Senior Relationship Manager
Summary: Yields soar, Equities sell off and USD strengthens after Powell turns more hawkish than hoped in the press conference after the rate decision in line with expectations..
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The initial reaction to the FOMC was friendly yesterday, late in the press conference where Powell appeared more Hawkish than the market had hoped, most of the gains evaporated, rates jumped and the USD gained.
The number of implied rate hikes increased from 4 to 4.3 on Powel stating the Feds course remained open and flexible. That was initially interpreted as a dovish loophole but on his statement that inflation has gotten worse in the last month and that the policy would have to be adjusted if it rises further. : THERE IS QUITE A BIT OF ROOM TO RAISE INTEREST RATES, THIS IS GOING TO BE A YEAR IN WHICH WE MOVE STEADILY AWAY FROM HIGHLY ACCOMMODATIVE POLICY
Over night Equities fall further, Futures show the current levels: S&P500 -1.4% @ 4280, Dow -1% @ 33700, Nasdaq –1.7% 13900. The Dax and Eurostoxx are down 2.6% and 3% but bear in mind that that is calculated against the Index close at 17:30.
10 year rates rise to 1.84 after hitting 1.88 yesterday, the USD Index rises to 96.67. EURUSD falls to the lower end of the range at 1.1215 and GBPUSD 1.3425. Gold and Silver come under pressure and fall to 1812 and 23.20. Bitcoin rose to above 37k yesterday but retreats to 35500.
Oil gained yesterday with the broader market but also receded somewhat late in the day.
Today I expect some seesaw movement until the meeting has been digested then the US GDP and Durable goods will come into focus
Shares of Tesla fell about 5% in the aftermarket on news that the company would not reach max capacity in 2022 due to supply-chain limitations. Results were above expectations and Elon Musk sees growth of more than 50% for 2022.
Deutsche Bank this morning exceeded expectations with a net profit of €145 million against an expected loss of €130 million
China weighs breaking up Evergrande to contain property crisis acc to Bloomberg News.
Key Economic Data:
Thursday: US Durable Goods orders and GDP
Friday: Swiss KOF, EU Business Climate, Personal Income, US PCE, University of Michigan Consumer Confidence.
Companies:
Thursday: Diageo, Danaher, Apple, Visa, LVMH, Mastercard, Comcast, McDonald's, SAP SE, Blackstone,
Friday: Charter Communications, Chevron Caterpillar
Trade safely.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.