James Brodie
Head of Learning & Development, Flux
Strong US Data, Commodity Volatility, Indian Stock Market
Strong US data lifts yields & USD; rate-cut hopes mispriced. Commodities volatile. RBA hike boosts AUD. India-US trade deal sparks rally.
Very strong U.S. data sends short end yields and the dollar higher.
The ISM's US Manufacturing index jumps from 47.9 to 52.6, the fastest expansion in 4 years. New orders jump to their best reading in 4 years. Prices tick higher third consecutive month. Employment highest in a year. The OIS pricing 46bp of U.S. rate cuts this year is mispriced with continued strong data. Likewise, the dollar is oversold considering the data, EURUSD should trade much lower, the dollar debasement story has it way too oversold. (Chart 1, EURUSD vs 2yr int rate differentials)
Commodity volatility continues, natural gas close down -21% yesterday, gold +6% today, silver +10%. Precious metals will remain whippy as positions unwind in thin markets.
Trump announces $12,000,000,000.00 "Strategic Mineral Stockpile" to counter China. Critical metals shares jump 7.8%, USA rare earth rises 7.1%
Aussie dollar and yields jump after the RBA 25bp hike (expected) as the central bank revised higher its near-term growth & inflation forecasts & revised lower their unemployment forecasts. Trimmed mean CPI seen jumping to 3.7% in Q2. Again, the AUDUSD has had a huge run with the commodity boom and strong data but is it overshooting due to excess dollar weakness. Chart here shows today’s hawkish RBA saved the currency from a larger decline. (Chart 2, AUDUSD vs Bloomberg commodity index, Bloomberg)
U.S. inflation pickle. While Trueflation sees U.S. inflation below 1% The Adobe Digital Price Index, which covers prices of items sold online, rose in January by the most in its 12-year history. (Chart 3, UBS, ADOBE)
India’s stock market surges over +5% after the US and India reach a trade deal. The deal includes: India to stop buying Russian oil. India to reduce tariffs on US to 0%. US tariffs on India lowered to 18%. India to buy $500B in US products.
U.S. Government will delay the release of the January jobs report, blames the partial government shutdown.
BOSTIC: I DIDN'T PROJECT ANY RATE CUTS IN 2026
Data today: US JOLTS job openings
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