Filter by Categories
Watch Series
The Great Game
Daily Post
Steno Signals
Free Content
Emerging Markets
Sentiment Nugget: Central Bank Divergence Into Year-End

Sentiment Nugget: Central Bank Divergence Into Year-End

Into year-end we have noted a number of key shifts in what Central Bank language is actually telling us from a quantitative point of view. We regularly track and update our measure of positivity/negativity of Bank language contained in statements, outlooks and speeches on a scale of -1 to +1 in our DataHub for premium subscribers. There you can access full histories and dig deeper into the underlying drivers. Note – our sentiment tracker is a moving average rolling over 10 instances of Bank communication. For each speech, statement, policy statement etc, we calculate sentiment via domain-specific language and terms used by policymakers. Data above 0 indicates more positive sentiment, whilst data below 0 indicates negative sentiment. Chart 1: An uplift in BoJ sentiment stands out – the most positive since April 2015 Net positive sentiment from the BoJ, between its statements, speeches and policy outlooks, is the strongest it has been since April 2015 on our measure at +0.14. That uplift is being led by consistent positivity in the policy statements, which have come in above the moving average since mid-2021, but acutely taken off into H2 of 2023. Of the three central banks we cover – all of which are directly comparable – the BoJ is, in relative terms, also far more positive. Chart 2: The ECB has also bounced off of the lows We also highlighted in our November update that ECB sentiment had reached its most negative point at any time on our measure (going back […]

To read the full article, sign up for a 14-day FREE trial of the Premium plan.

Something for your Espresso: Yuuuuuuuge week ahead!

Something for your Espresso: Central Bank Bonanza

It’s a big week in global central banking and both the Fed, Norges Bank, the Riksbank and the BoE will decide on rates this week. Some of the trends towards weakness/softness in European FX and rates seem a bit exhausted ahead of this week (confirmed by the market opening this morning), but with a few days of consolidation we may be back in a scenario that allows for renewed bets on weakness/softness from European central banks. Overall, we see a decent risk/reward in expecting European central banks to sound somewhat more balanced after the ECB made the pause the explicit base-case, while the Fed is likely not willing to accept a notion that a pause is a base case from here with the recent reacceleration of inflation numbers. Fed pricing hints of a roughly 40% chance of a hike in December, which is probably also the timing of the still intended rate hike from the dot plot in June. We expect Powell to solidify the expectations of that hike still being the modal outcome from the Fed. Chart 1: Fed fwd pricing BoE market pricing has been falling off a cliff lately with March-2024 peak SONIA pricing falling from 6.50% down to only 5.54%. We have earlier labeled UK rates pricing to be the biggest misallocation in global fixed income and we continue to lean that way given the weakness seen lately in services related gauges in the UK. We ought to remember that the smoking hot wage growth numbers […]

To read the full article, sign up for a 14-day FREE trial of the Premium plan.

5 Things That Could Wrongfoot Consensus in 2024

5 Things We Watch – Governor panel discussion, EU Fragmentation, Riksbank, EU Banks & The EM rate cycle

It’s Wednesday, and that calls for us to dissect 5 topics that we follow in Global Macro currently. What to expect from today’s panel discussion between governors? How is it going with the ongoing fragmentation of Europe? And will Riksbank hike 50bps like Norge’s bank? Find out here.

To read the full article, sign up for a 14-day FREE trial of the Basic, Premium or Crypto plan.


Sign up to receive free weekly
newsletters and macro nuggets

We don’t spam! Read our privacy policy for more info.