1.2330 and USDJPY at 140.80. The Turkish Lira fell after Edogans election and is trading at more than 20 Lira per USD.

Gold and Silver are at 1933 and 23.00.

Indexes are so far unimpressed by the risk aversion affecting FX and the S&P is above the important 4.200 at 4.217 in the CFD, the US 30 33.140, the US Tech 100 11.419. The GER40 is just below the 16k.

The week will be driven by progress or lack thereof around the debt ceiling in the US and the near term rate outlook. Key planned event is likely to be the US Non-Farm Payroll on Friday but News on the Debt ceiling could cause jumps at any time. 

Key events this week:

Today:

U.S.                 Conference Board consumer confidence (May)

Eurozone         M3 growth (Apr)

Eurozone         Consumer confidence & economic confidence (May)

Earnings: HP, HP Enterprise, JOYY

Wednesday 31 May

U.S.                 Chicago PMI (May)

U.S.                 JOLTS job openings (Apr)

U.S.                 Fed Beige book

Germany         CPI EU harmonized (May)

Japan              Industrial production (Apr)

Japan              Retail sales (Apr)

Japan              Housing starts (Apr)

China               NBS manufacturing PMI & non-manufacturing PMI (May)

Australia          CPI (Apr)

India                Real GDP (Q1)

South Korea    Industrial Production (Apr)

Earnings: Salesforce, Crowdstrike, Okta

Thursday 1 June

U.S.                 ADP private employment (May)

U.S.                 Initial jobless claims (weekly)

U.S.                 ISM manufacturing index (May)

Eurozone         CPI EU harmonized (May)

Japan              Investment in plant and equipment (Q1)

China               Caixin manufacturing PMI (May)

Earnings: Broadcom, VMware, Lululemon Athletica, Dell Technologies, MongoDB, Zscaler, Dollar General, Hormel Foods, Bilibili

 

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