Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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Morning Brew June 18 2024
Erik Schafhauser
Senior Relationship Manager
Summary: EU Inflation, US Retail Sales and Central Bankers up today -. Will the Nasdaq 100 break the 20k?
Good morning
Equities had a good day again yesterday with the Dow up 0.5%, the S&P 500 0.77% and the Nasdaq 0.95%. Volumes were decent. Reason for the optimism seems to be mainly AI – until we see a correction in the large AI stocks, all else seems to be shrugged off for now. Goldman Sachs lifted its 2024 year-end target for the S&P 500 Index to 5,600. The US Tech 100 NAS has the key level of 20.000 in view, we are currently trading at 19890. The GER40 remains stuck in it’s range and needs to test the highs for more potential bat that seems not to be imminent.
Patrick Harker stated he sees a likelihood for a rate cut this year and the NY Fed Manufacturing Index fell less than feared ( -6 vs -10 expected)
UBS is making progress in resolving issues from the CS takeover and traders seem to appreciate that, the stock rose by 2% yesterday.
US Yields rise to 4.28, the USD Index is at 105.42, EURUSD is 1.0723, GBPUUSD 1.2693 and USDJPY 157.80. Gold and Silver are trading at 2320 and 29.40 without real inspiration, that is expected to come later today in the data:
We are expecting the EU harmonized Inflation (11:00 expected at 2.6%), the German ZEW Index (11:00, sentiment expected at 50 and current conditions at -654) , US Retail Sales (14:30 expected at 0.2%) and Industrial Production (15:15, expected at 0.3%) Watch out for central bankers speaking throughout the day.
The middle East remains a focus point as Netanyahu dissolved his war cabinet and the situation along the border between Israel and Lebanon seems seems to be escalating.
From our Strats team, Peter Garnry is back in the studio with Søren Otto talking equity and macro. In this episode they talk about the past week's macro events such as US CPI figures and FOMC meeting, the French election and the European Parliament vote and look ahead to events such as the German ZDW and US PMI.
On equities they discuss Apple's deal with OpenAI, the strong earnings from Adobe, Broadcom and Oracle and look ahead to a slow week in terms of earnings.
Ole published his Analysis of the COT report: Dollar long jumps on EU election woes; Funds start rebuilding crude long
Key Data:
Tuesday
- Data AU Rate Decision, AT Inflation, EU Inflation. DE ZEW, US Retail Sales, Industrial Production. Barkin,. Collins, Kugler, Logan, Musalem and Golsbee speak
Wednesday
- Data, Japan Trade Balance, UK CPI, Kashkari & Barkin speak
Thursday
- Data AU GDP, China Rate Decision. CH Rate Decision, UK Rate Decision, US Initial Jobless Claims, Philly Fed, EU Consumer Conficence.. Daly Speaks
Friday
- Data International PMI UK Retail Sales.
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