Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
Senior Relationship Manager
Summary: 50 BPS in March now likely
Good Morning,
“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated," was the phrase that shook markets yesterday.
The expectation of a 50 BPS hike on March 22 soared from 20% to 65% and the peak rate rises to 5.65%, 2 year yields rise to above 5%. The USD Index jumps from 104.10 to 105.75.
EURUSD is now at 1.0535, GBPUSD 1.1824 USDJPY 137.66 and Gold and Silver dropped to 1812 and 20.05. Gold is at support level, is we break lower, 1750 would be the next strong level, Silver 18.75.
Equities dropped with the Dow down 1.7% the S&P 500 1.5% and the Nasdaq 1.25%. The Ger40 receded from near 15700 to 15520.
Today’s agenda is thin again except for the Fed`s beige book being released at 20:00. One can assume that the data was known to Powell before yesterday’s speech so I would not expect any disinflationary content.,
Traders will digest the new levels and adjust positions today and focus on the Q&A session with Powell.
Wednesday:
Data: EU GDP Revised YY, US International Trade, CA Trade Balance,, Ca Rate decision
Earnings: Legal & General adidas AG Brown-Forman Geberit AG Thales SA China Unicom China United Network Ping An Bank
Thursday
Data: Japan GDP, China PPI, CPI, US Initial Jobless claims
Earnings Wheaton Precious Metals Ulta Beauty Hannover Rueck Deutsche Post PRADA Contemporary Amperex
Friday
Data: DE HICP, UK GDP,US Nonfarm Payrolls,
Earnings: Daimler Truck Holding DiDi Global Inc ZTE BNP Oracle JD.com
Expiries
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