Morning Brew March 8 2024

Good morning,

Comments from Jerome Powell that the sees the Fed not far away from being confident, inflation is declining towards 2% was taken as a positive signal by traders.

The ECB left rates unchanged yesterday, but Christine Lagarde indicated, the ECB may lower rates in June. 2% inflation is expected by 2025. The ECB’s latest economic projections see 2024 inflation at 2.4%, from 2.7% in December, and at 2.0% and 1.9% in 2025 and 2026 respectively. Market pricing saw a slight dovish shift, with 100bps of rate cuts priced in now for the year.

The S&P hit a new record and closed a a full percent higher at 5157. The US Tech 100 NAS is trading above 18k at 18267, the GER40 17880 and the Japan 225 just below 40k at 39700.

Nvidia rose to above 900, Meta and Microsoft and Tesla also rose but less strongly.

US 10 Year yields fell to 4.07 and the USD Index fell to below 103, EURUSD is 1.0945, GBPUSD 1.28 and USDJPY 147.90. Cable is in an interesting place, testing the upper end of it`s range. Gold and silver remain strong at 2160 and 24.35, Bitcoin hovers near the all time high.

Althea wrote on UK rates The Debt Management Office's Gilts Sales Matter More Than The Spring Budget. And Koen on trading Gold via Options:  This article provides an in-depth guide on gold Kim focusses on the strength in the Yen: USDJPY, EURJPY GBPJPY and CHFJPY lower and there could be further downside to come

Next week you are invited to a Webinar with Koen on the employment of FX Options to hedge:

If you own international stocks or assets, then this webinar is for you! Find out how you can use Forex Options to control your foreign currency exposures. Whether it be managing US equities or hedging mortgage payments in foreign currencies then FX Options are the way to go. https://www.home.saxo/en-ch/insights/events-and-webinars

Today there are a few events to focus on, the Nonfarm Payroll at 14:30 expected at 200k is the most important, the EU GDP at 11:00 seen just positive at 0.1%

Our Strats believe recent labor market indicators and anecdotal evidence suggest that job growth could come in lower than economists predict.

o          A softer-than-expected headline growth could mean that markets will increase rate cut expectations. This can be positive for equities (unless soft landing assumption is challenged). Yields and dollar could plunge lower, pushing yen and gold to extend their rally.

o          Hot NFP print again will bring focus back on competitive pivots for central bank, reaffirming that ECB may cut before the Fed. This could be negative for equities, and yields and dollar are likely to go higher. EURUSD could reverse back below 1.09 and USDJPY could retrace to 148.50.

The mood into the weekly close will be very important – will Gold, Bitcoin, the S&P and Nvidia close at all time highs??