Morning Brew July 7 2021

Good Morning

10 Year Yields and blue chip stocks fall, tech gains while the USD Index rises ahead of the Fed Minutes

Weak German Data in the form of industrial orders (-3.7% vs 1% expected) and a lower than expected ZEW sentiment (63.3 vs 75.2 expected) caused the EUR and the Dax to slip yesterday. The ISM in the US came weak,  the S&P 500 and the Dow Jones lost 0.2% and 0.6%, the Nasdaq closes up 0.2% at a new record.

The USD Index rises from 92 to 92.65 before slightly receding to 92.50, the 10 year Yield falls to below 1.4, currently 1.3615.

Bitcoin continues to meander around the 3k level and to have a clear direction, a clear break of 20 or 40000 is required.

Gold and Silver gave up some of their gains yesterday but are off the lows currently 1800 and 26.30. EURUSD is at 1.1825 and Cable at 1.3810.

 There are no economic events of great significance on the agenda today but focus will be on the minutes of the last FOMC meeting. There are two key questions:

• When and by how much can rates be expected to rise?
• How intense was the discussion on tapering and what is a likely timeframe for the FED to stop their asset purchases

A hawkish interpretation of the minutes should strengthen the USD. If the USD Index breaks above the 92.75 it should head for the 93.44 level we saw in March. For Equities the tapering question may even be more important than  the dot plot.

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Other Headlines:

Nomura is planning to halt  parts of prime brokerage business after the Archego disaster

Samsung Electronics stated it is expecting 53% rise in operating profits in Q2 on high chip demand and rising prices.

The U.S. Defense Department stepped back from the  cloud computing agreement with Microsoft to include other cloud providers as well.  Amazon rose 4.7%.

Didi lost 19.75% yesterday after the Chinese watchdog ordered the company to halt  additional downloads of its app due to privacy concerns. Stocks closed at 12.49 vs the IPO price of 16.65. Other NYSE traded Chinese shares also lost.

(Refinitiv)