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Morning Brew June 28 2024
Erik Schafhauser
Senior Relationship Manager
Summary: Ultimo, PCE and Friday - Buckle up
Good morning
The first debate between Biden and Trump is over and it seems that Trump has come out of the first debate stronger than Biden, equity futures are slightly friendly. There as little new in terms of content but it seemed not very presidential or dignified.
Finding little inspiration yesterday, US Indexes rose minutely yesterday the Nasdaq gained 0.3% the S&P and the Dow 0.09%. Volumes were rather low at 9.5 billion shares.
Most exciting stocks were Nvidia down 1.9%, Wallgreens -22%. Levi Strauss -15% and Micron -7%.
Overall, many indexes have had a good month so far and regardless of what happens in the US Inflation data later today, the first half of 2024 will end in the green.
Yields are holding, the 10 year is at 4.30 and the USD Index 106.05. The Yen fell to a 38 Year low against the USD and Japan appointed a new top foreign exchange diplomat. USDJPY is just below 161 and EURUSD at 1.0690, GBPUSD 1.2630.
EURCHF is trading at 0.9615, this is likely the best measure of the Euros strength or weakness after the French election. The USD will be impacted by the PCE.
Gold and silver are mixed with Silver in the green and Gold slightly red at 29.15 and 2326. Goldman Sachs sees gold as having strong potential this year and sees the year end at 2700 or 16% higher. Remember that it is Friday and we have seen massive moves in to the last few weekends in
Today we expect the Swiss Leading Indicator at 9:00, KOF, the German unemployment at 9:55 CET and most importantly the US Inflation in terms of the Personal Consumption Deflator, PCE The PCE and the PCE Core are expected at 2.6% and will be releases at 14:30, the Chicago PMI at 15:45 and the University of Michigan sentiment at 16:00 are less crucial.
An additional source of volatility can be the Iranian presidential elections and Month, Quarter and half year ultimo.
There may be some nervousness in the Euro and or European Indexes as we have the first round of the French elections on Sunday,
Next week, the UK elections are important, Charu already took a look at them:
- The July 4 UK election is tilting in favor of a likely Labour majority, after a 14-year Conservative rule characterized by Brexit and the cost-of-living crisis.
- With limited fiscal space, Labour is expected to focus on supply-side reforms and cautious fiscal policies, likely promoting long-term economic growth and stability.
- Markets remain complacent with policy stability remaining the base case. UK assets have also attracted some safe-haven flows amid the election risks elsewhere in the US and Europe.
- UK’s stock index FTSE 100 still trades at a significant valuation discount to global stocks, and offers a good dividend yield as well as scope for portfolio diversification.
- Sterling could face short-term volatility if Labour’s victory is not as strong as anticipated, and if the Bank of England adopts a dovish stance post-election. However, long-term support for GBP may persist against the EUR due to contrasting political and fiscal stability between the UK and the Eurozone.
Trade safely!