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Stimulus (Almost) Everywhere
The ECB delivered another cut today and there is more to come, the BoC is primed to start cutting in 50bp increments and do a lot over the cycle, the Fed should cut further but only a little bit, and China has recently delivered a lot of st
Super-Sized
The Fed delivered a super-sized rate cut to the start of the cycle last week. More likely they go back to smaller 25bp moves if labour data remains resilient. But another large move is not out of the realm of possibility. We think the BoC i
Back in Sync
With the Fed and ECB set to follow the BoC’s lead with 25bp cuts of their own, a number of the major central banks are now back in sync. So far, these central banks look to be proceeding gradually along their respective cutting paths, but t
Is This Time Different?
There are nuances in every economic cycle but this one continues to feel different. Central banks are firmly in easing mode - the Fed will join the rate-cutting party in September. The timing and magnitude of rate cuts is the main topic for
Volatility Galore!
We have seen very large market moves triggered by the US labour market report over the last few days that have also led to quite a few market participants changing their view on Fed rate cuts. We take a deeper dive into the data, highlight
Well Telegraphed?
Markets have been pricing more rate cuts again on the back of somewhat weaker data releases, specifically in the US. Yet, central banks remain reticent in telegraphing rate cuts clearly. Can the latter change and make markets price in even
Green Light, Yellow Light, Red Light
Two G7 central banks have already cut – the ECB & BoC . Both should cut more as the year progresses while the BoE and Fed are likely to join the rate-cutting party later this year. At the other end of the spectrum is the RBA which is widely
Cuts For Thee, But Not For Me
The BOC and ECB both kicked off long-awaited cutting cycles last week with questions about the depth and duration of these cycles likely to drive markets from here. But in other regions the case for pulling forward cuts is still somewhat we
Ready, Set, Go - Policy Divergence
Two developed market central banks have already cut - Riksbank and SNB - and the BoC, ECB and BoE should follow suit over the next couple of months. But the higher for longer theme is dominating the US rates market. The divergence in macro
Data Determination
Markets have been ultra-sensitive to data for some time now, going back to market pricing for hikes starting in late 2021. More recently, several strong US inflation prints have de-railed the potential for upcoming Fed cuts, while upside su
Divergence - Real or Imagined?!
The latest resilience in the US has kick started a debate about how much other regions that appear to not show the same kind of underlying strength can diverge from the Fed and cut rates regardless. We see the best chances of that happening
Breaking Rank
Expectations for Fed rate cuts this year are wavering as US economic data continues to come in hot. But that economic performance hasn’t necessarily been replicated in other regions. Will other major central banks feel pressure to keep in s
When?
The question on everyone’s mind is when central banks will start cutting rates. Over the past month, market pricing has progressively gravitated from a near certainty that the BoC and Fed would cut by June to now under a 50% chance. In the
The Right Balance (Sheet)
While markets are parsing through central bank communication for the timing and pace of rate cuts, the future of central bank balance sheets is increasingly in focus as well. What will happen with quantitative tightening? And what will bala
Are We There Yet?
It appears that markets have retraced some of their expectations for central bank action much closer to where speakers are guiding investors - in other words, we are trading much closer to what most people would consider 'fair value'. We se
Not So Fast
Markets came into 2024 pricing in aggressive central bank cutting cycles. But continued resilience in growth and labor market data, along with some recent wobbles in the downward march of inflation has markets (and policymakers) pumping the
Easing into Easing
The narrative from central banks has decidedly shifted from the risk of further tightening to signaling the next move will be lower. To paraphrase the message Powell gave us last week – we have confidence, and our confidence has increased t
A Delicate Balance
Focus continues on the timing and depth of central bank rate cuts as they try to engineer soft landings for economies across the globe. Central bank balance sheets and QT end timing in different jurisdictions have become increasingly topica
Too Good to be True!
Bond markets and equity markets have rallied sharply at the tail end of 2023 essentially based on a ‘soft landing’ scenario that sees inflation back at target as early as Q2 2024 whilst growth is weakening but not descending into a fully-fl
Let's Look Ahead
As 2023 comes to a close, we shift focus to what to expect in 2024, with year-ahead outlooks released for Europe, the US, and Canada last week. Will macro data show a clear direction towards reaching the 2% inflation target? How soon will c
Riding the Chop
The market environment over the last two weeks may be best described as chop. Yields have been bouncing around day-to-day but market narratives seem to be settling with year-end in sight. Participants: • Michael Reid (Desk Strategy), US Eco
U-Turn
The trends in markets since June - higher yields, lower equities, wider credit spreads - pulled a sharp U-turn over the past week. Lower bond yields have provided the impetus for a decent equity and credit rally. Listen to hear about where
Finding Footing
Global yield curves have been moving higher and steeper despite new geopolitical risks and a dovish tilt in recent central bank rhetoric. Can bonds find some solid ground to stand on or do they still have further to fall? Participants: • Bl
Higher, Wider, Steeper - What does the bond market sell-off tell us?
Bond markets keep pushing higher and curves steeper - but why? It appears that a combination of better than expected macro data and central banks communicating that rates will be held around present levels for longer than expected is leadin
Bonds Unhinged
The main story in financial markets is fixed income and the relentless surge in yields. We explore why yields have been rising and curves steepening, whether this trend can continue, or what are the necessary ingredients for a turnaround. P
Last Call
We have a number of central bank events on deck, with the ECB meeting this week, followed by the Fed and BoE next week. Overall, it seems like it’s coming up on closing time for global hiking cycles, but major central banks may be looking t
Sunburnt Bonds
Ouch! Bonds have been burned in low liquidity summer markets, adding to the pain (total return losses) of the past two years. The move in bond yields is not unjustified based on fundamentals (now) but the level seems unsustainably high for
How Long Will It Take?
With key central bank meetings due over the coming weeks at the same time, as economic sentiment data is weakening, the question of 'How Long Will It Take?' until rate hikes feed through into the real economy has become more prominent again
Defying Gravity
A number of global fixed-income markets have broken higher as central banks are still left to deal with tight labor markets and core inflation that is not falling fast enough for comfort. Can the sell-off continue, overcoming lingering fear
Groundhog Day
Groundhog Day was a film about the same day repeating itself over and over, which has some parallels to what is happening in markets - policy rates higher, curves flattening, equities unfazed, and USD-CNY marching higher. Will this cycle co
