Senior Relationship Manager
Summary: Nonfarm Payroll to decide tug of war
Good Morning
US Indexes had the fourth negative day in a row as yields rose and the Dow lost 0.46%, the S&P 500 1.06% and the Nasdaq 1.73%.
Hopes of a slowing labor market helped yields fall back to 4.1 from 4.2 in the US 10 year and let the USD give up some of it`s earlier stronger gains.
The BoE delivered the expected 75 BPS hike but sounded more dovish than Mr Powell causing the expected rate differential between the USD and the GBP at peak rates to widen and this drove the exchange rate between the two lower by app 2%.
The USD Index rose to above 112, EURUSD is trading at 0.9780, the yen at 147.80, GBPUSD at 1.1230.
Gold and Silver lost strongly yesterday but could recover the losses and are now at 1648 and 19.70.
The Nonfarm Payroll will be the most important data point today at 13:30, expected at a moderate 200k, the lowest in two years. The unemployment rate is seen 0.1% higher at 3.6% and salary increases at a moderate 0.3%.
Before that, German Industrial Orders, French, Italian German EU and UK PMI data will be released.
This morning the market is trying to defy negative implusles, let us see if that holds.
Headlines:
Economic data:
Friday; EU PMI, US Nonfarm Payrolls
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.