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Playlist: NY Coffee July 2019

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2:39
Strategies in commodities — #SaxoStrats
Kay Van-Petersen
24 January 2017 at 10:52 GMT
1:33
Arabica ready to push coffee market higher: Hansen
Ole Hansen
07 September 2016 at 13:43 GMT
2:14
Hansen: Why I’m sweet on sugar and coffee
Ole Hansen
24 February 2016 at 11:29 GMT
3:33
Wild weather whipping up food price storm
Ole Hansen
09 November 2015 at 8:31 GMT
2:55
Hansen: Sugar tasting sweeter while coffee gets a break
Ole Hansen
08 October 2015 at 8:06 GMT
2:54
Hansen: Metals get a needed boost from China
Ole Hansen
01 October 2015 at 10:22 GMT
3:58
Hansen: Metals caught up in battle of the engines
Ole Hansen
25 September 2015 at 11:36 GMT
3:55
Hansen: Commodities attempt a comeback after China chaos
Ole Hansen
14 August 2015 at 12:19 GMT
1:28
Hansen: Is coffee brewing for a break?
Ole Hansen
17 March 2015 at 9:56 GMT
2:54
Nestle to hit sweet spot but will Swiss franc leave sour taste?
Peter Garnry
18 February 2015 at 11:31 GMT
Video / 25 April 2018 at 8:22 GMT

From the Floor: 'Stay cautious' on US equities – #SaxoStrats

#SaxoStrats
   • US stocks close Tuesday down 1.4%, tech leads decline
   • ECB bond purchases 50% lower in April
   • Fixed income volatility relatively muted on 10-year US yield hitting 3%
   • Crude oil retreats as French president Macron calls for new Iran deal
   • Coffee prices soar as technical outlook improves

SaxoStrats
By Michael McKenna

US equities endured a dramatic Tuesday session, falling 1.4% overall with the decline led by the technology sector. In Saxo Bank head of equity strategy Peter Garnry's view, more turmoil could be ahead as the US 10-year Treasury yield remains north of the psychologically key 3% level.

"The ostensible catalyst for Tuesday's decline was the Caterpillar earnings release, in which the firm's CEO states that the first quarter of 2018 might represent a high-water mark for the company, but I think this story is too simple," Garnry says.

While Caterpillar shares fell 6.2% on the news, US equity prices reflect a complex landscape of macro and cross-asset factors, with Garnry unwilling to link Tuesday's declines to a single factor, particularly in light of elevated yields.

In Europe, Garnry sees stocks heading lower on mixed earnings following Credit Suisse trending positive on the company's shift to wealth management while Nordea struggles to hit its 2018 targets. Another event in focus this week is the European Central Bank's April 26 press conference in light of data showing ECB corporate bond purchases down 50% in April, leading investors to question whether a "stealth taper" is already in effect.

The twin questions of a hawkish ECB and a potential selloff in risk assets on elevated bond yields are very much active in the fixed income space as well, although Saxo bonds specialist Althea Spinozzi notes that fixed income volatility did not notably pick up in the wake of the surge past 3% in 10-year US yields.

Saxo Bank head of commodity strategy Ole Hansen reports that oil prices headed lower from the recent peak on French president Emmanuel Macron's visit to Washington, where he called for a new Iranian nuclear deal. Geopolitical pressures, however, remain elevated in Hansen's view as the US and major European powers move to isolate and/or oppose Iran and Russia.

"The key levels here are $66.60/barrel in WTI and $72.12 in Brent, representing the 38.2% retracement of the April rally".

In gold, Hansen reports that prices remain tied to the 2018 average of $1,332/oz although downside pressures risk a move to $1,320 and potentially beyond. Finally, Hansen reports that coffee prices have spiked on an improved technical outlook and in the wake of speculative funds overselling an expected 5 million bag surplus by a factor of four.

Michael McKenna is head of editorial at Saxo Bank

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