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Morning Brew July12 2024
Erik Schafhauser
Senior Relationship Manager
Good morning,
Yesterday was a curious day! US Inflation came lower than expected, and FX markets behaved as one would have expected. The dollar fell significantly. . Interestingly, equities behaved completely the opposite way. Normally sensitive tech and mega caps lost while small caps and blue chips rose or remained stable. Tesla had its worst day since January, losing more than 8%, Nvidia ended the day at -5.57% % Meta gave up more than four and Apple and Microsoft fell more than 2%. At the end of the day, the S&P 500 lost 0.9% the Nasdaq 2% and the Dow rose by 0.1% - the Russel 2000 had a great day at +3.6%
The core CPI came at 3.3% against the expectation of 3.4 and the non-core came at3.0% versus 3.1% expected in June. After Jerome Powell had stated the Fed`s path was data dependent at his testimony Tuesday and Wednesday, the lower than expected inflation raised hopes of a September cut to more than 90% . 10 year yields fell to 4.21% and the dollar index to €104.43. EURUSD is trading at 1,0870 the British pound rose above one 1.29 and USDJPY dropped significantly to now 1.5890. It is suspected the Bank of Japan used the opportunity to intervene into the USD move. Gold is trading strongly and silver again in huge volatility. Gold rose above the 4387 resistance , rose to 2424 and is now at 2406. Silver soared to 31.70 yesterday and is now back at 30.95
With today`s agenda fairly thin, focus will be on digesting yesterday’s data and comments around it, it looks like we could see one of those Fridays again where there is excessive vol in precious metals so trade them carefully! Bank earnings before the bell will be closely watched and overall sentiment in equities will be important. Is this a buy the dip moment or the seen as the end of a trend?
Important developments could be:
- Joe Biden remains under pressure after he confused Pamela Harris and Donald Trump, he could be forced to pull out of the race.
- China exports rose more than expected while imports were lower, this raises the stakes in the international trade disputes as it increases the trade surplus even more, it also puts focus on next week’s leadership forum of the CP
- Der Spiegel leads with a story on Russia threatening the life of Rheinmetall CEO
Key Data:
Friday
- Data Sweden & France CPI US PPI & University of Michigan Sentiment
- Earnings: Bank of New York Mellon, Citigroup, Wells Fargo, JP Morgan Chace