Senior Relationship Manager
Summary: Will Crypto Spill over? Will the CPI Save the day?
Good Morning,
The failure of crypto exchange FTX and the news that Binance would not step in to acquire the rival caused massive ripples in crypto. Bitcoin fell to a low at 15600 and can recover to 16700 just now.
The woes of crypto spilled to overall risk sentiment and boosted the US Dollar as safe haven. The USD Index rose back to above 110 to trade at 110.23 despite falling yields (confirming it is a safety move as opposed to the normal yield seeking one)
There continue to be worries of larger spillover effects and calls for Bitcoin to drop to 10 or even 5k.
US Indexes lost sharply with the S&P 500 -2.08%, the Nasdaq -2.48% and the Dow -1.95%, the GER40 was relatively stable at 13600.
EURUSD is trading just above parity at 1.0033. GBPUSD trades at 1.14 and USDJPY at 146.14.
The US Midterms so far do not provide a very clear impulse for the markets. Most interesting seems to be a loomig showdown between Donald Trump and Ron DeSantis for the next presidential ticket.
Today, all eyes will be possible spillovers of FTX and then the US CPI at 14:30 CET. Traders and investors hoping for a year end rally will be expecting a number below 8 and a higher one would raise fears of a hawkish Fed for the December 15 Rate decision. Right now, the odds are even for 75 and 50 basis points.
Make sure to have your risk management under control, as always when everybody is maiting for a single moment, moves can be sharp.
Economic data:
Thursday: US CPI and Labor Data
Friday; DE HICP, UK GDP, Uni of Michigan sentiment
Earnings:
Thursday: Deutsche Telekom, Allianz, Merck, Tokyo Electron, Engie, Becton Dickinson, AstraZeneca, Brookfield Asset Management, National Grid, TransDigm
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.