Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Senior Relationship Manager
Summary: Trading Hours Key
Good morning,
The key event we are heading into for traders is the curious combination of the PCE on Friday and the fact that it is Good Friday. Most markets will be closed and the rest fairly illiquid. A key surprise could be that FX is open, but Gold and Silver are not. If you have positions you are not comfortable holding over the most important US inflation number without being able to manage them, do that before.
Holiday Calendar:
We seem to be trading in a nervous sideways market and we need a clear impulse to break out. Indexes gave up a little ground, but again less than half a percent. Noteworthy moves were Trump Media up 16%, Tesla gained 2.9% and is now down less than 30% this quarter, McCormick +10% on good earnings, UPS -8 on a bleak outlook for 2026. Volumes were higher than Monday but still low.
10 Year yields are at 4.22 and the USD Index at 104.35. EURUSD is at 1.0835, GBPUSD at 1.2620, and USDJPY at 151.66. The Japanese Government is stating very clear unhappiness with the weak yen, so watch for sharp moves.
Gold and Silver are see-sawing looking for the next big move, with Gold at 2179 and Silver at 24.50, Oil at 80.80, and Bitcoin holding at 70k.
A curious commodity at the moment is cocoa, as Ole points out: Cocoa’s parabolic rise to USD 10000 per ton mostly reflects a cocoa market in complete panic as producers scramble to source supply from other sources than West Africa, where arrivals to ports trail last year by almost 30%. The rally has for several weeks now not been driven by speculators who instead have been cutting back long positions both in London and New York. Instead, the rally has been driven by chocolate producers buying futures to source supply from the exchanges or in order to cover hedges (sold positions). During an eight-period to March 19, producers bought 296,000 tons in the NY futures market and 530,000 tons in the London market. During the same period, hedge funds and large speculators reduced their net long by a total of 715,000 tons spread between 439,000 tons in NY and 276,000 tons in London. The rally will continue until producers have sourced the cocoa they need or prices hit levels that accelerate a slowdown in demand.
According to Reuters, Russian oil firms face delays of up to several months to be paid for crude and fuel as banks in China, Turkey, and the United Arab Emirates (UAE) become more wary of U.S. secondary sanctions. The Israel delegation has left the negotiations with Hamas in Doha, diminishing hopes for an imminent truce. The Dutch prime minister and Xi Jinping will meet in Beijing today, which can have an impact on chip companies' shares later. Expect not too much from Economic releases today, more general nervousness and traders looking for the next big impulse – which may well not come this week or only on Friday. Position adjustments and expiries may well cause nervousness as well.
Wednesday
- Data AU CPI EU Consumer Confidence, Waller Speaks,
Thursday
- Data Swiss KOF, DE Unemployment, US GDP& Initial Jobless Claims, University of Michigan sentiment
Friday
- Data Japan CPI, France CPI, Swiss FX reserves, US PCE, Powell and Daly speak