Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
Head of Fixed Income Strategy
As ECB policymakers return from their summer break, they’re diving headfirst into the task of managing an economy where inflation remains sticky and growth is not keeping up with expectations. With a major monetary policy decision coming on Thursday, September 12, expectations are baked in for a 25 basis point rate cut. But the bigger question is—what happens after that?
Core inflation’s stickiness can be partially explained by sustained wage pressures. Negotiated wages were 3.6% in Q2 2024, down from a high of 4.75% in Q1 but still well above the pre-pandemic average of 1.73%. This cooling in wage growth is a relief for the ECB, but not enough to suggest that wage-driven inflation is going away anytime soon. Additionally, the Eurostat Labor Cost Index (20 countries) also dropped from 4.9% to 4.1% in the same period, providing further signs that wage pressures are easing, albeit slowly. This gradual reduction in wage pressures will likely ease inflation concerns over the medium term, but it's unlikely to lead the ECB into an aggressive rate-cutting cycle, as some in the market are hoping.
At this meeting, the ECB will also update its macroeconomic forecasts. Here’s what we expect:
04-Sept Stretched Valuations: Why the Bond Market's Next Move Hinges on Jobs Data
03-Sept The Reality Behind the UK’s Gilt Sales – It's Not About Confidence in the Government
02-Sept Bonding with Buffett: How the Oracle’s Stock Picks Can Boost Your Bond Portfolio
30-Aug Austria’s 2086 Bond Flop: What It Means for Ultra-Long European Debt
29-Aug Capitalizing on Fed Rate Cuts: A Guide to Emerging Market Local Currency Bonds
29-Aug Uncovering Value: The Strength of European Investment-Grade Bonds
28-Aug Insights into this week's US Treasury auctions: 2-, 5-, and 7-year overview.
22-Aug Wage Growth and Economic Resilience Challenge Market Expectations for Aggressive ECB Rate Cuts
20-Aug Understanding U.S. Treasury Auctions: What You Need to Know
19-Aug Insights into this week's US Treasury auctions: 20-year U.S. Treasury bonds and 30-year TIPS.
16-Aug No Signs of Imminent Recession: Why Bond Investors Should Approach Insurance Rate Cuts with Caution
14-Aug Markets Skeptical Despite Positive UK Inflation Report
09-Aug Yield Curve is Disinverting: Lessons from Past Crises
07-Aug Stable Bond Spreads and Robust Issuance Make a 50 bps Rate Cut in September Unlikely
06-Aug Insights into this week's US Treasury refunding: 3-, 10-, and 30-year overview.
05-Aug Why Investors Must Pay Attention: BOJ’s Hawkish Moves Could Roil Global Markets
30-July BOE Preview: Better Safe than Sorry
29-July FOMC Preview: A Data-Dependent and Balanced Approach
24-July Market Impact of Democratic vs. Republican Wins
23-July Insights into this week's US Treasury auctions: 2-, 5-, and 7-year overview.
16-July Insights into this week's US Treasury auctions: 20-year U.S. Treasury bonds and 10-year TIPS.
15-July ECB Preview: Conflicting Narratives – Rate Cuts vs. Data Dependency
15-July Understanding the "Trump Trade"
11- July Bond Update: Faster Disinflation Paves the Way for Imminent Rate Cuts, but Risks of Economic Reacceleration Remain
09-July Insights into This Week's U.S. Treasury Auctions: 3-, 10-, and 30-Year Tenor Overview and Market Dynamics.
08-July Surprise Shift in French Election Fails to Rattle Markets for Good Reasons.
04-July Market Optimism Ahead of French Elections Drives Strong Demand for Long-Term Bonds
01-July UK Election Uncertainty and Yield curve Dynamics: Why Short-Term Bonds Are the Better Bet
28-June Bond Market Update: Market Awaits First Round of French Election Voting.
26-JuneBond Market Update: Canada and Australia Inflation Data Dampen Disinflation Hopes.
30-May ECB preview: One alone is like none at all.
28-May Insights into this week's US Treasury auctions: 2-, 5-, and 7-year tenors overview.
22-May UK April’s Consumer Prices: Markets Abandon Hopes for a Linear Disinflation Path.
17-May Strong trade-weighted EUR gives ECB green light to cut rates, but bond bull rally unlikely
14-May UK labor data and Huw Pill's comments are not enough for a bond bull rally
08-May Bank of England preview: Rate cuts in mind, but patience required.
06-May Insights into this week's US Treasury refunding: 3-, 10-, and 30-year overview
02-May FOMC Meeting Takeaways: Why Inflation Risk Might Come to Bite the Fed
30-Apr FOMC preview: challenging the March dot plot.
29-Apr Bond Markets: the week ahead
25-Apr A tactical guide to the upcoming quarterly refunding announcement for bond and stock markets
22-Apr Analyzing market impacts: insights into the upcoming 5-year and 7-year US Treasury auctions.
18-Apr Italian BTPs are more attractive than German Schatz in today's macroeconomic context
16-Apr QT Tapering Looms Despite Macroeconomic Conditions: Fear of Liquidity Squeeze Drives Policy
08-Apr ECB preview: data-driven until June, Fed-dependent thereafter.
03-Apr Fixed income: Keep calm, seize the moment.
21-Mar FOMC bond takeaway: beware of ultra-long duration.
18-Mar Bank of England Preview: slight dovish shift in the MPC amid disinflationary trends.
18-Mar FOMC Preview: dot plot and quantitative tightening in focus.
12-Mar US Treasury auctions on the back of the US CPI might offer critical insights to investors.
07-Mar The Debt Management Office's Gilts Sales Matter More Than The Spring Budget.
05-Mar "Quantitative Tightening" or "Operation Twist" is coming up. What are the implications for bonds?
01-Mar The bond weekly wrap: slower than expected disinflation creates a floor for bond yields.
29-Feb ECB preview: European sovereign bond yields are likely to remain rangebound until the first rate cut.
27-Feb Defense bonds: risks and opportunities amid an uncertain geopolitical and macroeconomic environment.
23-Feb Two-year US Treasury notes offer an appealing entry point.
21-Feb Four reasons why the ECB keeps calm and cuts later.
14 Feb Higher CPI shows that rates volatility will remain elevated.
12 Feb Ultra-long sovereign issuance draws buy-the-dip demand but stakes are high.
06 Feb Technical Update - US 10-year Treasury yields resuming uptrend? US Treasury and Euro Bund futures testing key supports
05 Feb The upcoming 30-year US Treasury auction might rattle markets
30 Jan BOE preview: BoE hold unlikely to last as inflation plummets
29 Jan FOMC preview: the Fed might be on hold, but easing is inevitable.
26 Jan The ECB holds rates: is the bond rally sustainable?
18 Jan The most infamous bond trade: the Austria century bond.
16 Jan European sovereigns: inflation, stagnation and the bumpy road to rate cuts in 2024.
10 Jan US Treasuries: where do we go from here?
09 Jan Quarterly Outlook: bonds on everybody’s lips.