Morning Brew June 20 2023

Good Morning,

With the US on Holiday, markets were fairly quiet but far from boring. There is a little risk sentiment or profit taking but overall fairly small moves so far.

GBP is the currency to move with the 2 year Yield hitting 5% for the first time in 14 years. Cable hit 1,2850 but as I am writing, the USD is experiencing some strength and we dropped to 1.2770. Noteworthy is GBPJPY near the highest level since Brexit at 181.50 Tomorrow is the release of the UK CPI and Thursday the rate decision.

For the first time, Cash, S&P earnings yield, and Corporate Bonds are all the same, taking much incentive out of equities – let us see how that goes.

China delivered less stimulus than hoped cutting rates by only 10 basis points instead of 15, this seems this causes some disappointment. Indexes decline by app 0.5%, Oil and precious metals hive up up some ground to trade at 70.75 for US Crude, Gold at 1947 and Silver 23.85.

The US 500 is trading at 4394, the US Tech100 NAS at 15032, the GER40 16171.

Technical Dax: seems to struggle in following through with its higher close last week. RSI is showing divergence i.e., not really supporting the uptrend.
The uptrend is intact though and will stay intact until a close below 15,625. The 1.638 projection at 16,600 is the short-term target.
However, a close below 15,909 is likely to be the signal saying DAX is not going to move higher and that DAX could drop to test 15,625  https://www.home.saxo/content/articles/equities/technical-analysis-dax-ftse100-ftse250-aex25-bel20-cac40-19062023

In the midterm, agricultural commodities have been rising and reports that the North Atlantic is at he warmest level aver compared to previous year are raising fears of adverse weather. https://www.home.saxo/content/articles/commodities/technical-analysis-wheat-soybeans-corn-building-uptrends-19062023

Separately, the US and Germany are meeting with China. China and the US agreed to stabilize their relationship.

Adobe – one of the key AI companies could be volatile today as the EU is investigating the 20 bio takeover of Figma. Background on Adobe: https://www.home.saxo/content/articles/equities/adobe-outlook-adds-to-ai-rally-16062023

The German PPI at 8 (expected at 1.7%) and possibly US Housing starts at 14:30 are the key events of the day, Data aside, sentiment in the US after the long weekend will be key.

Tuesday June 20

China Loan Rate
German PPI

Earnings: FedEx Corp

Wednesday June 21
UK CPI
CA Retail Sales

Jerome Powell speaks in the House

Thursday June 22

Swiss Rate decision
UK Rate decision
US Jobless Data, Existing Home sales
Jerome Powell speaks in the Senate

Earnings: Accenture PLC, FactSet

Friday June 23
Japan CPI, PMI

UK Retail Sales
DE, NL PMI
EU PMI
US PMI

Earnings: Oracle