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Morning Brew July 27 2021
Erik Schafhauser
Senior Relationship Manager
Summary: Fasten Your Seatbelts
Good Morning
Fasten your seatbelts!
Tomorrow and Friday there will be no Morning Brew as I will be on Holiday – Monday I will be back.
We are expecting loads of Data, Central Banks and Quadruple Witching Friday in the next 72 hours.
In terms of importance, the FOMC with Powels Press conference today and the ECB tomorrow will be the most important even if it is basically certain there will be no action by either. The US PPI today at 14:30 and the US Retail Sales will have the potential to move markets on a surprise.
In my view, we are trading the expectation of the rate in December 24, for the US rate traders price in 1.09% in rate cuts until the 18th of December 2024, the ECB is seen to cut by 1.3% the bank of England 0.9% and the Swiss National Bank by 0.7%.
Especially for the US, the Central Bank commentary is quite out of synch with the market expectation and the question is who is right. Most commentary expect Jerome Powell to bring hawkish tones stressing the fight against inflation is not over even in a pause of hikes – will be believed?
The CPI yesterday provided little initial input as it came in line with expectations. This morning the UK published a load of data, all of which disappointed.
Equities had another good day with the Dow and the S&P 500 gaining 05% each, the Nasdaq a little more at 0.70%. among the S&P 500 stocks there were 74 new 52 week highs, volumes were just below the 20day average and Volatility remains near the lows.
10 Year Yields remain at 4.20, the USD Index at 104. EURUSD is trading at 1.0780, GBPUSD 1.2530 and USDJPY rose to 145.90. Gold and Silver trade lower at 1973 and 22.60. Oil is at 6 month lows at 68.05.
Expect huge swings on any surprises and comments out of central banks – trade safely.
Key Events.
Wednesday
- Data Japan Tankan. UK GDP, US PPI & Rate Decision
Thursday
- Data Australia Unemployment Rate, Sweden CPI, Switzerland, Norway, BOE and EU Rate Decisions, US Initial Jobless Claims
Friday
- Data Global PMI US International PMI, Quadruple Witching Friday