Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Chief Macro Strategist
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Morning BrewAugust 10 2023
Erik Schafhauser
Senior Relationship Manager
Good Morning,
Big day coming up:
The US CPI is up at 14:30 and after that the 30 Year Bond Auction will be closely watched. The expectation for the CPI by our strats team is +0,25% (slightly above consensus) Median is +0,20% Unlike recent CPI prints we feel this data point has less market impact as the market is accepting gradual lower inflation rate MoM and YoY, but the real discussion is on the END rate 2024. GS is looking for 3.0% by end of 2024, SaxoStrats is at 3.5%.We believe that wages + energy will remain sticky.. but as indicated yesterday with falling growth background, Saxo’s main “gauge” of inflation over time is the YoY change in energy, extremely simple but a R-square of 0,7-0,8 – issue being the MoM moves, however as seen in Nowcast forecast from Cleveland and New York FED there is small uptick – question is if this is a July (this report) or August data that will reflect this fully.
Expected reaction: Flat CPI will make market rally, 0,2-0,3% = Non-event & >= 0,4% is risk-off.
US Equities closed lower yesterday without too significant data releases, yields were meandering the ranges and the USD spent the day trading sideways.
Yields – driven by the CPI and the 30 year auction are likely to make or break the day but there are other news that may have an impact:
Danish drugmaker Novo hiked its full-year profit and sales forecast today as its weight-loss and diabetes drugs flew off the shelves in the United States. The company yesterday was less than 5% away from becoming the most valuable company in Europe after trial data show that Wegovy reduces heart risks by 20%.
The Biden administration is banning U.S. investments in Chinese entities in three sectors: semiconductors and microelectronics, quantum information technologies and certain artificial intelligence systems China said on Thursday it is "gravely concerned" about the order
USDJPY is trading at a 1month high before the CPI, EURUSD is within the range and Gold as well as Silver near the lows at support.
The day has the potential to be volatile, consider carefully, how much risk you want to carry into it,
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