US inflation continues to cool down
US April CPI inflation +4.9% year/year vs. +5% estiated & +5% in prior month … Core CPI +5.5% year/year vs. +5.5% est. & +5.6% prior
The correlation between stocks and bonds has become very negative again!
📊 The 50-day correlation between US stocks and the intermediate part of the US Treasury yield curve has hit its lowest level since 2021. This may have been driven by the fact that bond volatility has declined (although it remains at a high level) and the economic outlook is increasingly uncertain. 💼 In light of this, bonds remain a crucial component of a well-diversified multi-asset class portfolio, especially as we navigate the increasingly uncertain second half of 2023. 📈 Will bonds regain their status as a safe asset? Source : Bloomberg
NVIDIA breakout ?
After an incredible 170% rallye over the last 8 months, will NVIDIA (NVDA) have enough strength to break major resistance at 290 ? Source : Bloomberg
Refinancing? All is about timing for bond deals
Highly rated US companies have sizable amounts of debt in need of refinancing. Blue-chip firms have an estimated $427 billion maturing in the second, third and fourth quarters of 2023, according to S&P Global. High-grade issuers are finding that windows to sell new debt close as fast as they open. And, on top of that, good days easily get crowded, leading issuers to stand down. Source: Bloomberg
CAC 40 retesting major breakout level
Market is retesting April’s breakout level 7400 that is now a major support. Will it be able to hold ? Chart Source : Bloomberg
Will Tech breakout ?
Technology Sector (XLK US) is testing major resistance 151.78 for the 3rd time. Will it be strong enough to break after a 33% rallye since October 2022 ? Chart source : Bloomberg
Has the Fed ended the flattening of the US Treasury yield curve?
Yesterday, the Fed hinted that this could be the last rate hike of this cycle, leading some to wonder if the flattening of the US Treasury yield curve is finally over. After the FOMC meeting, the difference between 10-year and 5-year Treasury yields turned positive. It should be noted that this part of the curve was the first to turn negative in March 2022. Will this new trend continue in the weeks and months to come? Source: Bloomberg
Doubts about a 25bp Fed hike tonight?
Today, Fed Governor Powell will present the conclusions of the Fed meeting, a crucial moment as the market believes it will mark the end of the Fed's rate hike cycle. Despite deteriorating macroeconomic indicators and another failure of a major US regional bank (FRB), the market believes there is a near 90% chance of a rate hike. Powell is also expected to emphasize that rates will have to remain high for an extended period of time as inflation remains high. However, there are doubts about how the Fed will take into account the recent failure of First Republic Bank and the ongoing debt ceiling situation. Note that there is no update on the US economic outlook and the dot charts.
