【True Zoom Finance】April 19 Market Morning Brief: Fed policymakers unanimously agree 'no rush' to cut rates; TSMC lowers chip market outlook for this year
"TSMC (TSM.US) has lowered its growth forecast for the chip market and foundry industry this year. President C.C. Wei stated that overall economic and geopolitical uncertainties may affect consumer confidence and end-market demand. TSMC predicts its revenue will grow by at least 20% this year, with strong demand for AI chips from customers."
Overnight Highlights
l New York Fed President and other officials delivered hawkish remarks and remained open to rate hikes. Traders further reduced bets on rate cuts, leading to the longest losing streak for U.S. stocks in nearly six months. The S&P 500 recorded five consecutive declines, while U.S. Treasury yields hovered near their highest levels since November. The dollar index rose, the yen continued to weaken, and gold prices climbed. Oil prices remained near three-week lows as investors weighed mixed U.S. economic data, sanctions on Venezuela and Iran, and easing tensions in the Middle East. $Hang Seng Index(00HSI.HK)
International News
l New York Fed President John Williams said there is no rush to cut rates, and economic data will determine the timing. He added that rate hikes are not his baseline expectation but remain possible if data supports such a move to achieve the Fed's inflation target.
l Atlanta Fed President predicted that rate cuts are unlikely before the end of the year and remains open to hikes. Minneapolis Fed President Neel Kashkari stated the Fed needs more confidence in inflation cooling before cutting rates, potentially delaying cuts beyond 2024.
l JP Morgan President Daniel Pinto suggested the Fed may not cut rates at all this year due to persistent inflation, warning that premature cuts could lead to painful outcomes like a recession.
l U.S. initial jobless claims remained low last week, consistent with a healthy labor market. Claims held at 212,000 for the week ending April 13, below the median estimate of 215,000, while continuing claims were steady at 1.81 million.
l ECB Governing Council member Robert Holzmann noted that if the Fed delays easing due to high U.S. inflation, the ECB's room to maneuver would be limited.
l The IMF urged Asian central banks to focus on domestic inflation and avoid over-aligning policy decisions with expected Fed actions.
l Bank of Japan Governor Kazuo Ueda signaled potential further rate hikes if yen weakness significantly boosts domestic inflation. Finance Minister Shunichi Suzuki noted the U.S.-Japan rate gap is just one factor pressuring the yen, which hovers near a 34-year low against the dollar.
l Vanguard warned the U.S. Treasury market is nearing levels that could trigger large-scale sell-offs, with the 10-year yield potentially revisiting 5%.
l U.S. money market fund assets saw their largest weekly drop since 2008, with $112 billion outflows as institutional funds withdrew ahead of tax day. Total assets fell from $6.08 trillion to $5.97 trillion.
l The average 30-year U.S. mortgage rate rose to 7.1%, up from 6.88%. Redfin Corp reported record-high median monthly housing costs due to rising borrowing costs and home prices, while existing-home sales fell 4.3% in March.
Greater China News
l China's central bank pledged tighter monitoring of "funds circulating idly" and signaled slower growth in broad money supply, indicating reluctance to expand monetary stimulus aggressively.
l PBOC Deputy Governor Zhu Hexin affirmed China's commitment to stabilizing the yuan, vowing to prevent excessive exchange-rate fluctuations.
l Morgan Stanley argued the U.S. dollar's reserve currency dominance will persist, as alternatives like the yuan lack reliability.
l $Taiwan Semiconductor(TSM.US) cut its 2024 growth forecasts for the chip market and foundry industry, citing economic and geopolitical uncertainties. The company still expects at least 20% revenue growth, driven by robust AI chip demand.
l U.S. lawmakers urged the Pentagon to ban internet-connected vehicles with Chinese technology from military bases, following a Biden administration security review.
l Under U.S. pressure, Mexico will deny Chinese automakers incentives like cheap public land or tax breaks for EV production, Reuters reported.
l $XIAOMI-W(01810.HK) CEO Lei Jun said Xiaomi's EV sales are 3-5 times higher than projected, with initial SU7 Founder Edition deliveries completed in many cities and standard versions now available in Beijing and Shenzhen.
Commodities & FX
l Iran warned it may reconsider nuclear policy if Israel threatens its atomic facilities. Goldman Sachs estimates oil prices include a $5-$10 geopolitical premium but could fall if tensions don't escalate further.
Earnings & Data Watch
l Germany March PPI MoM (est: 0.1%, prev: -0.4%)
l UK March Retail Sales MoM (est: 0.3%, prev: 0.0%)
Source: Goldhorse Capital Extramile
Author: Terry Chow
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