Senior Relationship Manager
Summary: Weak labor data raises hopes for dovish Fed
Good morning,
A lower than expected Nonfarm Payroll, higher unemployment and wage growth lower than expected fueled hopes of high rates for less long.
10 Year yields fell to 4.50 and the USD Index came under pressure while stocks celebrated.
Based on interest rate futures, it is now likely we will see the first rate cut before the US election, there is a 40% chance of a cut in July and 85 in September.
The strong Friday pulled US Indexes into the green on a weekly basis. The Dow gained 1.2% on Friday and 1.1% for the week, the S&P 0.55% and 1.3% respectively and the Nasdaq 1.4 and 2%. Most Indexes are trading mid range and looking for the next large driver to test the upper or lower ranges.
Berkshire Hathaway reported good results on Saturday and focus of the statement was the reduction of Apple stock by 13% and an increase of the cash position. This could have impact on Apple shares. Warren Buffet was full of praise for Apple but it remains to be seen if traders will focus on the reduction in position or the comments. Kim had just published a technical outlook on Apple Friday after earnings, the stock jumped higher but failed to close above the resistance at 184.85.
This morning, the Dollar Index is at 105.17, EURUSD 1.0760, GBPUSD 1.2544 and USDJPY 153.90. Gold is trading higher at 2313 and Silver is testing the 27 level.
This week, we are expecting data and earnings that are usually of intermediate importance – meaning that an outlier is necessary. Most likely key will be the digestion and interpretation of the US labor data.
Israel has reportedly started the evacuation of Rafah which can bring more insecurity to the region and in Europe, Chinese president Xi is visiting. Here the focus will be on the trade relations and the key question of Europe can stand united in the discussions.
Thursday is a holiday in many parts of Europe causing limited liquidity.
Trade safely!
Monday
- Data: International PMI, Barkin & Williams speak
- Earnings:
Tuesday
- Data Australia Retail Sales& Rate decision, DE industrial Orders, Kashkari speaks
- Earnings: UBS, Siemens Healthliners, Nintendo, BP, Duke Energy, Walt Disney, Ferrari, Unicredit
Wednesday
- Data Sweden Rate decision
- Earnings: Itochu, Toyota, BMW, AirBnB, Uber, Anheuser Bush Inbev, Shopify, Emerson ,
Thursday
- Data US Initial Jobless Claims, China Trade,
- Earnings: Enel, Softbank, Brookfield,
Friday
- Data University of Michigan
- Earnings:NTT, Honda, KDD, Tokyo Electron.
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.