Fixed income market: the week ahead Fixed income market: the week ahead Fixed income market: the week ahead

Fixed income market: the week ahead

Picture of Althea Spinozzi
Althea Spinozzi

Head of Fixed Income Strategy

Summary:  Geopolitical tensions and central banks' monetary policies remain at the forefront of market concerns. Fears of a possible war in Ukraine will compress long-term yields while lifting the short part of the yield curve as the market considers higher energy prices. Strong Eurozone PMI readings and an elevated US PCE Index might also contribute to advance rate hike expectations. Uncertainty in bond markets will undoubtedly remain elevated, contributing to volatility and a steady bear-flattening of the US and UK yield curve. In Europe, the focus will be on ECB official speeches and the possibility of early stimulus termination.

Uncertainty in bond markets will remain high.

Another week starts with the market focusing on a possible escalation of tensions in Ukraine. The situation is unclear, with reports showing that Russia is ready to invade Ukraine any moment on one side and Emmanuel Macron brokering a summit between Vladimir Putin and Joe Biden on the other. What is certain is that volatility is likely to maintain elevated until Russian troops pull back from the Ukrainian border. Until then, we can expect the equity market to remain vulnerable and US Treasuries and Gold to serve as safe-haven.

Yet, geopolitical tensions are not alone in moving the US Treasury market. Expectations of a more aggressive Federal Reserve continue to adjust, causing the front part of the yield curve to advance or pare back interest rate hikes. While at the beginning of last week, markets were pricing a 50bps rate hike next month, by Friday, expectations dropped to 25bps. Fed official speeches contribute to uncertainty in the rates market, as they do not give explicit direction regarding the central bank's intentions. As money market guru Zoltan Pozsar highlighted in recent research, uncertainty could benefit the Federal Reserve's purpose to tighten the economy more efficiently to fight inflationary pressures.

 He explains that a way to do so is to spark a market crash, which causes much labor tightness.

Even if the Fed does not want to cause a selloff voluntarily, it might be nearly impossible for it to avoid a tantrum. On the one hand, if it does not do enough to curb inflation, it could spark an inflation tantrum. On the other, if it is too aggressive, a taper tantrum might ensue.

This week, investors will need to focus on the Personal Consumption Expenditure Index released on Friday, which is expected to come out at 6%. An overshoot might revive more aggressive interest rate hikes expectations. Before Friday, the focus will be on the 2-year, 5-year. 7-year US Treasury auction starting tomorrow and on Federal Reserve speakers.

Source: Bloomberg and Saxo Group.

Investors will focus on central banks' intentions in Europe and the UK

In Europe, the focus is on the PMI February data released this morning, which shows the recovery is underway after the winter lockdowns. It might encourage central banks to unwind pandemic stimulus faster than expected. Therefore, the focus will be on central bank officials and their speeches this week. In the UK, Bailey will speak in front of the Parliament's Treasury Committee to answer questions about the economy and inflation. In the eurozone, de Cos, Guindos, Schnabel, and Panetta speak throughout the week.

Although it's inevitable for the ECB to assume a less accommodative stance with the BOE and Federal Reserve hiking interest rate aggressively, we believe that the BTPS-Bund spread is a good indicator of how far the ECB can go. So far, the BTP-Bund spread remains below 200bps, leaving the central bank without preoccupations. However, as it widens above this level, we expect ECB officials to become more cautious.

Geopolitical tensions in Ukraine will also be a focus in the eurozone. Rising tensions could see energy prices soaring, contributing to even more aggressive monetary policies. 

Source: Bloomberg and Saxo Group.

Economic calendar

Monday, February the 21st

  • United Kingdom: Rightmove House Price Index (Feb), Markit Manufacturing PMI, Services PMI
  • Japan: Jibun Bank Manufacturing PMI (Feb)
  • China: PBoC Interest Rate Decision, House Price Index (Jan)
  • Germany: Producer Price Index (Jan), Markit Manufacturing PMI, Services PMI and PMI Composite (Feb) Prel, German Buba Monthly Report
  • France: Markit Manufacturing PMI, Services PMI and PMI Composite (Feb) Prel
  • Eurozone: Markit Manufacturing PMI, Services PMI and PMI Composite (Feb) Prel
  • United States: President' Day

Tuesday, February the 22nd

  • New Zealand: Credit Card Spending (Jan)
  • Italy: Consumer Price Index (Jan)
  • Germany: IFO – Business Climate (Feb), IFO – Current Assessment (Feb), IFO – Expectations (Feb)
  • United Kingdom: BOE’s Ramsden speech
  • United States: Redbook Index, Housing Price Index (Dec), S&P/Case-Shiller Home Price Indices (Dec), Markit Manufacturing PMI, Services PMI and PMI Composite (Feb) Prel, Consumer Confidence (Feb), Markit Manufacturing PMI, Services PMI and PMI Composite (Feb) Prel, 3-month Bill Auction, 52-Week Bill Auction, 6-month Bill Auction, 2-year Note Auction

Wednesday, February the 23rd

  • Australia: Wage Price Index (Q4)
  • New Zealand: RBNZ Interest Rate Decision and Press Conference
  • Germany: Gfk Consumer Confidence Survey (Mar)
  • France: Business Climate in Manufacturing (Feb)
  • Switzerland: ZEW Survey – Expectations (Feb)
  • Eurozone: HICP (Jan)
  • United Kingdom: BOE Monetary Policy Report Hearings
  • United States: MBA Mortgage Applications, 5-year Note Auction

Thursday, February the 24th

  • Australia: Private Capital Expenditure (Q4)
  • Switzerland: Employment Level (Q4)
  • France: Consumer Confidence (Feb)
  • Italy: Industrial Sales (Dec)
  • United States: Chicago Fed National Activity Index (Jan), Core Personal Consumption Expenditures (Q4) Prel, New Home Sales Change (Jan), 7-year Note Auction

Friday, February the 25th

  • New Zealand: Retail Sales (Q4)
  • Japan: Tokyo Consumer Price Index (Feb), Tokyo CPI ex Food, Energy (Feb), Foreign Bond Investment, Foreign Investment in Japan Stocks
  • Germany: Gross Domestic Product (Q4), Import Price Index (Q4)
  • France: Consumer Price Index (Feb) Prel, Consumer Spending (Jan), Gross Domestic Product (Q4)
  • Italy: Business Confidence (Feb), Consumer Confidence (Feb)
  • Eurozone: M3 Money Supply (Jan), Private Loans (Jan), Business Climate (Feb), Consumer Confidence (Feb)
  • United States: Core Personal Consumption Expenditures (Jan), Durable Goods Orders (Jan), Personal Income (Jan), Personal Spending (Jan), Michigan Consumer Sentiment (Feb), Pending Home Sales (Jan).

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • 350x200 peter

    Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • 350x200 althea

    Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • 350x200 peter

    Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • 350x200 charu (1)

    FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • 350x200 ole

    Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.