The Morning Hark - 24 Aug 2023
Today’s focus...Weak Global PMI's takes the sting out of the FI sell off, Nvidia beats lofty expectations and Prigozhin is presumed dead
Nvidia beat high expectations (WSJ) with their shares rallying another 8% after a blowout forecast (Fortune)
BoK held rates despite growth concerns (ING)
Leading indicators disappoint... What started in Europe with German mfg PMI weakness as well as a surprising drop down in UK service PMI sub 50, ended with US PMI's also disappointing. We initially saw a risk off usd rally in the European session as BoE terminal rate dropped from 5.95% sub 5.8% and calls for a Sept skip from ECB arrived from sell side analysts. However, the global FI rally and the weaker than expected US data were the biggest new news for the street, and as a result, we ended up with 10yr US real yields dropping 15bps from last week's 2% nadir back to 1.85%.
Even though we had a wave of "negative" outlooks for global growth, downside risks now to the US, Europe and of course China, EMFX loved the global fixed income real rates rally .... USDZAR sub 18.50, USDMXN 16.80, USDJPY back sub 145, AUDUSD closing at the highs of the day. The biggest surprise was the US weakness and once again rekindles the view that a US recession may appear sooner rather than later as the lagged impact of monetary policy takes hold... or at the very least, we get a tradable repricing / unwind of the US exceptional story which weighs on US fi pricing and triggers some USD hedge unwinds vs EMFX. The 5.8% Q3 Atlanta Fed GDPNow forecast was always going to be tough to beat.
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AI euphoria ... Nvidia's revenue more than doubled in the latest quarter...
Morningstar: Thanks to AI, Nvidia is Rocketing
TechCrunch: Nvidia's Q2 earnings prove its the big winner in the generative AI boom
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BRICS:
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Jackson Hole scenario analysis continues ...
FT: Higher for longer rate debate to dominate Jackson Hole meeting
WSJ: Jackson Hole Might Reveal Potential Divergence Between Central Banks
BBG: Powell Is Using Jackson Hole as Final Push in Inflation Fight
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All times in British Summer Time (BST)
USD (13:30): Initial Claims
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