Macro: Sandcastle economics
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Morning Brew May 5 2023
Erik Schafhauser
Senior Relationship Manager
Good Morning
Monday and Tuesday I will be travelling...
The Markets seems very headline driven so here we are:
- US regional Banks came under more pressure, sparked by PacWest announced to be considering strategic options. Markets calmed somewhat with the regional Bank Index recovering half it`s losses to close 3.5% lower. PacWest lost 50%, Western Alliance 38%. Pressure on the Fed to address the matter in a broader manner are rising
- The ECB delivered as expected, a hike of 25 bps and more to come while also halting reinvestments from July. Christine Largarde also pointed out that tightening was being felt in the economy. Traders see rates to increase a little less than 50 basis points from here.
- No resolution of the US debt ceiling is in sight and the clock is ticking.
- Apple Exceeded expectations after bell, sales were stronger than expected and stocks celebrate the fact. Apple will also repurchase shares to the tune of USD 90 bio. AI was not at the forefront of the report.
- Drones attacked Kyiy and a drone was also shot down over the Kremlin, it`s origins so far not known.
- UK Conservatives suffered heavy losses in local elections
US 2 year yields fell as low as 3.65 yesterday and recover to now 3.79, The USD Index is meandering the 101 level above support despite EURUSD being relatively weak at 1.1044, GBPUSD rose to above 1.26 and USDJPY fell to 133.90. Gold and Silver remain strong at 2050 and 26.
Indexes gave up ground yesterday but could gain over night on the apple results and a decent Chinese PMI. The US 500 is trading at 4075, the US Wallstreet 30 at 33200, the USTech100 at 13040 and the GER40 at 15790. The Vix was rising yesterday, showing nervousness. Volumes were way above average.
Today focus is on the US Non-Farm Payroll where we are looking for 180k as a headline, unemployment 3.6% and hourly earnings at 0.3%.
Also, any new banking issues – or a clear signal from the Fed on a broader approach will be key for sentiment.
- Today:
Data: DE Industrial Orders, CH Fx Reserves, US Nonfarm Payrolls
Earnings: ANZ, Macquire Group, Enbridge, Canadian Natural Resources, Adidas, Intesa Sanpaolo, CaixaBank, Cigna Group - Monday:
Data: Germany Industrial Production,
Earnings: Biontech, KKR, Semantix,
- Tuesday:
Data: China Trade Data, UK House Prices, - Wednesday
Data: Germany HICP, US CPI
Earnings: Nikola, Under Armor, Fox,
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