Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
You can access both of our platforms from a single Saxo account.
Morning Brew September 9 2022
Erik Schafhauser
Senior Relationship Manager
Summary: Markets cautiously optimistic after Powell and ECB
Good Morning
Yesterday was quite a day with large swings on the ECB and Jerome Powell's speech. In the end equities ended higher and the USD gave up ground on hawkish tones from both and a largest ever rate hike by the ECB.
The European Central Bank raised its key interest rates by an unprecedented 75 basis points indicated further hikes, prioritizing the fight against inflation even as the bloc's economy is heading for a likely winter recession.
With inflation at 50 Year high, policymakers are worried that rapid price increases could become entrenched and lead to secondary effects. The decision for the for a 75-basis point hike was unanimous. The interesting part of the ECBs decision may well be that there were no measures taken to reduce liquidity. This can indicate the ECB is looking to support the economies while appearing to fight inflation.
The Federal Reserve is "strongly committed" to controlling inflation but there remains hope it can be done without the "very high social costs" involved in prior inflation fights, Jerome Powell reiterated, making another 75 bps hike more probable, it is now traded at 85%.
All three US Indexes closed 0.6% higher with banks in the lead. The Dax swung widely yesterday, from 13045 to 12690 (in the Future) to currently trade at 12900.
The USD gave up ground over night despite Powell, with not fully clear reasoning, the USD Index fell to 109, EURUSD rose to 1.0060, GBPUSD 1.1580 and USDJPY 143.10.
The BoJ intervened verbally stating rapid moves of the JPY were undesirable, pushing USDJPY from 144.12 to 142.48. The 1998 dollar/yen high at 147.66 looms in the mind of many “old FX traders.
Gold and Silver could rise to 1718 and 18.75. Bitcoin can retake the 20k to trade at 20530, the upcoming Ethereum merge raising interest in crypto again.
Chinas Consumer Price Index rose less than expected at 2.5% vs 2.8% expected.
Italy Plans To Spend At Least 6.2 Billion Euros To Help Firms And Families Cope With Surging Energy Costs
Britain will cap consumer energy bills for two years and funnel billions to prop up power companies, the day in Britain will be dominated by the death of Queen Elisabeth II yesterday, King Charles will hold a speech later today.
The economic calendar is fairly empty today, the market will focus on the EU Energy summit and try to digest the recent moves and comments. The US CPI as well as the large Q* expiry next week will be the key topics coming up.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...