Watch Series

We see reasons to bet on a reversion of the latest weakness across risk assets and have decided to buy the dip.

Option-implied probabilities derived from DEC2024 SOFR options show interesting dynamics in Fixed Income sentiment, where rates traders now almost see 0 cuts or even hikes as the most favored outcome by December this year. Read how positioning data has evolved over the last week here.

The rise in energy prices, the USD wreckingball and the higher-for-longer narrative has finally reached equities, which seems to be taking a bit of a breather here. We take a look at movements in energy and commodity markets once again.

While precious metals could provide further gains if a USDCNY devaluation comes into play, we book some profits in the turmoil.

It is tricky to time the drones flying back and forth in the Middle East, which is why we are sitting on our hands. We see an increasing latent potential in risk assets paired with higher rates when the dust settles.

The Norwegian rate path is likely to look dovish in June in contrast to expectations. Here is our “cheat sheet” to assess the NOK rate path daily. At the same time, NOK/SEK remains too cheap as the global reflation narrative is positive for NOK versus SEK.

Volatility was more or less muted in the beginning of the year, but the cocktail of less dovish statements from Fed officials, strong economic data and the USD wreckingball has sent volatility in the other direction. Has it moved positioning? Not really, but that doesn’t mean that it’s not important.

Despite initial succes, our long Asia bet did not turn out in our favor

The USD wreckingball has overshadowed the bullish technicalities in the long NOK bet, and we were stopped out today.

King USD is back and portfolio rebalancing flows will likely emphasize the move into next week. We are at crossroads in FX markets as energy commodities are starting to impact price action.

Exiting some suration trades and moving on in the reflation trades

US core inflation printed only a few bps away from our forecasts in another report showing the firm price pressures in the US economy. Inflation is accelerating right when Powell and his ilk want to start cutting rates.

The money market working group in Norway has presented its early results. Here are the main take-aways for the NOK and NIBOR.

The macro regime model has gone from ALL-IN on risk to a much more moderate scenario as the liquidity tide is turning. Find the allocation thoughts here.

Manufacturing sensitive assets have generally been outperforming broad-market benchmarks over the past weeks, despite some signs that the manufacturing boom could be short-lived. Some markets have started to agree, lowering exposure in both commodities and cyclical FX.

With the rebound in manufacturing coming through, our energy bet has enjoyed the mix of greater demand and geopolitical tensions.

Solid numbers out of China over Easter solidifies the commodity case including in Energy. If China is actually moving, commodities remain too cheap.