Read on the Trading Floor - 07 June 2024
Today’s focus… h/t to those who saw today's NFP coming...
Macro Themes At Play
Theme 1 - Trading is hard!
Theme 2 - Week Ahead Previews
What's being read on harkster.com
Theme 1 - Trading is hard!
Having spent the past two weeks basking in the glory of a US economic slowdown, soft data rolling over, US household savings dwindling, retail sales weaker, housing starts slowing and ISM gapping sub 50... The summer market ran into another NFP/AHE disc saw. 0.4% MoM hourly gains are not what the Fed will want to see and were driven higher by the minimum wage hikes in /California.
However, it was a "divided" report... the household survey showed a rise in the unemployment rate to 4% and a decrease in employment by 408k. This discrepancy casts doubt on the payroll figures, suggesting they might be “overestimated.”
According to ZeroHedge, it was a "4-sigma beat to estimate, unheard of in the past year."
Source: Bloomberg via ZeroHedge
The strength of today's data has already taken the Atlanta Fed GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2024 back up to 3.1 percent on June 7, up from 2.6 percent on June 6.
Just as the mkt felt comfortable again engaging in soft USD, earn some carry over the summer months, with many who had survived the volatile scare, if not profited from fading the EM sell off now feeling increasingly discomfort as the mkt pares back the probability of a Sept cut. In fact we're now almost back to 50/50 for Sept and where we entered the week as the US economy continues to outperform. As a result, 2s backed up to 4.87%, 10s to 4.42%, gold dropped 3% to 2305 and USD squeezed to 1.0810 vs EUR and 156.60 vs JPY. What a mess! Just as a trade started to build we mean revert the mean reversion.... Trading is hard! Choppy summer markets to endure until after the US election?
For the mkt to get the cuts it wants, the Fed needs more evidence of easing inflation, increased labour market slack, and a decline in consumer spending....
Steno Research - Portfolio Watch: Good news = no cuts = bad news (for metals)
ZeroHedge - Inside The Most Ridiculous Jobs Report In Years
Theme 2 - Week Ahead Previews
USD shorts praying for disinflation to return in next weeks CPI report?
Newsquawk - Week Ahead 10-14th June: Highlights include US CPI, FOMC, BoJ and China inflation
ABN Amro - The week ahead: 10 - 14 June 2024
ING - Asia week ahead: India and China to report inflation while the BoJ decides on policy
What's being read on harkster.com
Time to build a "short" focused HF?, Chinese expanding influence, GameStop continue to fade roaring kitty (why do retail follow roaring kitty? Dumb Money never asked the question, how many retail investors lost money following him / holding the bag), AI bonaza, ECB deputies hit the airwaves post meeting, very little impact on GBP from the UK election and much more...
Capital Flows and Asset Markets - Pushing the Big Red Button
Brent Donnelly am/FX - A Bunch of Things
Emerging World - China, Middle East Ties Accelerating
FT - GameStop announces share sale plan ahead of Roaring Kitty livestream
Saxo Bank - AI bonanza drives new highs and dangerous index concentration
Econostream - ECB’s Schnabel: Inflation Outlook Uncertain, Cannot Pre-Commit to a Rate Path
Rabobank - GBP
The Inflation Guy (Mike Ashton) - Talkin’ ‘Bout the China Gold (Whoa Oh)
Nomura - The G7 Easing Cycle Begins
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