Senior Relationship Manager
Summary: And Nothing Else Matters
Good Morning
Ahead of the FOMC rate decision tonight, higher than expected job openings in the US – a number normally not closely watched – spooked traders hoping for dovish tones. US 10 Year Yields rose to above 45 again and the USD Index gained while equities gave up gains. US Indexes closed lower, with the Dow Jones slipping 0.24%, the S&P 500 0.41% and the Nasdaq 0.89%.
The overall expectation among analysts polled by Reuters is that we are likely to retest the USD Highs again, only 32% expect the Dollar to decline from here.
There seems to be some expectation for an intervention out of the BoJ around the FOMC so the Yen is on the move.
Looking at the FOMC, the expectation for a 75 BPS hike stands at 99%, takin the implied rate to 3.8%. The peak rate at the moment is seen at 5% in May 23 and any shift there will have a significant impact on market sentiment.
The rate decision is at 19:00 tonight due to the daylight savings time difference and the Press conference by Jerome Powell at 19:30.
Headlines:
Uber up 12% on good results
Reports that China may be considering loosening Covid restrictions boosted sentiment
HKEX has issue a notice that HKEX, including Stock Connect and its derivatives market will be suspended at 13:55 local time and there is no After-Hours Trading Session.
Oil prices rose more than 1% on Wednesday after industry data showed a surprise drop in U.S. crude inventories
Germany is likely to decide on subsidies to industry and households to deal with high energy costs
Economic data:
Wednesday: EU PMI, DE unemployment, FOMC Rate decision
Thursday: UK PMI and Rate decision, EU Unemployment, US PMI,
Friday; EU PMI, US Nonfarm Payrolls
Earnings:
Wednesday: Novo Nordisk, GSK, Booking, Qualcom, CVS,
Thursday: ConocoPhillips Cigna Corp, Amgen, Paypal, Starbucks, EOG, DBS,
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.