Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Trader Strategy
Senior Relationship Manager
Good Morning,
Today at 13:30 we will find out how deep the fed is stuck between a rock and a hard place. The banking crisis calls for lower rates while inflation demands higher ones.
Lower yields and the traded rate patch show a clear expectation of lower rates – the necessity of which weighs on equities and banks in particular.
2 Year US Yields are now trading at 4.03%, more than a full percent below last week, the probability of no rate hike next week is now 50% with the other 50% for a hike by 25 bps and the peak rate this year is seen at 4.73 and the year end is seen at 3.92%.
The great winners yesterday were Gold (1910) Silver (21.90) and Bitcoin (24500) and CHF (find a collection of Charts here) while Banks were the big losers.
US Stocks held up decently yesterday while the GER40 and other global Indexes came under pressure. The Dow closed down 0.28%, S&P 500 down 0.15%, Nasdaq up 0.45% The S&P Banking Index fell 7% the largest drop since 2020.
In the driver seat from here will be the CPI, government and central bank comments and any news of stress in the banking system or the lack thereof.
The CPI is expected at 6% annually and 0.4% monthly with the core at 5.5% and 0.4%.
Consider options for any speculative positions to limit losses as volatility can be expected to be very high and sharp moves may lead to unwanted risks.