Global Market Quick Take: Europe – May 23, 2023 Global Market Quick Take: Europe – May 23, 2023 Global Market Quick Take: Europe – May 23, 2023

Global Market Quick Take: Europe – May 23, 2023

Macro 9 minutes to read
Saxo Strategy Team

Summary:  US equities managed another sideways session, with the megacap-heavy Nasdaq 100 index running higher and nearly touching 14,000 in overnight trading even as US treasury yields closed at the highest levels since the banking turmoil in March. Gold beat a retreat again and is facing a test of key support if the pressure continues. US Debt ceiling talks are dragging on with hopeful spin emerging from both sides yesterday, but no breakthrough yet.

What is our trading focus?

US equities (US500.I and USNAS100.I): strength despite rising US bond yields

The equities bounced back yesterday with the US 10-year yield rising 5 basis points suggesting an interesting pattern recently with rising equities and rising yields. This could be a sign that the market is lifting its economic outlook for the economy. S&P 500 futures closed above the 4,200 level yesterday which was important if this key US equity benchmark is to sustain the latest breakout. The key event risk remains the US debt ceiling negotiations which are still getting closer to a deal, but judging from the VIX Index that closed around 17 the equity options market is still very relaxed about the US debt ceiling issue.

FX: Dollar range-bound as hawkish Fedspeak returns

Dollar traded modestly higher on Monday amid hawkish comments from Fed members Bullard and Kashkari but Bullard is a non-voter and market pricing for June is still under 20% probability of a 25bps rate hike. Jitters around the debt ceiling also remained in the US session, although comments from McCarthy hinted at positive talks. The further rise in Treasury yields supported USDJPY again, which rebounded to as high as 138.87 overnight in the Asian session. Japan’s machinery orders for March hugely missed consensus. AUDNZD remains below 1.06 with RBNZ expected to hike rates again this week, with some even looking for a 50-bp hike.

Crude oil: gaining on lower inventories

While the broader macro conditions remained complex as hawkish Fed speak and debt ceiling deadlock weighed, crude oil prices managed to inch higher and start the week on a positive note after heavy selling both in paper and physical market over the last few weeks. Supply side news remain mixed with Russian exports remaining firm while OPEC’s early April production cut is only now starting to be felt. Extreme heat across Asia has ramped up demand for fuel oil to run air conditioning and lights while oil traders will be on alert for comments scheduled later today from Saudi Arabian Energy Minister Prince Abdulaziz bin Salman at the Qatar Economic Forum, especially following the recent jump in short selling by funds to levels seen before the April 2 production cut.

Gold: hike or no hike remains the big question

Gold prices (XAUUSD) trades lower for a second day but holding above $1950 support as optimism about a US debt ceiling deal and whether the FOMC will need to raise rates again continue to ebb and flow. The latest weakness being triggered by renewed weakness in bonds and SOFR futures after two central bank officials said they see the need to raise interest rates further this year. Speaking against such moves are the rising risk of recession later this year, potentially forcing another U-turn in rate projections. For now, the market suffers from a relatively large hedge fund long that could be reduced on further price weakness. To regain some positive momentum gold would need to break back above its 21-DMA currently at $2002.

Copper and iron ore: sliding on China weakness concerns and debt ceiling risks

Even as debt ceiling deadlock may be overcome, a deal has still not been reached. Even with a deal, the expected cut in spending will likely weigh on economic momentum, and a drag on liquidity could potentially result in a credit crunch. Together with China’s moderate recovery from a year of lockdowns and lack of extra stimulus has kept base metals in check, with iron ore down 4.8% and HG copper down 1.6% so far this week.  Iron ore is also weighed by the winding down of China’s construction season. Meanwhile, iron ore stockpiles at Chinese ports are in a decline. Copper prices are also sliding lower amid lack of stimulus in China. Key levels to watch are $3.60 in copper and $100 in iron ore.

Six-months T-bills hit 5.37% in yield, the highest since 2000 (US912797FL60)

Investors are waiting for the US Treasury to announce the issuance of 3- and 6-months this Thursday. Normally, if there is no space under the debt ceiling, an auction will not be planned to avoid market disruptions.

US rates continue to soar as Fed’s member speakers signal more hikes (2YYK3, 10YK3, 30YK3)

Although none of the Fed’s members who spoke yesterday are voting members this year, it’s clear that inflation remains a concern. The market is beginning to price out rate cuts later this year and is reconsidering a rate hike this June provoking a selloff across the whole yield curve. Yesterday, also 2-year yields broke above their resistance level at 4.24% and are now rising to 4.49%. Today’s 2-year US Treasury auction will be in the spotlight as it can give room for the front part of the yield curve to rise further. If 2-year yields break above 4.49%, they will find next resistance at 4.63%.

Greek yields drop as prime minister Misotakis is re-elected (GR0128015725)

10-year Greek government bonds yields dropped by 14bps to 3.88%. The Greek-Bund spread is now trading 40bps tighter than the Btps-Bund spread as a Greek credit upgrade to investment grade becomes likely.

What is going on?

