Macro Digest: Another roller coaster week ahead


Steen Jakobsen

Chief Economist & CIO

Summary:  After an ugly close on Friday and concerns that US lawmakers may not be on the same page Sunday evening on the terms of a massive stimulus package, next week looks set to provide another roller coaster ride for global markets. The race between the Covid19 impact and policymakers escalating attempts to get ahead of the curve continues.

The Friday close on Wall Street was a dramatic disappointment  and as such probably a confirmation that this week will be another roller coaster. The focus will be on:


  • The US Congress is debating their relief bill as we are writing and are currently at an impasse. The market can ill afford even a day's delay, so Monday's session could prove chaotic without a deal in place late Sunday in the US.
  • Illiquidity - several bond funds now closed in Sweden, Denmark and globally - currently not allowing redemptions.
  • The USD: monitor DXY and EURUSD for indications of stress in the system. An old rules dictates that if you can't get "gamma" or "funding dollars", then you buy wherever you can - in this case, USD in the OTC FX market. Watch extremely closely for signs of either improvement or worsening of liquidity.
  • Fear - market is still trading more on fear than value or opportunity. That will eventually change, but no one says it will be this week as Covid19 numbers in New York City in particular are exploding. There is now little doubt that the market, fear and liquidity are tightly connected to the path of the COVID19. Nothing else seems able to change direction - German chancellor Angela Merkel is in quarantine, US Senator Rand Paul has been diagnosed, etc.
  • There is still an elevated risk of markets being closed. Stock market will come first, then Bonds... we doubt FX and commodities will be closed, unless we go full BANK HOLIDAY like the emergency banking act of 1933.
  • The US St. Louis Fed's Bullard is tossing out figures like the fear of an unemployment rate of 30% in Q2 and an annualized GDP rate of -50% - this can't 


  • The amount of commitment from governments is ever increasing (of course partly because the reality is getting more and more bad!!)   (Follow Saxo Bank Global Policy Tracker via
  • The amount of liquidation needed is close to being done. We have now sold off for two straight weeks. Yes, there is still another potential 10-15% but for now most funds will have deleveraged.
  • There is growing understanding that money spent by government needs to be grants not loans. Loans is NOT going to do anything for struggling SME's and small business owners - this needs to be a grant / handout to work and if treated as such should be given swift and without usual red tape!!!!
  • We will see EU decide to suspend the 3% deficit this week, Germany has finally decided to open up fiscally, and all governments are willing to invest into equity, where in normal circumstances they are limited to liquidity and lending, now they come forward with liquidity, credit and equity (plus soon handouts)

We at SaxoStratS have no crystal ball, but we remain committed to provide up-to-date fact based analysis through our fixed Saxo Market Call podcast and daily Quick Take on


Bullard eyes Covid19 impact

Germany readies massive fiscal programme

US lawmakers wrangle over terms of stimulus deal

Fed ready to backstop businesses with $4 trillion in loans


Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Combined Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, 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. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such 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.

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

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide and Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.