Senior Relationship Manager
Summary: 50 BPS in March now likely
Good Morning,
“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated," was the phrase that shook markets yesterday.
The expectation of a 50 BPS hike on March 22 soared from 20% to 65% and the peak rate rises to 5.65%, 2 year yields rise to above 5%. The USD Index jumps from 104.10 to 105.75.
EURUSD is now at 1.0535, GBPUSD 1.1824 USDJPY 137.66 and Gold and Silver dropped to 1812 and 20.05. Gold is at support level, is we break lower, 1750 would be the next strong level, Silver 18.75.
Equities dropped with the Dow down 1.7% the S&P 500 1.5% and the Nasdaq 1.25%. The Ger40 receded from near 15700 to 15520.
Today’s agenda is thin again except for the Fed`s beige book being released at 20:00. One can assume that the data was known to Powell before yesterday’s speech so I would not expect any disinflationary content.,
Traders will digest the new levels and adjust positions today and focus on the Q&A session with Powell.
Wednesday:
Data: EU GDP Revised YY, US International Trade, CA Trade Balance,, Ca Rate decision
Earnings: Legal & General adidas AG Brown-Forman Geberit AG Thales SA China Unicom China United Network Ping An Bank
Thursday
Data: Japan GDP, China PPI, CPI, US Initial Jobless claims
Earnings Wheaton Precious Metals Ulta Beauty Hannover Rueck Deutsche Post PRADA Contemporary Amperex
Friday
Data: DE HICP, UK GDP,US Nonfarm Payrolls,
Earnings: Daimler Truck Holding DiDi Global Inc ZTE BNP Oracle JD.com
Expiries
Physically Settled Futures
CH3 will expire 09 Mar 2023
FPH3 will expire 09 Mar 2023
ADH3 will expire 10 Mar 2023
BPH3 will expire 10 Mar 2023
DXH3 will expire 10 Mar 2023
E7H3 will expire 10 Mar 2023
ECH3 will expire 10 Mar 2023
JGB1H3 will expire 10 Mar 2023
JYH3 will expire 10 Mar 2023
M6AH3 will expire 10 Mar 2023
M6BH3 will expire 10 Mar 2023
M6EH3 will expire 10 Mar 2023
M6JH3 will expire 10 Mar 2023
MPH3 will expire 10 Mar 2023
MSFH3 will expire 10 Mar 2023
NEH3 will expire 10 Mar 2023
NOH3 will expire 10 Mar 2023
PJYH3 will expire 10 Mar 2023
RFH3 will expire 10 Mar 2023
RPH will expire 10 Mar 2023
RYH3 will expire 10 Mar 2023
SEH3 will expire 10 Mar 2023
SFH3 will expire 10 Mar 2023
Expiring CFDs
AUDUSDADMAR23 will expire 08 Mar 2023
EURJPYRYMAR23 will expire 08 Mar 2023
EURUSDECMAR23 will expire 08 Mar 2023
GASOILUKMAR23 will expire 08 Mar 2023
GBPUSDBPMAR23 will expire 08 Mar 2023
USDINDEXMAR23 will expire 09 Mar 2023
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.