Symax Fintech Daily Market Insights 05.01.24

The options market was abuzz following the emergence of a large bearish wager that Friday’s US jobs report will trigger the biggest jump in benchmark yields in more than nine months. The trade targets a surge to as high as 4.15% by the end of today.

Asian stocks and US futures were mixed ahead of the release of nonfarm payrolls, which may have climbed by 175,000 last month, consensus shows. BB

US companies ramped up hiring in December and wage gains continued to ease, consistent with an outlook for sustained economic growth and diminishing inflation. Private payrolls increased 164,000 last month, the most since August, according to figures from the ADP Research Institute. Wage growth that’s topping inflation while slowly cooling can support US consumer spending, a potentially bullish sign for equities across the board, although the S&P 500 continued to slip Thursday, ending lower for a fourth-straight day while Treasury rates moved higher amid a pullback in rate-cut bets. Investor attention will now turn to the government’s monthly jobs report due Friday. BB

Apple shares slipped as growing concerns over iPhone sales triggered a second analyst downgrade this week. Piper Sandler’s Harsh Kumar cut his rating, citing a weak macro environment in China that will dampen demand for iPhones, and the stock is now down more than 8% from its peak in December.  Kumar, who had held a bullish view since March 2020 lowered his recommendation for Apple to neutral from overweight. Of course, it’s  not just Apple: the technology sector more broadly is struggling to maintain momentum as investors book profits on one of last year’s winningest bets. The Nasdaq 100 notched a fifth straight decline,  its longest stretch of down days since December 2022.  BB

Carrefour pulled PepsiCo snacks and soft drinks off of store shelves in France, replacing them with a note saying the brand’s price hikes are “unacceptable.” It’s the latest flare-up in a long-running clash between retailers and food companies over the cost of popular items. BB

Fewer shoppers visited UK stores in the holiday period, the British Retail Consortium and Sensormatic IQ said. Footfall declined 5.8% year on year in England and Wales in the final five weeks of 2023, and was down 2.2% in Scotland. Wet weather may have contributed to the poor turnout. BB

One would expect the outlook for the dollar to be overwhelmingly negative this year, given pricing for rate reductions that exceed even the Fed’s own projections. Instead, firms including Deutsche Bank, AXA Investment Managers and Brandywine Global expect resilience and cite weaker global growth among factors that would support the US currency.

AXA Investment Managers single out the euro and pound, noting that both currencies are “not cheap, with weaker fundamentals and are likely to depreciate.” Meanwhile, Brandywine Global notes that central banks in Europe look poised to cut rates before the Fed, which would weigh on their currencies relative to the greenback.

A scenario where the dollar outperforms its peers even with ample Fed rate cuts priced in would be consistent with the top end of the dollar smile, a framework created by Eurizon SLJ Capital’s Stephen Jen and Fatih Yilmaz. That posits that the greenback will climb due to haven demand if the US economy outpaces the rest of the world.

While we’re certainly not there yet, any indication that things are headed in that direction should ring alarm bells for markets and economies across the globe. BB

A quagmire of European rules has put €82 billion of new housing in jeopardy.

• As housing shortagescause rents to surge in major European cities, investors are queueing up to pour cash into new homes, only to be thwarted by a bewildering array of hurdles—from rent controls to planning bottlenecks.
• The hurdlesvary across Europe and will require sustained government action to ease pressures on strapped households BB

About one in six new cars registered in the UK last year was a battery-electric hybrid, representing a flatlining in EV’s market share growth from the year before, the Society of Motor Manufacturers and Traders said. The trade group called for lower taxes on EVs for a limited period. BB

Huawei’s newest laptop runs on a 5-nanometer chip made by TSMC, research firm TechInsights said. This counters speculation that Huawei’s domestic partner, Semiconductor Manufacturing International, may have achieved a major leap forward in fabrication technique. BB

Citadel Securities has made a series of senior hires in Paris and London, building out its European government bond and sterling rates businesses. The market-making business founded by Ken Griffin has been growing in fixed income beyond its core US Treasuries business. Its new Paris hires underline the city’s attractiveness as a European trading hub in the wake of Brexit. Among those hired are Stefan Boyce from Bank of America and Laury Zhou from BNP Paribas, according to people familiar with the matter. BB

Credit markets are also having a tough start to 2024, with the combined value of the high-grade and junk markets having shrunk by about $240 billion to $13.6 trillion, the lowest since Dec. 13 according to data compiled by Bloomberg. Spreads in credit-default swap indexes, which act as a barometer of credit risk, have risen back to levels last seen in the first half of December. And that’s even before investors have absorbed the usual flood of supply of new corporate bonds that’s typical in January BB