The Last Morning Hark - 28 June 2024
Today’s focus...Dull, dull, dull continues but The Debate saves the day as Biden has a shocker.
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Overnight Highlights
Prices are at 6.45 BST/1.45 EST, with changes reflecting movement from midnight GMT
Oil - Oil firm in Asia with Brent and Crude Sept futures currently at 85.80 and 81.30 after yesterday’s strength as expectations continue to grow for high demand over the summer in the US and rate cuts are closer.
EQ - Asian equity markets little changed overnight with the Hang Seng and Nikkei futures currently at 17,700 and 39,500 respectively.
The US indicies up smalls with the S&P and Nasdaq futures now at 5555 and 20,100 respectively.
Gold - Gold unchanged in Asia with the August futures trading currently at 2335.
FI - US yields a touch firmer in Asia with the US2y futures trading at 4.73% whilst the US10y futures yield at 4.31%.
European yields little changed yesterday with the German 10y closing at 2.45% and the Italian 10y yield at 4.03%.
UK gilt 10y at 4.13%.
FX - The USD continuing to firm in Asia with the USD Index currently at 106.07 profiting from the continued JPY weakness which is being fuelled by a lack of reaction from the Japanese authorities other than replacing their chief “currency diplomat”.
The majors now trading at; JPY, EUR and GBP 160.95, 1.0690 and 1.2630 respectively.
Today’s major FX option expiries we have in the EURUSD; $€1.8bn at 1.0725 and €3bn at 1.0650/70. In USDJPY we see $3bn at 160. Finally GBP sees £1.8bn at 1.2645/50.
Others - Bitcoin and Ethereum up smalls and continuing to stabilise after its travails earlier in the week with the pair currently at 61,500 and 3445 respectively.
Macro Themes At Play
Recap
Riksbank Interest Rate Decision rates remained on hold at 3.75% as expected. The statement was a touch more dovish though with them signalling two or three more cuts this year, from two in May. The aggressive hiking of the Riks would seem to be now flipping into an aggressive cutting cycle. This brings the August meeting into focus for the next cut.
US Durable Goods Orders MoM for May produced a small upside surprise with a 0.1% reading.
US GDP QoQ Final q1 came in as expected at 1.4%. Prices for the quarter were all a touch higher than was expected but the focus is more on today’s PCE print.
Central Bank Speakers
ECB’s Kazimir anticipated a quiet summer on ECB rates and was looking for only one more cut this year.
The Day Ahead
Overnight the Japanese Data Dump was a touch better than expected.
Tokyo CPI came in a smalls stronger than expected across the board. Headline printing at 2.3% YoY whilst the core equivalent is now at 2.1%.
Unemployment Rate for May bang in line at 2.6%.
Industrial Production for May MoM prel came in strongly at 2.8% boosted by the resumption of the automobile sector after the disruptions we saw earlier in the year.
The other overnight “highlight” was The Debate. Disastrous for Biden with a lot of mumbling and a section where he appears to freeze. Trump for once retained his discipline. Trump now firm favourite on the exchanges with Biden currently slipping to an implied chance of winning below 15%.
As we go to print the final UK GDP print for q1 which should just be a tick box. Later in the morning sees the German Labour Report for June.
The afternoon sees Canada’s April GDP print and of course the week’s highlight US PCE Report for May. Later in the day Chicago PMI and the final print for the June Michigan Survey.
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Main Highlights Ahead
All times in BST (EST+5 / CET-1 / JST-9)
The main highlights for the day ahead ahead in terms of data and speakers:
Friday
UK GDP Growth Rate QoQ Final q1 consensus 0.6% vs previous -0.3% (07.00 BST)
UK GDP Growth Rate YoY Final q1 consensus 0.2% vs previous -0.2% (07.00 BST)
Germany Unemployment Rate June consensus 5.9% vs previous 5.9% (08.55 BST)
Germany Unemployment Change June consensus 15k vs previous 25k (08.55 BST)
Canada GDP MoM April consensus 0.3% vs previous 0% (13.30 BST)
Canada GDP MoM Prel May consensus % vs previous % (13.30 BST)
US PCE Price Index MoM May consensus 0% vs previous 0.3% (13.30 BST)
US PCE Price Index YoY May consensus 2.6% vs previous 2.7% (13.30 BST)
US Core PCE Price Index MoM May consensus 0.1% vs previous 0.2% (13.30 BST)
US Core PCE Price Index YoY May consensus 2.6% vs previous 2.8% (13.30 BST)
US Personal Income MoM May consensus 0.4% vs previous 0.3% (13.30 BST)
US Personal Spending MoM May consensus 0.3% vs previous 0.2% (13.30 BST)
US Chicago PMI June consensus 40 vs previous 35.4 (14.45 BST)
US Michigan Consumer Sentiment Final June consensus 65.8 vs previous 69.1 (15.00 BST)
US Michigan 1y Inflation Expectations Final June consensus 3.3% vs previous 3.3% (15.00 BST)
US Michigan 5y Inflation Expectations Final June consensus 3.1% vs previous 3% (15.00 BST)
Fed Speakers
Barkin (11.40 BST)
Bowman (17.00 BST)
ECB Speakers
Villeroy (11.00 BST)
Good luck and a good weekend to one and all.
Finally goodbye and I wish all readers health and happiness for the future.
Thank you for your support over the years.
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Your approach and insights get a “professional “ A plus from me! Abd I read a lot!
Only 1 President, showed up last night.....that's clear to EVERYONE !!!!