Fed split emerging

Fed members are showing a clear divergence in stance for the June meeting. James Bullard (non-voter) said the Fed may still need to hike another 50bps this year. He said that the FOMC's median projection of 5.1% Fed Funds rate at the end of this year was based on slow growth and inflation improvements that have not occurred. Minneapolis Fed President Kashkari (voter this year) said that the Fed could need to go north of 6% as he is not yet seeing evidence that the banking stress is doing the Fed's inflation-fighting work for it. With the committee being split in June, it is likely that we will get a hawkish rate guidance if the Fed does hold in June. Mary Daly (non-voter) was more balanced, but declined to endorse a June pause, emphasized that monetary policy operates with a lag, and said tighter credit conditions could be worth "a couple" of hikes. Raphael Bostic (also a non-voter this year) backed holding next month.

Zoom shares higher on Q1 results

Zoom Video reported Q1 revenue and EPS above consensus estimates last night issuing a fiscal year outlook for revenue that again was above estimates at $4.47-4.49bn. Shares were up 1% in extended trading hours.

Germany flags fiscal belt-tightening

Chancellor Olaf Scholz and Economic Minister Christian Lindner are said to be making plans to reduce a 2-3% spending cut to all government departments except for defense, a move that risks fallout from their coalition partner, the Greens. Further cuts may be in the works to bring the German budget close to balance and if they move forward, will impact Germany’s economic growth outlook. Since the global financial crisis, Germany’s national debt to GDP topped out above 80%, and governments managed to reduce that to about 60% before the pandemic response saw an increase back to 70%.

Japan set to outdo US in curbing chip-making exports to China?

Japan is said to be planning to restrict exports of 23 types of equipment for manufacturing semiconductors from July of this year, a move that would bring into alignment with US policy on limiting China’s ability to manufacture high-end chips. The FT reports that, according to Chinese sources who have examined the deal, the restrictions could impact the ability for China to produce even older generations of chips up to 45 nanometers, while US restrictions cut off around the 14-16 nanometer area, and thus could prove more damaging than US restrictions.

What are we watching next?

Debt ceiling headlines to dominate this week

The meeting between Republican House Speaker McCarthy and President Biden yesterday was billed as “productive” by Biden and McCarthy said that the “tone was better than any other time we have had discussions”. Still, no agreement is yet in place as the two are set to meet daily until a deal is agreed. If US Treasury Secretary Yellen is correct, crunch time comes as soon as June 1, and an added pressure is the upcoming Memorial Day weekend and its Monday holiday, with Congress back in session on Tuesday, May 30 after the Senate is out this week and the House in session only through this Thursday.

Central bank of Hungary the first European bank to cut rates today?

A majority of analysts surveyed suggest that Hungary’s central bank will cut its overnight interest rate 100 basis points to 17%, while keeping its base interest rate unchanged at 13%. It would be the first rate cut by a European central bank in the post-pandemic period. The decision has been made easier by the strong recover in the Hungarian forint over the last seven months from EURHUF of 430 to 375 currently. Still, the most recent CPI data point from April measured CPI still running at 24% annual clip, while growth for Q1 was –0.9% YoY.

Today’s Technical Highlights:

  • Nasdaq 100 higher. Taken out all resistance levels. RSI divergence cancelled, now signals Nasdaq higher. Next resistance at 14,349
  • S&P 500 RSI bullish but divergence i.e., a struggling to close above 4,200
  • DAX couldn’t close above all-time high at 16,290 but likely to have another go shortly
  • Gold likely to test support at 1,949
  • US 10-year above resistance at 3.65 i.e., bullish trend.Next resistance 3.80-3.90
  • US 30-year higher towards 4% resistance
  • EURUSD bouncing just above key support at 1.0745. Could test the support
  • Dollar Index above the cloud. RSI bullish paves the way to 103.84 – 104.75.
  • GBPUSD Could test 0.382 retracement support at 1.2344
  • USDJPY took out key strong resistance at 137.85. Eyeing 140
  • Tesla closed gap at 179.10. RSI positive. Bullish trend. Room to 207

Earnings to watch

Today’s US earnings focus is Palo Alto Networks expected to report FY23 Q3 earnings (ending 30 April) after the US market close with analysts expecting revenue growth of 24% and EBITDA of $423mn up from $26mn a year ago. Cyber security stocks have been some of the best performing stocks the past week and demand remains robust amid the war in Ukraine and general high level of cyber security threats.

  • Tuesday: Intuit, Lowe’s, Palo Alto Networks, AutoZone, Agilent Technologies

  • Wednesday: Bank of Montreal, Bank of Nova Scotia, Xiaomi, Nvidia, Analog Devices, Snowflake, Splunk

  • Thursday: Royal Bank of Canada, Toronto-Dominion Bank, Meituan, Generali, Costco, Medtronic, NetEase, Workday, Autodesk, Marvell Technology

  • Friday: PDD, Booz Allen Hamilton

Economic calendar highlights for today (times GMT)

  • 0715-0800 – Eurozone Flash May Manufacturing and Services PMI
  • 0830 – UK May Flash Manufacturing and Services PMI
  • 0915 – UK Bank of England Governor Bailey to testify on monetary policy
  • 1030 – Sweden Rikbank’s Thedeen to speak
  • 1200 – Hungary Central Bank Rate Decision
  • 1230 – US Philly Fed Non-manufacturing Survey
  • 1300 - US Fed’s Logan (voter 2023) to speak
  • 1345 – US May Flash S&P Global Manufacturing and Services PMI
  • 1400 – US Apr. New Home Sales
  • 1400 – US May Richmond Fed Manufacturing Index
  • 1445 – UK Bank of England’s Haskel to speak
  • 1700 – US 2-year Treasury Auction
  • 2030 – API's Weekly Crude and Fuel Stock Report

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.