Senior Relationship Manager
Summary: US CPI key for today
Good Morning
Markets were rather quiet while I was travelling. Focus is clearly on the CPI Release today at 14:30 with the core expected at 5.5% and the overall annual number at 5%. As Jerome Powell stated the Fed would decide the rate path based on data going forward, this release will be considered as very important for future guidance.
Interest Rate Traders still see no change at the next FOMC meeting in June but overall more than 2 cuts by year end. Also, talks around the debt ceiling are not progressing but continue and that is weighing on overall sentiment and causing traders to load up on put options on equities while the Vix Index remains low.
2 year yields in the US are at 4.05% and the USD Index at 101.60, EURUSD 1.0970, GBPUSD 1.2625 and USDJPY 135.33. Gold and Silver are trading at 2030 and 25.60.
Equities are need a push either way for a clear direction, the most important level seems to be the 4200 in the US 500. A break above would open the way to test all-time highs. Currently the Index is trading at 4125, the US Tech 100 at 13214 and the GER40 at 15961. Toyota very strong results in fiscal Q4
The big question remains from where the next large impulse will come, there are several candidates starting with inflation and rates, the debt ceilings as well as geopolitics in the short term.
Thursday:
Data:China CPI and PPI, UK Rate decision, US Initial Jobless claims and PPI Machine Manufacturing,
Earnings: JD.COM, IONQ, Getty Images,
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.