Daily Market Outlook, April 8, 2024

Munnelly’s Macro Minute…

“US CPI & The ECB The Main Macro Drivers Ahead”

Most Asian stock markets are experiencing gains on Monday, in line with the generally positive signals from global markets last Friday. This comes as traders respond to US data indicating a significantly stronger job growth in March than expected, signaling a healthy economy. The Japanese stock market is experiencing a significant increase, recovering from some of the losses from the previous session. The Nikkei benchmark has surpassed the 39.5K handle, influenced by positive trends in global markets on Friday. This has resulted in gains across various sectors, particularly driven by leading companies, exporters, and technology stocks.

Today's economic data docket remains light, with key data and events scheduled later in the week. These include Wednesday's US CPI inflation report, projected to show a slight decrease in core inflation but an increase in overall inflation due to elevated oil prices, posing challenges for the Fed's interest rate decision. On the same day, the European Central Bank might use its April update to lay the groundwork for a June interest rate cut. Additionally, Friday brings the latest monthly UK GDP data and a report on Bank of England forecasting by former Fed Chair Ben Bernanke.

The latest UK jobs report by S&P Global, KPMG, and REC, released earlier today, indicates a further relaxation in labor market pressures. New recruit wages saw their slowest growth in three years, attributed to increased workforce availability and businesses scaling back hiring. With ongoing uncertainty surrounding official labor market data, this report garners significant attention, seemingly aligning with Bank of England Governor Bailey's recent suggestion that inflation risks from labor markets may be diminishing. However, it does not reflect the impact of this month's national living wage increase. BoE MPC member Breeden is scheduled to speak today at an event in Zurich, focusing on the future of the monetary system. It is unlikely that her remarks will touch upon interest rate policy.

In the Eurozone, the only noteworthy release today is the April update for the Eurozone Sentix investor confidence index, which has been on the rise for five consecutive months, reflecting market recovery and optimism regarding potential interest rate cuts. However, its level remains relatively low compared to historical standards.

Stateside, attention is on the New York Fed's inflation expectations index, monitoring any impact from recent oil price hikes. Inflation expectations, though significantly lower compared to the past year, still exceed pre-COVID levels. The New York Fed index, focusing on one-year inflation expectations, tends to fluctuate due to gasoline price shifts and may see a rebound in today's reading.

Overnight Newswire Updates of Note

China’s Economy To Grow 5.3% This Year As Property Sector Stabilizes
BoJ Gov Ueda: Will Respond Appropriately To Changes In The Economy
PBoC To Give $69 Billion In Loans To Boost Science, Technology
Yellen, China’s He Agree To Talks Aimed At ‘Balanced Growth’
ECB Jostling Over Back-To-Back Summer Cuts Has Already Begun
Italy Sees Debt ‘Surely’ Staying Below 140% Of GDP This Year
Japanese Yen Hangs Near Multi-Decade Low Against USD
Bond Traders See 4.5% Yields As Next Test As Focus Shifts To CPI
Oil Slides More Than 1% As Middle East Tensions Ease
Netanyahu Says Victory Near, Pulls Some Troops From Gaza

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

FX Options Expiries For 10am New York Cut

(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)

EUR/USD: 1.750 (1.1BLN), 1.0790-1.0800 (1.3BLN), 1.0830-40 (542M)
1.0880 (401M), 1.0930 (402M)
GBP/USD: 1.2500 (380M), 1.2630 (476M)
EUR/GBP: 0.8580 (350M), 0.8705-10 (675M)
AUD/USD: 0.6580 (371M). AUD/NZD: 1.0900 (266M), 1.1000 (309M)
USD/CAD: 1.3600 (262M)
USD/JPY: 151.00 (362M), 151.45-55 (400M), 151.85 (748M)
152.00 (216M), 152.50 (439M)

CFTC Data As Of 29/03/24

Bitcoin net long position is 160 contracts
Swiss Franc posts net short position of -22,370 contracts
British Pound net long position is 43,414 contracts
Euro net long position is 16,794 contracts
Japanese Yen net short position is -143,230 contracts
Equity fund managers cut S&P 500 CME net long position by 26,140 contracts to 930,132
Equity fund speculators trim S&P 500 CME net short position by 83,217 contracts to 365,684