Morning Brew November 16 2023
Senior Relationship Manager
After the sharp moves on Tuesday, yesterday was calmer but the positive sentiment largely held. The Big Three US Indexes closed positive and the S&P500 posted 42 52 week highs. The GER 40 is now 7.4% off the October low at 15740. The US500 needs to break the resistance at 4540 Key stocks were Macy`s and Kohls which followed Target to gain 7.5% and 9% , Sirius rose 6% after Berkshire Hathaway took a stake in the Company.
Yields rose yesterday but the 10 year held at 4.5% and the USD Index is off Tuesdays lows at 104.50. EURUSD 1.0840, GBPUSD 1.2395 and USDJPY 151.35. According to the press, the Bank of Japan has stepped up its hawkish comments over the past week in what insiders say is priming markets for an end to negative interest rates. EURUSD likely to test 1.0950 resistance, GBPUSD minor resistance at 1.2445 but could move to 1.27
Dollar Index could drop to 103 acc to Kim Cramer
Gold and Silver are trading at 1964 and 23.50 and Bitcoin 37500.
The Summit between China`s President Xi and Joe Biden went well but did not have real market impact. The agreements focused on fighting Fentanyl production and improving the communication between the two giants.
Our Althea wrote on US Yields likely to rise due to the disparity between the Fed`s Dot plot and traders expectation:
The bond market is pricing four rate cuts in 2024 versus two indicated by the Federal Reserve’s dot plot. As inflation remains elevated and the economy grows at a reasonable level, it is unlikely that the Federal Reserve will give easing ammunition unless a significant recession unravels. That builds a floor for yields across the yield curve, increasing the probability for bond futures to reconsider rate cut expectations for next year. Therefore, Long-term US Treasuries remain vulnerable and ten-year yields are likely to resume their rise towards 5%. Yet, the safe haven brings an enticing risk-reward proposition even at current levels, as it provides protection against a downturn and little downside even if yields continue to rise.
In terms of Data, the 14:30 US releases will be key with the Initial Jobless Claims expected at 220k, the Philly Fed Business Index at -9 and industrial production at -0.3%.
Several Fed speakers including Loretta Mester, Lisa Cook and Michael Barr will be speaking.
Overall the question is of the positive sentiment of the last few days holds. Trade carefully.
- Data Japan Trade Balance, Philly Fed Business Index, Initial Jobless Claim
- Earnings Siemens, Copart, Walmart, Ross Stores, Applied Materials, Alibaba.
- Data UK Retail Sales, EU HICP Final
- Earnings Johnson Controls International, Association Generali, Tokio Marine
Physically Settled Futures
KC3 will expire 20 Nov 2023 at 16:00 GMT
CLZ3 will expire 20 Nov 2023 at 16:00 GMT
OILUSDEC23 will expire 16 Nov 2023 at 16:00 GMT
COFFEENYDEC23 will expire 17 Nov 2023 at 16:00 GMT
FRA40NOV23 will expire 17 Nov 2023 at 09:00 GMT
NETH25NOV23 will expire 17 Nov 2023 at 09:00 GMT
NOR25NOV23 will expire 17 Nov 2023 at 09:00 GMT
SPAIN35NOV23 will expire 17 Nov 2023 at 09:00 GMT
SWE30NOV23 will expire 17 Nov 2023 at 09:00 GMT