The Prime Minister has jumped on the latest distraction from the government's woes. The big problem is he's not actually prepared to confront the biggest area of concern.
Mixed data overnight out of China (GDP beat, Retail sales & Industrial production miss) was matched by an equally divergent overnight of macro in the US with ugly housing data but strong industrial production, but once again the markets were ping-ponged by Fed fears (rate-cuts-off - Fed Vice-Chair Jefferson and Powell both sang from the same 'higher for longer' hymnsheet with the latter finally admitting that "recent [inflation] data have clearly not given us greater confidence and instead indicate that is likely to take longer than expected to achieve that confidence") and MidEast tensions (WW3-on, but not yet - Israeli war cabinet plan is 'keep Iran guessing').
All of which pushed rate-cut expectations lower in the US...
Source: Bloomberg
In fact, the majority of investors now see 2 rate-cuts this year...
And the odds of a possible 1st June rate- cut have tumbled to just 15% which IMO won't happen.
The US 2Y yield is also back over 5% while the US 10Y is now around 4.66%
Stocks were volatile today amid the surge in yields and Powell's comments, with Small Caps lagging in the red along with a small loss for the S&P and Nasdaq unch. The last minute saw a big sell program hit to ruin most people's day...
The only real notable mover overnight was the US Dollar - trading to fresh highs since NOV2023 and the chart has formed a Golden Cross which is a bullish indicator suggesting the USD could move higher which means the AUD could fall below 64 US cents
Source: Bloomberg
Oil and Bitcoin ended essentially unchanged while Gold managed small gains to reach a new record high price of US$2,448.80 (it has since fallen back to just under US$2,400
Lastly, now wonder the chances of a US rate cut have taken a dive - check out US Gasoline (petrol) prices.
Source: Bloomberg
Nuff said...
Take it easy
Happy Wednesday!
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Andy is the founder of ANDIKA Pty Ltd, a licensed securities & derivatives dealer. He's the author of fiction and non-fiction books and has been a University lecturer on risk and investment.
