Morning Brew November 11 2022

Good Morning,

Monday I will not be updating you here, watch out for the Japanese GDP int he night from Sunday to Monday, Chinese Retail sales, French CPI, EU GDP and the US PPI. 

As my good colleague Peter wrote yesterday, “Today we celebrate US inflation and tomorrow we think”, in further discussions we agreed the thinking may well be skipped.

What a melt up after the lower than feared CPI! The Annual rate came at 7.7 vs 8% expected and caused a massive improvement in risk sentiment. The probability that the next FOMC would only hike by 50 Basis Points rose to 72% and the terminal rate fell to 4.9% from 5.1% in May 2023.

I had expected a year end rally on a good number, but n ot that it finishes in a day, the S&P 500 rose +5.54%, Nasdaq +7.35% and the Dow +3.70%, Nvidia gained 14%, Amazon 12% Meta 10% and  Google nearly 8%, so far this morning the move continues with the US 500 at 3980 and the GER40 at 14260.

The USD Index dropped to 108, EURUSD rose to 1.0215, Cable is testing the 1.17 and USDJPY is at 141.60. Japan announced it may intervene.

Gold and Silver rose to 1756, above the important resistance at 1735, Silver 21.80 with eyes on the 22 and 22.50 if the move continues.

Bitcoin is trading at 17300 and will continue to be nervous as long as FTX is not resolved. The Company is looking to raise mor than USD 9 bio to survive,.

The calendar today is fairly empty and comments out of central banks are likely to be market moving, tone can either be that one swallow makes no summer or praise that inflation has topped. Let us see if the rally is on the way

• Headlines:
• The European Central Bank is examining the use of derivatives by energy companies to trade future power and fuel prices, ECB officials are concerned that energy companies were acting as de facto traders but without the regulatory oversight applied to bank acc to Reuters
• Elon Musk raised the possibility of the social media platform going bankrupt
• German Harmonized Inflation in line with expectations this morning at 11.6%