Morning Brew February 13 2025

Erik Schafhauser
Senior Relationship Manager
Résumé: Hopes for peace in Ukraine rise
Good Morning,
Hotter-than-expected inflation data and Ukraine talks caused interesting market moves yesterday and overnight. US Yields rose on the highest inflation reading in 18 months. The S&P 500 lost 0.27%, the Nasdaq rose 0.03%, and the Dow lost 0.50%. The general expectation is now only one rate cut by the Fed this year.
FX traded interestingly. Initially, the USD gained on the inflation release, but news of talks between Donald Trump and Putin shifted sentiment and let the USD decline. Yesterday morning, the USD Index was at 108, it jumped to 108.50, and is now back at 107.58. EURUSD is 1.0430, GBPUSD 1.2490, and USDJPY 154.10.
BoE's Catherine Mann said yesterday that soft consumer demand and the risk of a sharp deterioration in the labor market and weakening corporate pricing power were the reasons for her to agree on cutting rates. Huw Pill, on the other hand, issued caution on further rate cuts.
Gold and Silver were surprisingly strong on apparently rising fears of trade wars and tariffs, while higher yields and talks in Ukraine had only a temporary effect. We are currently at 2915 and 32.30. Implied Volatility is rising with Silver back at 23%, up from 20.50% at the beginning of the year. The 200-day average is 27%. Silver needs to tackle 32.50 for more real upside potential.
- The GER40 is strong on the Ukraine talks, rising to 22400, but expect some volatility in Rheinmetall today.
- Sony beat expectations and raised the forecast, while Nestle reported higher sales but warned of a lower margin.
- Commerzbank has announced reducing 3900 jobs, mainly in Germany.
- Alibaba rose on the reported cooperation with Apple.
Today, we are watching the US PPI and, to a lesser extent, the Swiss CPI and EU Industrial production. Key is likely to be news around peace talks for Ukraine and Russia as well as tangible plans for tariffs.
Key events:
- Thursday: Germany Inflation, UK GDP, US Initial Jobless Claims & PPI. Earnings; John Deere, Sony, Coinbase, Airbnb, Roku.
- Friday: EU GDP, US Import Prices & Retail Sales.
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