Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
You can access both of our platforms from a single Saxo account.
JPY flexes again as JGB yields soar
John J. Hardy
Global Head of Macro Strategy
Summary: The JPY is powering up as US yields and European yields drop, while long Japanese yields spike. The USD bearish case is finding a bit more traction again, while AUD dips on a surprisingly dovish RBA.
Note: This is marketing material.
Latest market moves:
A quick one today. The Japanese yen is powering up after US treasury yields reversed lower after having broken above key levels. This by itself is a relief for JPY longs, but an interesting twist has been the weakness in long JGB’s overnight as a 20-year JGB auction saw the weakest bidding metrics since 2012 and the benchmark yield for 20-year JGB’s rose above 2.50% for the first time since 2000. The JPY strength was broad with most PY crosses pressing on local lows if not yet on technically interesting levels just yet. Interesting to note the contrast in the European bond markets this morning, where yields are pressing to new local lows on a very weak German PPI figure for April (-0.6% (!) MoM and -0.9% YoY vs. -0.3/-0.6% expected).
EURUSD teased higher through the 1.1266 resistance yesterday and to 1.1288 before dropping back to 1.120 and then rebounding back higher in late Asian and early European trading today. A close there above 1.1300 helps to cement a more broadly bearish USD picture.
The RBA surprised dovish, less with its expression of uncertainty on tariff issues and very modest downward revision of the inflation outlook and much more by noting that a 50 basis point cut was considered and clearly expressing an optionality to slash rate quickly if the economy/labor market weaken more than anticipated. Australian 2-year rates collapsed almost 20 basis points as the market upped the odds of further cuts. AUDNZD slipped below 1.0850
The US fiscal focus continues as House Republicans wrangle over how much help for poorest Americans needs to be slashed (how is this a political win for Trump?) and on SALT tax exemptions. The noise is that the House wants to have something ready by the end of this week. And we’ll need to continue to track US treasury yields.
Chart: USDJPY
Some follow through lower here in USDJPY is feeding further hope for the bears that we are set for a showdown at the critical 140.00 level in coming weeks. The rising line of consolidation or trendline is challenged here and the next step is perhaps a full erasing of the rally of the 142.34 lows.
FX Board of G10 and CNH trend evolution and strength.
Note: If unfamiliar with the FX board, please see a video tutorial for understanding and using the FX Board.
We have the USD weakness rebuilding slightly, while the JPY has built some positive momentum without yet showing signs of trending. The CNH has been kept a non-story for now by China.
Table: NEW FX Board Trend Scoreboard for individual pairs.
EURUSD is trying to re-establish is bullish trend credentials here, and USDJPY has not yet done so because the scale of the recent rally requires time for the EMA’s that determine trend status to cross, but is falling so fast that that cross could happen as early as today on a significant extension lower.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Commodity Outlook: Commodities rally despite global uncertainty
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Upending the global order at blinding speed
John J. Hardy
Global Head of Macro Strategy
We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ... -
Quarterly Outlook
Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever
Jacob Falkencrone
Global Head of Investment Strategy
-
Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
-
Quarterly Outlook
Equity Outlook: The ride just got rougher
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
China Outlook: The choice between retaliation or de-escalation
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Commodity Outlook: A bumpy road ahead calls for diversification
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX outlook: Tariffs drive USD strength, until...?
John J. Hardy
Global Head of Macro Strategy
-
Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Disclaimer