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Bill Gross says buy short-term US bills at discount!

The week started on a mixed note. Bank stress further eased with PacWest and Western Alliance, which were the two banks that were on the chopping block after the First Republic Bank got swallowed by JPM, rallied, but gave back most of earlier gains.

Federal Reserve’s (Fed) senior loan officer opinion survey came in worse than expected. The data showed that the banks who tightened credit conditions were higher than expected, around 46%, versus 44.8% expected.

On the political front, tensions regarding the US debt ceiling impasse remain high as US President Joe Biden meets congressional leaders today to discuss about a possibility to lift the debt ceiling to avoid a default which could hit the US as early as June 1st.

While suspense is killing everyone, Bill Gross, Pimco’s ex CIO says it’s a good idea to buy short term US papers at the current prices, as the debt ceiling discussion is ‘ridiculous, it always gets resolved’. Buying one, two-month treasury bills at a much higher rate than longer term papers is a good opportunity, according to him.

In FX, the US dollar outlook remains soft due to the bank stress and the debt ceiling impasse, which both increase the chances of slower growth and soften the Fed expectations.

In energy, American crude advanced past $73.50 per barrel yesterday, but slipped below the $73 level on worries that the Chinese recovery may not be as strong as predicted, and that slower global growth could further hit demand. Price advances into $75/76 will likely see strong resistance.

Watch the full episode to find out more!

Bill Gross says buy short-term US bills at discount! | MarketTalk: What’s up today? | Swissquote
Swissquote (in English)
Video news

Mixed bets amid strong US jobs, bank stress, debt impasse

Strong jobs data reversed expectation of a Federal Reserve (Fed) rate cut in July on Friday.

The US 2-year yield rebounded from last week’s lows, but the dollar index remained offered at session highs, on the unresolved US debt ceiling debate, and despite some relief on regional banks front.

US President Biden will meet some congressional leaders this week but will unlikely compromise on spending.

On the economic calendar, investors will focus on US CPI report, due this Wednesday, and Bank of England (BoE) rate decision, due Thursday.

Cable tests the ceiling of a long-term down-trending channel, as economists and markets can’t agree on what the Bank of England (BoE) should do, or what it WILL do.

Economists bet for one more rate hike from the BoE and pause, whereas the interest rate markets price in a 25bp hike this Thursday, followed by one, and possibly two more rate hikes until September.

In equities, the S&P500 closed with a 1.85% gain on Friday, as US regional banks closed a turbulent week with a decent rally. PacWest shares rallied more than 80%, Western Alliance jumped nearly 50% and SPDR’s regional bank index was up by more than 6% on Friday.

US crude jumped nearly 4% on Friday, along with the US equities, but upside potential in US crude will likely remain capped near $75/76, region that shelters the 50 and 100-DMA.

Watch the full episode to find out more!

Mixed bets amid strong US jobs, bank stress, debt impasse | MarketTalk: What’s up today?| Swissquote
Swissquote (in English)