Morning Brew July 17 2023
Senior Relationship Manager
Summary: Markets awed by the large moves - Retail Sales and earnigs ahead
Markets are fairly calm – before the storm?
Friday was a fairly slow day - we had the first large earning announcements that were slightly mixed. JP Morgan as well as Wells Fargo reported better than expected earnings but loan loss reserves were increased. Weak Chinese data during the night seems to have been compensated – the GDP came at 6.3% vs 7.3% but industrial output came higher than expected.
Indexes closed little changed and have found no clear impulse over the weekend. The USD500 is at 4500, the US Tech 100 15551 and the GER40 16043.
The USD Index is holding below the 100 and awaiting the next impulse that will bring it to 99.30 or 101. EURUSD is 1.1225, GBPUSD 1.3090, USDJPY 138.55 and USDCHF 0.6610.
Yields have stabilized for now and the expectations for the next central bank meetings are
Fed: Hike next week by 25 BPS and peak in November at 5.40
ECB: Hike next week by 25 BPS and peak in December at 3.9%
BoE: Hike by 50 BPS on August 3 and peak in May 24 at 6.17%
Ole published his Commodity weekly: Weak dollar driven rally
Peter wrote a fundamental piece on Japanese Equities that have been a quiet star of H1: Out of Hibernation: A primer on the Japanese equity market
Looking ahead, the week will be dominated by the US retail sales on Tuesday and earnings. We are also in the Fed`s Lockdown period so there will be no comments from US Central bankers.
The agreement that has allowed Ukraine export of grain for the past year will expire today if no continuation is decided.
The weak USD will be closely watched for implications on global trade and commodity prices.
Monday July 17
China Retail Sales &GDP
Tuesday July 18
US Retail Sales & Industrial Production, Canada CPI
Earnings: Bank of America, Novartis, Morgan Stanley, Prologis, Lockheed Martin, Charles Schwab, PNC Financial, Bank of NY Mellon
Wednesday July 19
EU HICP, US Housing Starts,
Earnings: Tesla, ASML, Netflix, IBM, Elevance Health, Goldman Sachs
Thursday July 20
China Loan Prime Rate, US Initial Jobless claims, US Consumer Confidence
Earnings: TSMC, Johnson & Johnson, SAP, Blackstone, CSX, ABB, Freeport-McMoran
Friday July 21
Japan CPI, UK Retail Sales
Earnings. American Express, Schlumberger