Morning Brew January 5 2024
Senior Relationship Manager
Summary: Nonfarm Payroll Day
Welcome to Non-Farm Payroll day.
We are experiencing a shift in US Rates where the sharp drop at he end of 2023 may have been overdone.
Rate traders remain very dovish but the expectations for the first rate cut are moving back in time and the year end rate is dropping. Jim Bianco was on the wires with a forecast of the 10 Year Yields hitting 5.5% this year from now 4%.
This shift put some pressure on stocks in general while banks seem to like it. The Nasdaq 100 (-0.5%) and the S&P500(-0.3%) gave up ground yesterday while the Dow was supported by banks and barely made it in the green.
Apple suffered it`s second outlook cut and gave up more than a percent.
In FX, the USD Index gained with the Yen being very week, USDJPY is up almost 3% for the year,. EURUSD is trading at 1.0930, GBPUSD 1.27.
Gold and Silver are trading at 2042 and 23.05, US Crude is at 72.75, Bitcoin regained to 43700
We are expecting a flurry of data today, with the key being the US Data at 14:30.
UK House prices at 8, Austrian Inflation at 9:00, Italy at 10:00, EU at 11:00
Then at 14:30
- Nonfarm Payrolls expected at 170K,
- Unemployment Rate 3.8%
- Average Earnings M/M 0.3%.
At 16:00 we will receive the ISM non-manufacturing and the Factory Orders
Traders will watch if there is any slowdown in employment data that would give the Fed reason to turn more dovish, yesterdays data was fairly strong though, that should have caused some hawkish shift already.
Consider using options for speculative trades and remember that recently the reaction to economic data is often a little delayed.