Morning Brew April 4 2024

Good morning,

Yesterday the EU unemployment rate came higher than expected at 6.5% vs 6.4% but inflation lower at 2.9) vs 3%. The US Manufacturing PMI came above the important 50 line but below the expected 52.7 at 51.4. Jerome Powell spoke in relatively hawkish tones saying economic data and inflation were both higher than expected and there was more debate needed before cutting rates.

Rate traders nevertheless continue to price in almost three rate cuts – in December the implied rate is 70 bps below the current level.  The ECB, seen to cut 90 BPS this year will set rates next week but there is only a 13% chance they will take any action.

10 Year yields moved little and remained at 4.36 but he USD Index remained under pressure and is currently 104.16

EURUSD rose to 1.0844, USDJPY is stuck just below 152 at currently 151.66 – It seems the BoJ has cried Wolf too often and traders are not convinced they are really willing to take any action. Cable rose to 1.2655.

Indexes were at a loss on what to do and basically froze in place. The Dow lost 0.1%, the S&P 500 lost the same and the Nasdaq gained 0.2% in slightly below average volumes. Big Outliers were Intel at -8% after a larger than feared loss and Ulta Beauty at -15%.

Gold and Silver are the stars of the moment with silver at 27 and Gold at 2296. We bow our heads to Ole and the strats team who called it – targets are still 2500 and 28 – maybe not in as straight a line as we have seen the last few days. Silver is up 10% in ta week and God more than 5%. Copper is at a 13-month high!

If you have enjoyed the ride, consider your strategy from here in case there is an adverse move.

Bitcoin is once again in a sideways move at 65k.

Today we are expecting some economic data, The EU Composite PMI is seen to come at 47.4, US Initial Jobless Claims are expected at 214k. Next to that, there are a lot of US Central Bankers speaking in the European evening.  NATO celebrates its 75 year anniversary. Tomorrow, the US labor market data will be released as the weeks highlight.

Q2 is certainly off to an interesting start.

Thursday

- Data More PMI, initial Jobless claims, Barkin speaks,

Friday
- Data:  De Industrial Orders, US Nonfarm Payroll, Unemployment Rate