Breakfast Bites - Pres Biden withdraws and China Cuts Rates

Rise and shine everyone.

Big things happening before the market opens today.

Firstly, President Biden withdraws from the race and endorses VP Kamala Harris as the candidate for the Democratic Party. We are yet to get a confirmed nomination but, it’s looking more and more likely that she will be the choice for the Democrats.

So far it’s not looking like the Trump Trade should be over here, and the likelihood of a Red sweep continues to remain high, although some early trading suggests a bit of an unwind.

In other major news, we saw China unexpectedly cut their key lending rates by 10bps. The Loan Prime Rate is the main benchmark rate for households and corporates. The 1-year LPR was cut to 3.35% while the 5-year LPR was cut to 3.85%. Most analysts have been expecting this for the entire first of the year, and just when we almost gave up, they went ahead and slashed the rates to historic lows.

Asian markets, other than Hong Kong, all closed lower ahead of key earnings. US Equity Futures are high but the Russell 2000 is lagging. Megacap tech is higher in the pre-market. Bond yields are showing mixed results as the yield curve flattens and the US dollar weakens. Commodities are also mixed, with agricultural goods trending higher while energy and metals are lower.

Today is a light macro day but, we start the second busiest earnings week of the season with almost 20% of the companies reporting.

Chart of the Day

Gold: We saw bit of a reversal after reaching all time highs. But the price now sits around the 2400 level coming into today, and close to longer term trendline. We could very well see a short term bounce from this level. However, a break below this could see prices somewhat lower, looking for liquidity before the next leg up.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)