Morning Brew MAy 9 2025

Good morning,

The first “big” trade deal and hopes for an agreement with China boosts risk sentiment and boosts the “Trump Trade:

• Stocks rise, the Nasdaq 100 is testing the 200 day moving average, the Dax is testing the all time highs, the S&P 500 rose 0.6%, Nasdaq jumped 1.1, volumes were quite high exactly on the 20 day average of 16.85 billion shares.
• US Yields rose with the 10 year at 4.37, the year end rate rose as traders now only expect 68 basis points in cuts.
• Bitcoin surged above 100k again, there is lots of interest in options on IBIT that at 100-120.
• The USD Gained massively with the USD Index rising to above 100, currently 100.65. EURUSD is 1.1230, GBPUSD 1.3235 and USDJPY was wild, trading a 3 yen range and is now at 145.50. USDCHF jumped 1% to 0.8320, Gold and Silver are at 3325 and 32.50.

Pakistan's armed forces launched "multiple attacks" using drones and other munitions along India's entire western border

China`s trade data surprised over night, Imports had been expected to fall 5.9% but came at -0.2%, exports were 8.1% vs 1.9% expected.

A new pope has been elected, a US American.  Leo the 14^th is expected to be liberal and work for the underprivileged – maybe an interesting counterpart for the Trump administration.

Today’s agenda is basically empty, news will once again dominate markets, next week  the most important events will be the US Inflation and Retail sales data, even if both will not yet include a clear impact from the trade war.

Russia is celebrating the end of World War 2 and there has been speculation that Ukraine may seek to disrupt the parade with Drone attacks in an attempt to embarrass Russia.

We are looking at a massive event risk over the weekend from the Sino-US negotiations in Geneva and the escalation in Kashmir, consider how much risk you want to carry into the weekend. with the Vix relatively low, options as a hedge are an option worth contemplating.

If the talks in Geneva go well and we open the next week above the 200 day averages in the US Indexes and all time highs in the Dax, we could see a further surge in optimism, if they end disappointingly, we could see a selloff, of course the most likely outcome is that nothing spectacular at all happens.