Senior Relationship Manager
Good Morning,
A busy day in the markets yesterday. Yields rose, weighing on Tech but supporting banks and value stocks, and supporting the USD. In the end the Dow Jones gained 0.5%, the S&P 500 0.17% and the Nasdaq lost 0.5% Tesla closed 4% lower.
Overnight, the US 10 year yield is trading lower at 1.6350 after 1.6850 yesterday. EURUSD is trading at 1.1245 and GBPUSD at 1.3385 with the USD Index little changed at 96.40. Gold and Silver fell significantly yesterday but stabilized at 1790 and 23.60 for now. Curiously, we saw similar moves precisely a year ago in the precious metals after the US election.
The key question seems if we will see a strong year end rally or if profit taking and corona and yield worries weigh.
Bitcoin is trading at 57k still.
Turkish Lira had a rough day yesterday losing more than 10% yesterday, USDTRY is testing the 13 level and has gained 75% year to date.
New Zealand CB raised rates again but dovish tones prevented a rise in the Kiwi.
The U.S. will release millions of barrels of oil from strategic reserves in coordination with other countries but less than the markets had hoped? So far the Oil price remains strong.
The Biden administration has invited Taiwan to its "Summit for Democracy"
Apple filed a lawsuit against Israeli cyber firm NSO for targeting Apple users.
Jamie Dimon stated he would take bets that JP Morgan outlasts the Chinese Communist Party, and the Biden administration has invited Taiwan to its "Summit for Democracy" That seems a lot of provocation.
For today, key events will be the German IFO at 10 and a mass of US data including durable goods orders, the PCE and GDP at 14:30
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist