Senior Relationship Manager
Summary: Relief measures coming into focus
Good Morning
Equities were trading slowly yesterday on the US Holiday, FX was the main trading ground.
The USD Index gave up some ground and fell back below 110, EURUSD rose to 0.9960, GBPUSD gained to 1.1580 Gold is 1718 and Silver 18.30. Bitcoin remains low at below 20k. USDJPY rose to above 141 for the first time since the Asian currency crisis in 1998 sparking some fond memories among well aged FX traders.
Liz Truss will replace Boris Johnson as Britain's prime minister on Tuesday
Australia's central bank raised its rate 50 basis points to a seven-year high of 2.35%
US 10 Year Yields are at 3.24 and the EU one at 1.56.
The Energy situation remains the key focus in Europe and the struggle between Russia and the West is heating up. Russia demands that the sanctions are lifted before it supplies additional gas, Western Europe is planning massive bailouts for industry and the population in order to avoid large scale bankruptcies and unrest.
Today various PMI will be in focus with the EU at 9:30 and the US at 15:45 the most important, I believe that fiscal emergency measures may be more important.
It will be a very interesting ECB Meeting where the Central Bank is strongly expected to tighten while governments of the member states look to support the economy.
Remain nimble and consider optionality to avoid spikes in volatility – for trading as well as investing.
Economic Data
Tuesday: De Industrial Orders, EU and US PMI,
Wednesday: AU GDP, China Exports, DE Industrial Output, EU GDP, CA Care Decision,
Thursday; CH Unemployment Rate, ECB Rate decision, US Jobs data
Friday: CN PPI, CA Unemployment rate
Expiries
Physically Settled Futures:
White Sugar - Oct 2022 (WV2) will expire 7th Sep at 9:00 GMT
Euro-BONO - Sep 2022 (FBONU2) will expire 7th Sep at 12:00 GMT
Euro-BTP - Sep 2022 (FBTPU2), Short-Term-Euro-BTP - Sep 2022 (FBTSU2), Euro-Bund - Sep 2022 (FGBLU2), Euro-BOBL - Sep 2022 (FGBMU2), Euro-Schatz - Sep 2022 (FGBSU2), Euro-BUXL - Sep 2022 (FGBXU2), Euro-OAT - Sep 2022 (FOATU2), will expire 7th Sep at 1500 GMT
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.