The FOMC will likely decide to raise the Fed Funds target range by 25bps and regret it soon thereafter on Wednesday. Everything but the banking sector stress screams higher interest rates, why the Fed will attempt to regain control of the narrative.
Something for your Espresso: The rates roller-coaster
Up, down, up, down. Front-end rates are schizophrenic these days and the hiking cycle is close to being over consequently. The banking crisis “complicates communication”.
Fixed Income Watch: Zooming in on the curve steepening
What happens when the curve steepens? It is bad good news for commodities, mixed news for equities and often temporarily good news for the USD except against JPY. Here is why..
Something for your Espresso: RBA “inflation has peaked” .. over to you JPow
RBA echoed other major central banks by clearly stating that inflation has peaked. This is a potential interesting harbinger ahead of Powell’s appearance in the US congress
Positioning Watch: Does positioning and fund flows unfog the ambiguity ruling markets?
In this somewhat unusual edition of the ‘Positioning Watch’ we’ll take a look at relevant and readily available data to assess whether we are leaning with or against the wind. Maybe this can provide further insight into the ambiguity which we have experienced in markets lately.
5 things we watch: Higher(er) for longer(er), the consumer, core price pressures, energy prices and cyclicals
If this truly is a rebound in activity with consumption back in the service sector, then there is no reason to sell equities. This is the big schism currently. Why sell both fixed income and equities if the economy is doing better? Current market trends are not sustainable. Something will HAVE to give.
The Dollar O’ Meter #1 – 5 ways to gauge the USD outlook
The importance of the dollar and its influence on almost any given asset will come to nobody’s surprise, especially after its tear in 2022, which was like a wrecking ball, wreaking havoc in and around the financial system. Therefore we are launching the Dollar O’ Meter to track the USD versus peers.
Real Estate Watch – Which markets will be worst off in 2023?
While liquid markets are still trying to make up their minds on whether to rise from the ashes of H2 2022 or continue the downward trajectory, I think it is due time we put the real estate markets under the scrutinous loop once more.
Bond Watch – Kuroda the rug-puller.. What is priced in for BoJ?
It is a BIG week in Japanese central bank history with widespread speculation of another increase to the trading range of 10yr JGBs in the yield curve control program. More than 35 bps are priced in, but will BoJ fail to deliver?