Morning Brew June 8 2023

Good Morning,

A surprise hike by the Bank of Canada caused some nervousness yesterday. The Central Bank has had rates on hold since January to assess the impact of the previous hikes but now deemed it necessary to take more action. While the Dow and the Russel 2000 ended positively, the Nasdaq as well as the S&P gave up ground. the Canadian move caused some nervousness that that the US might also go for one more hike rather than the expected hawkish pause.

The probability of a hike next week rose to 30% from 20% and yields rose. This caused some profit taking in the mega caps, Microsoft, Nvidia, Amazon and Alphabet all lost more than 3% - Nevertheless the Vix fell to the lowest level since 2020.

Equities are still trading lower this morning with the US 500 at 4262, the US NAS 100 TECH at 14255 and the GER40 at 15920.

FX was relatively calm with bouts of volatility in the Loonie, Turkish Lira and Gold as well as Silver.

The TRY is now trading at 23.35 down 25% year to date showing a complete lack of confidence in Erdogan while Gold and Silver tried to beak out to the upside yesterday before being sold off again. Citi lowered the price target for Gold to 1915 from 2100 short term before finding more support.

EURUSD remains near 1.07. GBPUSD 1.2450, USDJPY 139.85 Gold 1946 and Silver 23.60.

Today and tomorrow is slow in data before we hit a busy coming week. The EU GDP iss normallyl now very key but it could be important today because it is one of the few things to watch and the expectation for the ECB meeting next week has shifted to basically certain 25 BPS and 50 are off the table. The Turkish FX reserves at 13:30 could be a driver for the Lira today to show if there is any ammunition left in the coffers of the central bank.

AI stocks are the most interstin gin stocks alongside the Russel – will the gap between the megacaps and “normal” shares narrow?

Thursday 8 June
AT CPI

Turkey FX reserves
US Jobs Data