Head of Macroeconomic Research
Summary: On Thursday morning at 11:30 AM (GMT), the SNB will communicate its monetary policy decision. We expect that interest rates will remain unchanged.
In this edition, we focus on upcoming central bank meetings once again. On Thursday morning at 11:30 AM (GMT), the SNB will communicate its monetary policy decision. Like most analysts, we expect that interest rates will remain unchanged. The fact that the ECB has only lowered its deposit rate by 10 basis points last week substantially reduces the pressure on the SNB to lower its rates.
On the top of that, the SNB now seems to be comfortable with the current CHF exchange rate. According to the latest data, the evolution of sight deposits at the SNB is stable at CHF 591 billion, which tends to suggest that the central bank has reduced its FX interventions or even temporarily stopped them since the last week of August.
Given number of risks that may emerge in coming weeks and could potentially push the CHF higher (Brexit, growth slowdown and US tariffs against Europe following the US victory in Airbus case), the SNB has every interest in keeping ammunition. Lowering interest rates as early as this week would considerably reduce the central bank’s room for maneuver later.
2024: The wasted year
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As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
