We see US Treasuries, as well as non-US bonds, falling further as swap markets continue to reduce expectations for Fed rate cuts following another string of strong US economic data. Friday's NFP data came in much better than expected. We see that swap markets do not expect the Fed to cut rates by 60bps – meaning that markets are leaning towards “only” two Fed rate cuts (2 x 25bps) rather than three.
Higher yields and the expectation that rates will remain high for longer have created a headwind for bonds, pushing US Treasury yields to their highest level since 2024. It's another busy week, with key US CPI data due on Wednesday and also the ECB's interest rate decision. In addition, the next earnings season is just around the corner, which unofficially kicks off on Friday when JPMorgan, Wells Fargo, BlackRock and Citigroup announce their Q1/2024 results.
Rising yields also increase the potential for another rate hike – especially if yields on the key 10-year rise above 5%. The recent strong US economic data is likely to remain an indicator of a very resilient, growing US economy. However, concerns over another hot inflation report will keep the market cautious ahead of the US Consumer Price Index report (on Wednesday).
Tesla rose 4.0% in pre-market trading, reversing some of its 34% year-to-date plunge. According to CEO Elon Musk, Tesla will unveil its new robot cab on August 8. Shares in cryptocurrency-related companies also rose as Bitcoin climbed back above the $72,000 mark, gaining for the third day in a row. Commodity prices also remain robust, with copper and iron ore prices rising – a sign that commodity traders are expecting demand to rise.
Oil prices, on the other hand, saw a slight correction after the recent strong gains following Israel's announcement that it would withdraw some troops from the Gaza Strip. The rapid rise in oil prices led to increased concerns about inflation – temporarily lower oil prices are therefore being welcomed by equity traders.
We expect Friday's slightly positive momentum to continue. We expected earnings to return after the NFP data and investors to become more optimistic again that strong US economic data could also lead to another strong earnings season.
Gold reached another all-time high in Asian trading, but appears slightly overbought in the short term given the sharp rise in yields. Nevertheless, gold will remain attractive in 2024 and has much more upside potential.
👁 ROB'S MARKET OVERVIEW:
April 08, 2024
🌐/🇺🇸 Global Markets ↗️/➡️ (first moving back to Friday highs than extend gains; More cautious trading in second half of US trading)
Cyclical / Luxury Stocks ↗️/➡️
Tech/Growth Stocks ↗️
Financial Stocks ➡️
Defensive Stocks ➡️
Energy Stocks ↘️/➡️ (temporary headwinds only)
Materials Stocks ↗️
💱 Forex
AUD ↗️ (benefiting from strong commodity prices)
CAD, ↗️/➡️ (benefiting from strong commodity prices)
USD ↗️/➡️
EUR, GBP ➡️
JPY, CHF ↘️
⚒ Commodity Markets ↗️/↕️
Oil prices ↘️/↕️ (temporary headwinds; Oil to remain bullish)
Natural Gas prices ↗️/↕️
Metal prices ↕️ (mixed, short-term headwinds if NFP report comes in strong)
Gold ↗️/↘️/↕️ (Strong gains during Asian trading; remains bullish but temporary correction(s))
⚡️Cryptos ↗️/↕️ (Strong recovery after recent slump; temporary resistance near $73K)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
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