US Treasuries are in focus this Monday morning as the 10-year yield edged past 2.95% to take aim at the psychologically important 3% level. The advance brings it to its highest level since January, notes Althea Spinozzi from Saxo's fixed income income trading desk.
"The market seems quite confused and there are two reasons for this: one, investors know that Treasuries are meant to weaken and two, [we are seeing the] deterioration of the US' safe-haven status."
"Higher US yields are a pretty severe short-term headwind for equities globally as it tightens financial conditions and sweetens alternatives," says Peter Garnry, Saxo's head of equity strategy. Meanwhile, investors are rethinking their exposure to Chinese tech following the export ban on ZTE and the dim outlook from TSMC, Garnry adds.
This is a bumper week for earnings and some of the biggest bluechips are reporting, including Alphabet, Coca-Cola, 3M, Facebook, Intel, Amazon, and Microsoft.
Finally today, in commodities, crude oil is trading steadily for a third day with a rising US rig count (up 5 to 820, a three-year high) being offset by geopolitical risk related to Iran, Venezuela and a pipeline fire in Libya, says Ole Hansen, Saxo's head of commodity strategy.
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.