Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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Morning Brew May 15 2024
Erik Schafhauser
Senior Relationship Manager
Summary: Key Data with Indexes near records and huge volumes - US CPI and Retail Sales at 14:30 CET
Good morning,
The Nasdaq hit a record high close yesterday as the higher than expected PPI was ignored.
The Dow rose 0.3%, the S&P 0.5%, and the broader Nasdaq 0.75%, most interesting stocks were again the meme stocks line AMC and GME, Tesla gained 3% on the increased tariffs imposed by the Biden administration and Alibaba lost 6% after an 86% drop in profit. Nvidia is again above 900.
Volumes were huge at more than 13 bio vs an average neat 10.
Many Indexes are near all time highs again despite Interest seemingly settling at least high for longer if not higher for longer. I am not sure this makes a lot of sense but there are some possible explanations:
- Traditionally, Stocks fall when the Fed cuts rates, we may me delaying that.
- Higher inflation devalues the USD and raises the price tag on tangible assets like stocks, gold and silver and copper.
- Election years are usually good for Equities
US Yields are a little lower at 4.42 and the USD Index has gropped below 105 to trade at 104.92. EURUSD has risen above 1.08 (1.0825) GBPUSD is testing the 1.26 and USDJPY 156.25. Gold and Silver are strong at 2360 and 28.62, copper is above 500 and Platinum has risen above 1000.
Today we are expecting the EU GDP, US Retail Sales and most likely as highlight the US CPI,
the CPI M/M is expected at 0.4%, Y/Y 3.4%, the Core CPI M/M is expected at 0.3%, Y/Y 3.6%,
There is very little focus on the Retail Sales which may be dangerous. Retail Sales are an important indicator. The release will be at the same time as the CPI and is expected at 0.4%. As the excess savings from the Covid period have run out and the high interest rate eats away disposable income it could be an interesting read.
There seems to be a lot of buying power around and if data supports the sentiment, we could see new records today. If the mood sours, there may well be selloffs.
Safe trading!
Key Data:
Wednesday
- Data Sweden PPI, EU GDP, US CPI& Retail Sales, Neil Kashkari & Michelle Bowman speak
- Earnings: Cisco,
Thursday
- Data JP GDP, AU Unemployment Rate, Initial Jobless claims & Philly Fed, Michael Barr , R. Bostic & Partick Harker Speak
- Earnings: Walmart, JD.Com Under Amour
Friday
- Data China Retail Sales, EU HICP
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