Macro Updates 29/04/2024 Trading Markets
The very last post from previously, before I carry on another one
https://medium.com/@kiann00/macro-updates-22-04-2024-trading-markets-102d74138bdd
- Markets (Current Week, and maybe past week moves)
- Key Events of the past week
- Key Events of the coming week
- Any trading strategy/thoughts
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- Markets (Current Week, and maybe past week moves)
US Rates : yield curve remained stable/unchanged week-on-week though with intra-week volatility. Yields had been slowly rallying, but sold-off sharply when Thursday PCE Inflation print came in hot at +3.7%
EUR Rates : EUR rates remained fundamentally unchanged as well (10y sold off slightly by +7bp).
2. Key Events of the past week
- GDP QoQ (Prelim) came in at much weaker +1.6% vs 3.1% expected; while PCE Inflation came in at blistering +3.7% vs +3.0% expectations. Immediately, this means a (whiff of ) stagflation with falling growth vs high inflation (worst economic scenario). US yield curve reacted instantly by +6bp to >4.7%.
- However, a more nuanced view (post instant reaction), there is some pushback from economists that the GDP print was not as weak as presumed. The driver of the under-performace was the volatile component ‘Net exports’ of -0.9% vs +0.3% previously. If this was taken out, the GDP print was not as weak as it seemed.
- On Friday 26/04/2024, given PCE Inflation was hotter than expected, it was expected the PCE YoY came in at 2.7% vs 2.6% expected. By then, (it seems), the reaction had happened on the previous day; and market reaction was muted (in fact, SPX went up almost 1% on the print).
- Equity markets (SPX) were again the highlights given that we are in Earnings Season with
- TESLA soared +12% (two weeks ago) on the forward business plans by Elon Musk; even though latest Quarterly results were HORRENDOUS
- Meta crashed -12% (Tuesday) as while quarterly results were respectable, markets were spooked by the AI costs Meta were running
- Microsoft and Google (Alphabet) both soared around +12% post results, with AI as the theme again; as their positive results showed that they are on track to earn outsized profits from AI in the future.
3. Key Events of the coming week
EUR : we have the core CPI prelim of 2.6% exp on Tuesday 30th April.
USD : The big event is foreseeable the FOMC on Wednesday 2pm, where the Fed is NOT expected to do any rate cuts. All eyes are on the Presser on the Fed’s forward updated guidance on the rate-path; given the heavy inflation prints over the past few months.
JOLTs job report on Wednesday.
Finally, one big upcoming event is the Treasury Issuance, Quarterly refunding activity by Yellen; amidst the de-dollarization.
This has huuuge implications for the long-tenor Treasuries.
- Equity : Earnings, bell-weather stocks Amazon Tuesday after-hours.
- Equity : Earnings, bell-weather stocks Coca-Cola Tuesday before-hours.
- Equity : Earnings, bell-weather stocks Apple Thursday after-hours (personally expect this to under-perform post market irrespective, as there is too much negative geo-politcal news between China and US).
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