The very mechanical rate path setup of Norges Bank allows us to track the rate path live, and in sharp contrast to elsewhere, it looks like we are ripe for another hawkish revision of the path in September.
The highly systematic rate path setup of Norges Bank allows us to track the rate path live. In sharp contrast to other regions, it appears that we are poised for another hawkish revision of the path in September.
We are starting to see some compelling risk/rewards in betting on higher interest rates again, not least in Europe. We will get news from the US Service sector today setting the scene for the nationwide PMIs later this month.
The Trump trade is currently gaining traction, but for how long? There is still a long way to November and Biden remains in power for now. Retail Sales numbers from the US will be interesting today.
The French election risks leave Europe uninvestable from an equity perspective for now, which leaves opportunities ahead in USD markets. We continue to see strong performance in USD liquidity sensitive trades paired with softness in commodities.
If we are indeed experiencing a slowdown, it is not the typical one characterized by clear disinflation. The job report from the UK this morning reminds us that this is not an ordinary disinflationary slowdown.
EU politics have not been in the limelight for a long while but the parliamentary elections serve as a reminder that the EU project is fragile.. But is the result good or bad news for the EUR?
The full-blown underpinning of crypto by Donald Trump increases the probability of pro-cyclical fiscal- and monetary policy. Ensuring a floor under Crypto developments is of utmost relevance ahead of the election for Biden.
The GBP rates case is heating up again as both price plans- and wages are probably re-accelerating. Have markets completely mispriced the GBP rates case? It feels VERY reminiscent of late Q4 in the USD rates space.
The weakness in Asian FX is back and there are signs of a bottoming in Oil prices. Will the breathing space only last until next week’s CPI report? Meanwhile, the UK could prove to be a US case T+6.
Loads of USD key figures and we mostly lean in a hawkish direction. This could re-fuel strong flows into the USD and paid USD rates positions. Here is why in our “the week at a glance” publication.
High for longer vibes are once again impacting the EUR- and USD rates forward pricing. Is the market wrong to assume that equilibrium rates have to be lower than current spot levels? None of us knows, yet the market is hellbent on assuming it knows!
The mechanical adjustments are likely going to lead to a hawkish revision of the Norges Bank rate path tomorrow unless the subjective layer is used to send another signal. Risks tilted towards a hawkish take-away.
2024 has been better than feared for the USD, with hotter inflation data and better economic conditions paving the way for a stronger dollar, but what happens if the Fed cuts into sticky (or even rising) inflation?
Fed and ECB doves have ultimately killed the last market hopes of rate cuts during the spring from the big three central banks. What does it take to bring back the receiver case and the hopes of April/May cutting action?
Central bankers across the G10 space currently push back against market pricing. The market will likely eventually force their hands but chubby markets will be seen until.
As Lorie Logan hinted on Friday, the QT policy is running on fumes at the Fed, which leads us to ask the question; “How do we trade the QT taper and the subsequent more benign bank reserve bank case?”
This cycle has been notoriously tricky to navigate and there are odd signs of a cyclical pick-up in prices, wages and growth momentum, while certain recession indicators flash red. NFIB adds to the stagflationary confusion ahead of 2024.
We have made adjustments to our portfolio in preparation for the FOMC decision week,. Read our full take of the current macroeconomic landscape and see our new positions below
Another set of soft inflation numbers is set to be released from Europe in the coming weeks. We see both GBP and NOK inflation surprisingly low for November, while Swedish evidence is a tad more mixed.
Forward curves continue to trend lower in the US and Eurozone. The early adopters are leading the way, but perhaps Yellen’s spending spree will pose another challenge for her EM colleagues. We have taken a look at potential receiver/steepener cases in EM space.
It’s Wednesday and that means time for another 5 things we watch where we hone in on the things that we have been most interested in over the last week.
A “hump” may be on the way in the US economy but can the Fed steer clear of the gathering storm, while Chairman Powell has left the market in front of the monetary policy wheel? We remain skeptical
The soft inflation report from the US led to a substantial sell-off in the USD alongside weaker real rates, but is the tide turning for the USD? Our models are not convinced yet.
Markets have been all about lower yields and a weaker dollar over the past weeks, but positioning data remains pretty upbeat on the greenback.
After today’s soft inflation report from the US, we have a look at how markets are positioned at current junctures. Find out if you have your eggs in the right basket, and what consensus is currently.
We barely dare suggest it. But are bonds finally reap for entry on the long side? We are definitely getting there. Read our latest Portfolio Watch below
In the wake of this tragic situation that is still unfolding, investors are grappling with the need to understand and navigate the turmoil. See our main Positioning takeaways here
Rising manufacturing PMIs, sticky labour markets and re-accelerating services inflation in some categories. Have we all underestimated the risk of the Fed continuing on a path of higher(er) for longer again?
The EIA report indicates demand drop, Non-farm payroll signals a soft landing, and we’ve taken a spread trade loss. We’re in challenging waters. How should we position ourselves, and how are we doing? Read our weekly Portfolio review below
With the recent surge in oil prices due to supply constraints, we highlight the contrasting market impact in the US and the Eurozone. Our Monday Macro Nugget available below