FXTRADING.com's Exclusive Market Insights for 4 July
On Friday night US bond yields fell sharply across the board, and the US 2-year came off 2.839%
The Atlanta Fed Q2 GDP tracker tumbled to -2.1% vs -1.0% the day before.
?And suddenly, the market is pricing 75bps of CUTS in 2023...
This is based on the difference between money market rates by end 2022 (EDZ2) and money market rates by end 2023 (EDZ3).
It has been an incredibly fast shift in sentiment over the past few weeks, from - “the Fed will do multiple 75bps hikes”, to “The Fed will NEED to CUT soon...”
What is impressive is that this shift is happening even before we have any new CPI or NFP data. The market is convinced that the softening global growth data will map into weaker inflation soon, and put the Fed on hold.
When it comes to recessions… the problem with recessions is the E (earnings) in PE falls.
* OPEC output falls 100,000 bpd from May
* Libya, Nigeria post biggest declines
* Compliance with OPEC+ cut pledges rises to 253%
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The euro has hit parity with the Swiss franc.?The real rate differential between the euro and the Swiss franc = -8%.
The RBA meets tomorrow. There are lots of job openings and few workers to meet demand, which is clearly a signal that wages are rising.
Inflation is set to hit a 32-year high above 7%. The economy needs to slow - the RBA will deliver another rate hike tomorrow to help. CBA jumped the gun last week on fixed rates, raising them 1.6%.
The AUD looks like it could break down here. The NZD also broke the key level of 62 against the USD, before rebounding into the level on the close. Could be one to watch here for a breakdown.
PMI fell to 53 vs 56.1, for its lowest since June 2020. Inventories rose from 56 from 55.9
Production rose slightly from 54.2 to 54.9.
10 billion-dollar crypto hedge fund 3 Arrows has also just filed for bankruptcy.
That’s the state of the market as of 4 July – FXTRADING.com hopes that these insights prove useful to its clients and followers.??
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