Deutsche Bank strategists said that as the “de-dollarization” theme gains increasing attention, investors will shift more and more cash from US investment-grade bonds to Europe.
The team led by Cem Keltek expects that 25% of the reinvestment funds from US investment-grade credit (i.e. the money investors pay in coupon payments and bond redemptions) will flow to other markets. In a report, strategists wrote that this amounts to an average of $9.3 billion per month, and the European credit market is likely to absorb about half of that.
Strategists say that as investors become increasingly concerned about the Trump administration’s greater focus on domestic affairs and the expanding US deficit, they will continue to reduce their exposure to the US dollar and US assets.
They expect that investment-grade bonds will be most affected, as this sector has a larger international investor base compared with high-yield bonds.
Keltek and its team stated that although this shift will not alter the entire US dollar credit market, it should be a positive factor for euro corporate bonds.
The report said that investment-grade bonds denominated in euros saw an average monthly inflow of 3.9 billion euros ($4.6 billion), equivalent to 25% of the average monthly net supply since 2020.
Technical analysis:
Gold: Yesterday, gold fluctuated upward, but before tonight’s non-farm payroll data release, the price won’t have a real take-off. Previously, the ADP data was a surprise -33,000; if tonight’s non-farm payroll performance also shows an unexpected deterioration, then after the fluctuation, the gold price will continue to rebound towards 3400. In terms of operation, continue to pay attention to the long signal near 3328 and 3300. For detailed positions, please consult the plugin.
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The Nasdaq: The overnight price continued to show a rebound after a decline. However, before the July 9th tariff deadline, it is very risky to take a long-term bullish position actively. We will continue to maintain the strategy of buying at the low point after the intraday volatility and the liquidity sweep. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Yesterday, the price broke through 66.50 and then pulled back for the second time before starting to rise above 68. The operation we previously reminded through the blue plugin was a complete success. Today, we should actively reduce positions and set protective stops, waiting for new market guidance after the non-farm payroll. For detailed positions, please consult the plugin.
(Crude oil 15-minute chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note “666” in the message.
Today’s key financial data and events to focus on:
16:00 Eurozone June Markit Services Purchasing Managers’ Index Final Reading
20:30 U.S. Seasonally Adjusted Initial Jobless Claims (thousands) for Last Week
20:30 U.S. Non-Farm Payrolls Change for June (Seasonally Adjusted, in Thousands)
22:00 US June ISM Non-Manufacturing Purchasing Managers’ Index
