Morning Brew May 4 2023
Senior Relationship Manager
Summary: FOMC Done, ECB next
The Fed remained on the expected course, hiking 25 bps and signaling pause and a move to data dependency from here. While inflation is too high and the labor market tight, the impact of credit tightening needs to be assessed.
At the end of the hike cycle in 2006, the Fed used similar language as Powell did yesterday.
The rate path remains similar we are now pricing in 65 BPS in cuts by year end from here. 2 year yields fell to 3.8% and the USD Index drops to 101,00. Key support is just around the corner. Gold tested all time highs around the open but could not break, still we are trading at 2042, Silver 25.75. EURUSD 1.1080 and GBPUSD 1.2580. USDJPY dropped from 137.70 to now 134.80.
Stocks came under pressure and the US500 is trading at 4095, the US30 Wall Street 33440 and the USTECH 100 NAS 13075. The GER40 is at 15810.
All eyes today are on the ECB and Apple Earnings. The ECB es seen to hike by 25 basis points with a probability of 75%, 25% are in favor of 50 basis points. Inflation remains too high relative to the ECB£s mandate. While the Fed signaled a pause, today is not expected to be the last hike of the ECB. The Deposit Rate is seen to increase 70 Basis points until October.
Oil remains under pressure and fell another 4% yesterday, the loss in WTI reaching ~10% in the last 5 days.
Russia accused Ukraine of attempting to assassinate Russian President Putin via a drone attack, although they were shot down by Russia. Volodymyr Zelenskiy denied Russian allegations, but there seems to be something brewing. There are reports of significant defensive positions in Russia being set up.
Remain on your toes as it will be volatile. Tomorrow we have the Nonfarm Payroll to finish off the week.
Data: International S&P PMI, ECB Rate Decision. US Labor Market,
Earnings: National Australia Bank, Anheuser-Busch InBev, Shopify, Novo Nordisk, Maersk, Volkswagen, BMW, Infineon Technologies, Uniper, Rheinmetall, Zalando, Shell, ArcelorMittal, Equinor, Apple, ConocoPhillips, Booking, Regeneron Pharmaceuticals, Zoetis, Becton Dickinson, EOG Resources, Ferrari, Fortinet
Data: DE Industrial Orders, CH Fx Reserves, US Nonfarm Payrolls
Earnings: ANZ, Macquire Group, Enbridge, Canadian Natural Resources, Adidas, Intesa Sanpaolo, CaixaBank, Cigna Group
Physically Settled Futures
CK3 will expire 05 May 2023 at 09:00 GMT
FPK3 will expire 10 May 2023 at 15:00 GMT