Market Watch June 2024

Eurozone and US PMIs strong, US Consumer confidence surprisingly rises

The US consumer is back on track! Contrary to expectations, the latest Consumer Confidence Index has risen instead of falling. As a result, Treasury yields are climbing further, with the 10-year yield around 4.6% and the 2-year yield nearing 5%. This makes the US yield curve slightly more inverted. So far, the long-indicated recession is not materializing in the US.

Based on the latest US PMI data, it is very unlikely that we will see a US recession over the coming 12 months. On the contrary, the US economy is gaining momentum. Furthermore, along with a larger US broker, we expect that the US corporate sector will gain 1-1.5% in productivity each year over the coming years. This will further support the economy and fuel the AI-driven momentum rally in the stock market.

Additionally, the Eurozone economic recovery is gathering pace as new orders rise at the fastest rate in over a year. The Ifo expectation index for Germany also indicates that the economy will accelerate over the coming 6-12 months.

Despite the negative news regarding China-US trade policies and the newly imposed US tariffs on electric vehicles, there is a noticeable uptick in shipping activity from China to the US. Additionally, the Chinese government has initiated fiscal measures to stimulate the economy. Similar to the US, the Chinese consumer appears to be quite resilient.

Furthermore, the chip sector is receiving additional stimulus from the government to address the delivery halt of high-quality chips, primarily designed by Nvidia, to China. However, this move could potentially backfire, as it may inadvertently foster the development of new competitive rivals in China, initiated by the US.

The positive developments have significantly altered expectations regarding the number of central bank rate cuts and their timing. Currently, in the US, the possibility of 1-2 rate cuts is being considered, with the first anticipated step likely to occur in November.

The ECB is contemplating 2-3 rate cuts, with the initial cut expected in June. However, the next step might be delayed until fall due to the robust economy and inflationary pressures stemming from the job market.

Markets in 2024: Currencies, Commodities, Equity & Bond Indices

Strong global equity rally in May, but the air gets thinner and thinner


The Swiss Franc has experienced as expected a further depreciation against both the Euro and the US Dollar. The open question is will the SNB follow the expected ECB rate cut? If so a further deprecation must be expected.

The Euro has further depreciated against the USD, influenced by geopolitical tensions and the expected rate cut by the ECB in June.

The USD, as measured by the DXY, has mean-reverted and returned to levels seen in April, yet it has remained within a narrow trading range.


The S&P 500 has overcompensated its April pullback and reached alongside with the Nasdaq and the Dow Jones new record levels. The rally is mainly driven by AI related momentum stocks.

The US earnings season was strong, and the outlook for the rest of the year has improved. Projected earnings growth of more than 10% in 2024 and around 15% in 2025 is expected to bolster USA equities.

Globally, the acceleration of economic activity is expected to bolster stock markets. While Europe has already seen a rise, there is anticipation that emerging markets might finally catch up.

We must, however, add that a pullback can and might occur until the US election. Nevertheless, we believe that this rally will endure for a longer duration and could potentially evolve into an AI bubble over the coming years.

Fixed Income

The 10-year Treasury yield remains unchanged compared to one month ago, but we’ve observed a recent drop attributed to slightly negative news followed by strong PMIs and US consumer data. Consequently, this is expected to postpone the first Fed rate cut until fall.

Considering the very narrow US corporate spreads, we recommend purchasing high-quality bonds with a maturity range of 2-5 years. Alternatively, rather than opting for high yield, investors may choose to take on risk directly in equities.

Alternative Investments

Gold is trading at a level very similar to one month ago, but we witnessed a spike to USD 2450 per ounce, followed by a mean reversion to around USD 2350. Besides technical factors, higher US yields and fewer anticipated rate cuts are the main reasons for this retreat

The price of copper has surpassed the 10,000 threshold. We anticipate this rally to continue as more research is published, emphasizing the shortage of supply expected over the coming years.

Both oil futures prices are trading at levels similar to those of one and two months ago. However, we observed a drop of around 5%, followed by a rally back to the initial levels. Driven by the latest macro data, the oil price is expected to be well-supported and may continue to appreciate over the coming months.


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