In the run-up to the US inflation figures, which are crucial for the debate on when the Fed will cut interest rates and how much to expect in 2024, bonds are making up for some of Monday's slump. Yields reached their highest level since November in the last session. Bond yields in Europe also followed suit, with yields falling across the curve.
The slightly lower yields provided Wall Street with some (additional) support, particularly for the growth sector – but also for gold. Overall, however, analysts expect tomorrow's US inflation report to show a further easing of price pressures – leaving room for disappointment. On the other hand, I expect little sign that disinflation will continue at a pace that would allow for rate cuts in June – possibly not even in July. Core rates in particular have been very persistent of late.
Traders are also preparing for the ECB's interest rate decision on Thursday, which could reinforce expectations that the ECB will cut rates before the Fed and possibly before 2024.
The rather dovish comments from former St. Louis Fed President James Bullard, who said that three rate cuts remain “the base case scenario”, have further eased concerns that rates will stay higher for longer – which I think is the most likely scenario, however, as we currently see little to no signs of economic weakness in the US that would make rate cuts more likely.
The oil price has risen again despite the ongoing negotiations for a ceasefire in Gaza, which I do not expect to be successful. The rising oil and industrial metal prices reflect the continuing expectations of an improving global economy. Copper has traded near a 15-month high as demand outstrips supply – a strong indicator of improving production.
We expect another day of sideways movement. Yesterday's trading was the lightest since December – a sign that traders are still waiting for more clues, especially on the Fed's interest rate outlook. If yields continue to edge lower, we could see the first small gains in equities before we expect more profit taking in the second half of US trading.
Commodity prices remain in an overall uptrend but could come under pressure as concerns over a potentially hot US inflation report will keep demand for the USD. The gold price rise went a little too far in the short term, but we expect further gains as uncertainty remains.
👁 ROB'S MARKET OVERVIEW:
April 09, 2024
🌐/🇺🇸 Global Markets ↗️/➡️ (early gains on lower yields; More caution to return in 2nd half of US trading)
Cyclical / Luxury Stocks ↗️/➡️/↘️
Tech/Growth Stocks ↗️/➡️
Financial Stocks ➡️
Defensive Stocks ↗️/➡️
Energy Stocks ↗️/➡️
Materials Stocks ↗️/➡️
💱 Forex
AUD, CAD ↗️/➡️ (benefiting from strong commodity prices, improved risk sentiment)
GBP ↗️/➡️ (benefiting from improved risk sentiment)
EUR, CHF ➡️
USD ↘️/➡️ (recovering in 2nd half of US Trading as trades turn more cautious)
JPY ↘️/➡️
⚒ Commodity Markets ↗️
Oil prices ➡️ (hovering around $86/barrel WTI)
Natural Gas prices ↗️/➡️
Metal prices ↗️
Gold ↗️/↕️ (remains bullish – swings in range $2,340 – $2,365)
⚡️Cryptos ↘️/↕️ (sees some profit taking after recent gains; support at $70K)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
