Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
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Morning Brew July 27 2021
Erik Schafhauser
Senior Relationship Manager
Summary: Full Speed Ahead but how long?
Good morning,
The US 500 is above 5.500, the US Tech 100 Nas is at 20.000, the Japan 225 40.600 - a great start to H2. The big driver of sentiment was Tesla which gained 10% after strong(er) deliveries. The stock is still down 7% YTD but up 30% in a month and 65% off the low.
European Indexes are a little subdued ahead of the UK and French Election with the GER40 at 18.200 and the EU 50 4.928. Novo Nordisk gave up some ground as US President Biden called for lower prices on weight loss drugs.
The other Mega caps except Nvidia were friendly as well but volumes overall low at more than 20% below average.
Into the seemingly strong risk sentiment, our Koen points out that the current environment is far from risk free: Hidden dangers beneath the surface of a calm market “Whether you are an active investor seeking to capitalize on individual stock movements or a buy-and-hold investor looking to safeguard your portfolio, the key takeaway is clear: diversify.”
Yields and USD Index moved only slightly, EURUSD is 1.0738, GBPUSD 1.2680, the Yen remains weak at 161.80 and CHF little at 0.9045 against the USD and 0.9716 against the Euro.
Precious Metals could gain while Crypto fell: XAUUSD is 2333, Silver 29.66 and Bitcoin 60.800.
The Current rate expectation for the US is 90% probability of no change in July and 70% for a cut in September. There is no Fed decision in August. There is a 88chance of two rate cuts by December.
China's services sector expanded at the he slowest pace since November and confidence hit a four-year low in June, this may cause economic measures.
We are heading into a busy day as internationally various PMI will be released, the EU Producer Prices and the Initial Jobless Claims on Wednesday as tomorrow is the US Independence Day Holiday. US Factory orders will be released and tonight the Minutes of the last FOMC
Expect position adjustments and low liquidity as many traders will head into a long weekend!
Wednesday
- International PMI, DE Industrial Orders, EU Producer Prices, US Initial Jobless Claims, Factory Orders and Fed Minutes, John Williams Speaks
Thursday
- US Holiday, UK Election, DE Industrial Orders
Friday
- DE Industrial Production, UK House Prices, Swiss FX Reserves, US Nonfarm & Unemployment, Canada Labor Market Data
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