Morning Brew December 11 2024
Senior Relationship Manager
Summary: US CPI, Rate decisions and Expiries will make an intersting week
A better than expected nonfarm, higher earnings and lower unemployment let yields and the USD rise, Stocks were unaffected it seems, Indexes rose with the S&P500 up 0.4% to 4,604 in moderate volume. The number seem to support he soft landing narrative. The divergence between Rate/FX and Equity traders is interesting to say the least.
The rate cut expectation shifted to 4 cuts in the next 12 months with the December 24 rate 100 BPS below the current level so four cuts are now priced in from more than 5 earlier in the week.
US 10 Year Yields are at 4.25 ant the USD Index 104, EURUSD 1.0765 ,GBPUSD 1.2540 and USDJPY 145,50. Gold and Silver fell to just below 2000 and 23.05. Bitcoin fell 4% over the weekend after trading as high as 44k last week. Oil is stable over the weekend and adds 0.7% to trade 71.73 in the US Line.
We are expecting rate decisions from the US, EU, UK, Switzerland and Brazil this week, only the Brazilians are expected to change rates. Switzerland has the second largest chance of a change, the probability of a cut is 21%.
China`s consumer prices fall the fastest since Corona and the PPI falls to -3%. With Moody`s decision to cut China's credit rating due to costs to bail out local governments and state firms and to control the property crisis would weigh on the economy, there are likely measures to support growth in the near future.
Besides the rate decisions, the US CPI and the last big expiry of the year on Friday will be the key events of the week.
Basically the story we are trading is the validity of the rate cut expectation on the one hand, the question of a soft or hard landing in the US. China Stimulus and the green transition and AI are of course larger topics that one should not lose from sight.
With a possible shift in the larger narrative, try not to be caught on the wrong side of a sharp move – consider options for speculative positions.
As usual, be extra careful on Thursday and Friday as I have taken them off.
- Data: Sweden House prices Turkey Unemployment, Denmark, Norway, Czech CPI,
- Data: Corporate Goods Prices, UL Labor Data, Germany ZEW, US Consumer Price Index,
- Data Japan Tankan. UK GDP, US PPI & Rate Decision
- Data Australia Unemployment Rate, Sweden CPI, Switzerland, Norway, BOE and EU Rate Decisions, US Initial Jobless Claims
- Data Global PMI US International PMI, Quadruple Witching Friday
Physically Settled Futures
FPZ3 will expire 11 Dec 2023 at 16:00 GMT
JGB1Z3 will expire 12 Dec 2023 at 01:00 GMT
AUDUSDADDEC23 will expire 13 Nov 2023 at 16:00 GMT
EURJPYRYDEC23 will expire 13 Nov 2023 at 16:00 GMT
EURUSDECDEC23 will expire 13 Nov 2023 at 16:00 GMT
GER50MIDDEC23 will expire 13 Nov 2023 at 16:00 GMT
UK100DEC23 will expire 13 Nov 2023 at 16:00 GMT