Morning Brew

Good Morning

Higher than expected US Retail Sales increased worries about a shift in the rate cut expectations.

Strong private spending is a signal of a strong economy and has inflationary impact – decreasing the likelihood that 6 cuts are realistic. 10 year yields briefly crossed to above 4.10 – a new 2024 high - before falling to 4.08, the implied cuts this year amount to 142 basis points in the US and 135 in the EU.

The USD Index is currently at 1.0318 after the EUR and the GBP found some strength. The UK inflation came higher than feared yesterday at 4% vs 3.8% expected. Christine Lagarde stated that while the European Central Bank may consider rate cuts this summer, it is not helpful for the market trade the timing and pace of cuts. EURUSD is back at 1.0900, Cable 1.27 and USDJPY 147.70. Gold and Silver fell to 2010 and 22.66, in Silver 22.50 has established itself as solid support.

In Equities, Indexes gave up a little ground yesterday but not spectacular. The US 500 is at 4740, the US tech 100 NAS at 16758 and the GER40 16444.

For single stocks, Apple will be worth watching as it will likely be forced to halt imports of Apple Watches with blood oxygen sensors, TSMC beat expectations by a song margin and Meyer Burger Technologies announced is was considering closing the largest European manufacturing plant in Europe, the share fell to below 0.1 CHF

The Agenda today is thin, the usual US labor data will be released at 14:30 and iunthe night, we are expecting the Japanese CPI expected at 2.3%. This will be key for the many traders betting on a stronger yen . so far wrong footed in 2024.

Trade carefully while traders try to assess if the re is a fundamental shift or not. Geopolitical risks remain and suggest the use of options for speculative positions.

Thursday
- Data Initial Jobless Claims, Philly Fed,
- Earnings: TSMC,

Friday
- Data Japan CPI, UK Retail Sales EU Consumer Confidence,