Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Chief Macro Strategist
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Morning Brew July 6 2023
Erik Schafhauser
Senior Relationship Manager
Summary: Hawkish Fed Minutes weigh sentiment a bit
Good Morning,
Sentiment can be describes as lackluster risk off at the moment.
The Fed Minutes were slightly hawkish as many had expected but neither FX, Rates or Equity markets reacted strongly. The USD is grinding higher against most currencies and equities lower, rates rise a little.
The US500 is now 4430, the US30 34167, the USTECHNAS 100 15137 and the GER40 fell back to mid range at 15850.
The USD Index fell rose to 103.50 as EURUSD Fell to 1.0845, GBPUSD 1.2705 and USDJPY fell to 143.85 – are we seeing the BoJ at play already? A poll released by Reuters yesterday shows that Analysts expect most FX to trade fairly quietly in the next few months, USDJPY is the outlier where a the median estimate for the end of September is at 137.80.
Oil rose yesterday, Gold tested the 1930 but failed to hold above and receding to 1920, Silver broke above 23 and is at 23.15. An Item to watch in the commodity space is rice, where global prices are at the highest in 11 years acc to Reuters data.
US 2 year rates are very close to 5% and the 10 year at near 5%.
Meta rose near 3% on the Release of the release of “threads” a twitter competition dubbed Twitter Killer in the media. Often, systems solely designed to beat a competitors fail miserably – let us see how that goes.
We have a new Market Strategist who will focus on the Option space and has put together a great piece why options should be part of every portfolio. Please find it here it is almost mandatory reading in my view
German politics are turning into a nightmare as the failed Maut system causes the government to liable for 243 mio in damages and the new legislation on heating was at least delayed by federal court. While financially not significant it will way on sentiment.
Today we are expecting the release German Industrial Orders, EU Retail Sales and of the regular US employment data, the US PMI. Maybe more important is the visit of Janet Yellen to China where the mood will be watched closely. The Opec Summit continues in Vienna and Nato is discussing the Swedish membership with Turkey ahead of the Nato Summit next week.
Data:
- THU: July 6th, Australian Trade Balance (May), DE Indistrial Orders, EZ Retail Sales (May), US ADP National Employment (Jun), US ISM Services PMI (Jun) Opec Seminar
- FRI July 7th : German Industrial Output (May), US Jobs Report (Jun), Canadian Jobs Report (Jun)
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