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Breakfast Bites - Tue Jun 20, 2023

Rise and shine everyone and Happy Tuesday!

We have a fairly light economic data and earnings week for the US. We still have a few more rate decisions to come this week globally.

The big earnings for today is FedEx reporting after the close.

S&P futures down 0.4% in Tuesday morning trading after inces capped off a fifth-straight week of gains on Friday, while Nasdaq higher for eighth-straight week with tech the leader again amid more AI optimism. Follows Asian and European trading sessions that have been under pressure.

The US Dollar is slightly weaker, with Gold slightly higher, WTI Oil higher, and Bitcoin lower. The Yield Curve remains inverted at -0.95%.

Asia and Australia

  • Asian equities ended lower Tuesday as investors reacted negatively to a modest LPR cut in China. Hong Kong was worst off falling 1.5%, mainland markets were mixed.

  • China lowered Loan Prime Rates in an effort to boost the economy: LPRs were lowered with 1y down 10 bp to 3.55% as expected, while 5y also down 10 bp to 4.20%.. China's delayed stimulus adds to worries over slowing economy

  • Australia higher following RBA minutes but the AUD was under pressure all day; RBA aiming for 4.5% unemployment rate to return inflation to target

  • Taiwan's May export orders fell 17.6% y/y to $45.7B, lower than April's 18.1% and consensus forecast of a 20% decrease

  • The 1-month Hong Kong interbank rate (Hibor) rose to 5.1%, its highest level in 14 years

  • Alibaba co-founder Joe Tsai to take over as chairman as Daniel Zhang steps aside to focus on cloud business

Europe, Middle East, Africa

  • European equity markets mostly lower.

  • Bank of Spain raises 2023 growth forecast to 2.3%, warns of risks

  • Two-year UK borrowing costs have edged out new highs after clearing the 5% handle for the first time in 15 years on Monday on BoE rate hike expectations.

  • UK inflation data due Wednesday, ahead of BoE decision on Thursday. Markets expecting headline to come in 8.4% y/y vs 8.7% prior, and core at 6.8% y/y vs 6.8% prior.

  • German PPI for May came in at the lowest in 2 years. Producer prices of industrial products were up 1.0% compared with May 2022, the Federal Statistical Office reported. That is the smallest increase since January 2021's rise of 0.9%.

  • Germany and Intel agree on chip plant subsidies worth €10B

  • Alsonside the BoE, Swiss National Bank (SNB) and Norges Bank also expected to hike rates by 0.25% to 1.75% and 3.50% respectively.

The Americas

  • US-China relations seemingly on a more stable footing following Secretary of State Blinken's visit to Beijing

  • Boeing confirms order for 40 737 MAX airplanes with Avolon

  • Eli Lilly to Acquire DICE Therapeutics for $48/share

  • Chair Powell will provide testimony and may face tough questions from Congress this week about possible further tightening

  • Pain trade/FOMO supported by nearly $40B of inflows to US equity funds in last three weeks, the best stretch since last October.

  • Google in early talks with suppliers to produce some Pixel phones in India


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(news taken from Reuters, FT, Bloomberg; Calendars from Benzinga Pro)


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