Macro: Sandcastle economics
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Morning Brew March 7 2024
Erik Schafhauser
Senior Relationship Manager
Summary: ECB and Powell with Bitcoin and Gold testing All Time Highs, Yen shows signs of life
Good Morning,
Rate cuts were dependent on the path of the economy was the key message by J. Powell yesterday and "We are just going to keep our heads down and do our jobs and try to deliver what the public is expecting from us."
The ADP Employment report showed 140k added positions vs 150k expected and Job openings were a tad lower.
In Japan, expectations are rising we may see a shift in policy towards an end of the negative rates, acc to a Reuters Poll, 80% of economists see negative rates ending by April.
In China, Trade came massively higher than expected, Exports rose 7.1% vs 1.9% expected, Imports 3.5% vs 1.5% expected, causing the trade balance to surge to 125 bio vs 103% expected. JD.Com could exceed guidance.
Overall equities rose after the weak Tuesday, Tesla fell against the trend after it was clear, the Berlin Gigafactory would be offline longer than hoped, Nvidia meanwhile seems unstoppable and is looking at the 900, the Main Indexes rose between 0.2% and 0.5%. The US 500 is trading at 5090, the GER40 17670 and the Japan 225 is below the 40k again.
Despite the fact that the expectation for 3-4 cuts did not really shift, and 10 year yields dropped by 4 bps compared to yesterday, FX saw a significant shift. The USD Index is now 103.24 with EURUSD at 1.09, GBPUSD 1.2730, USDJPY 148.36, Gold hit a new all time high yesterday and is now 2154 and Silver 24.05, Bitcoin is just below the all time high at 65.900.
Kim wrote on precious Metals: Technical Update - Indicators are suggesting Gold could push to 2,400. Silver to 26, possibly higher
Key events today will be the ECB Rate Decision, it is basically certain there will be no change today but it expected Mme Lagarde will prepare markets for a cut in June.
For the Swiss, the FX reserves will be interesting, the US initial jobless claims are seen to come at 215k. Jerome Powell will continue testify.
Tomorrow we are awaiting the Nonfarm Payroll, the EU GDP as well as the State of the Union Adress by US President Joe Biden.
For me, the most interesting question is if we can maintain the current momentum in Crypto and Precious Metals over the next 2 days to confirm the all-time highs and the positive sentiment on a weekly level.
Thursday
- Data China Trade Data, ECB rate decision & Press Conference ,US Initial Jobless claims Powell testifies, Mester speaks
- Earnings: MTR Corp, Techtronic Industries, PRADA, Costco Wholesale, Broadcom, Marvell, Mongo., Samsara, Kroger, Continental.
Friday
- Data EU GDP, Nonfarm Payroll , Biden delivers the state of the Union
- Earnings: Oracle, China Unicom, ZTEmi
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