Bilal Hafeez, Viresh Kanabar
Dominique nailed it – the Fed finally acknowledged the US economy’s strength. The Fed stayed on hold, kept an extra 2023 hike, reduced the number of 2024 cuts from four to two, and kept the inflation trajectory unchanged but upgraded the growth trajectory.
John Floyd, Richard Jones
The upcoming Swiss National Bank (SNB) monetary policy meeting provides an ideal vantage point to consider future Swiss monetary policy as driven by both domestic and global influences and provides significant trading opportunities.
Vasileios Gkionakis
As of 8 September, the dollar had risen by 4.8% since mid-July, its largest gain over a 41-day period since mid-October 2022.
Vasileios Gkionakis
Idiosyncratic and relative-value (RV) trades are currently appealing. Look for monetary policy divergences (Bank of England repricing lower, rates re-pricing in CEE), sensitivity to ongoing muted Chinese growth, and energy prices.
Bilal Hafeez, Viresh Kanabar
ECB pulled off a dovish hike, but we see more to come. The ECB hiked by 25bps as Henry had expected for some time. They also increased their interest rate forecasts for this year and next, driven by higher energy prices.
Matthew Tibble
Small businesses may be about to start reversing disinflation. UK unemployment is rising much faster than the BoE expected.
Henry Occleston
The ECB’s decision to hike is based on three factors: Whether core inflation (and importantly wage-intensive services inflation) is trending towards target.
Bilal Hafeez, Viresh Kanabar
The quarterly Beige Book was released last week, continuing to point to strong growth, falling inflation and a loosening labour market. Here are our highlights on each point:
Matthew Tibble
The US is moving away from China imports. SPX and NDX earnings growth stalls – a warning for equities. US unemployment rises on increased participation, especially from young workers.
Bilal Hafeez, Viresh Kanabar
US jobs data took centre stage. Last week, US jobs data dominated the market narrative, with JOLTS (Tuesday) and NFP (Friday) data pointing towards a slower labour market.
Matthew Tibble
Core inflation and wage growth remain an issue for the ECB ahead of the September meeting. Rapid growth acceleration in the US could explain why Powell feels less confident the Fed’s policy stance is restrictive.
Bilal Hafeez, Viresh Kanabar
Powell stood his ground at Jackson Hole. Despite speculation and academic calls suggesting otherwise, Chair Powell reiterated his commitment to the 2% inflation target. He also stated that continued strong growth in the US could require additional policy tightening given inflation remains above target.
Richard Jones
As with the rest of the G10 FX and rates space, Antipodean and Scandi markets have been rangebound in July-August as investors await a decisive September and Q4 for developed market central banks. We expect the rangebound price action to hold in Aussie, Kiwi, Norwegian and Swedish markets in the next week or two.
Matthew Tibble
The credit intensity of China’s economy is surging, helping to explain why Chinese policymakers have struggled to boost growth this year.
Bilal Hafeez, Viresh Kanabar
Last week, US retail sales beat expectations across the board. Advance retail sales rose +0.7% MoM versus +0.4% MoM expected, while the control group rose +1.0% MoM versus +0.5% MoM expected.
Richard Jones
G10 FX and rates markets are chopping around within ranges as investors await a busy September for developed market central banks. We expect the rangebound performances of July and August to hold in coming weeks.
Matthew Tibble
UK core inflation came in stronger than expected thanks to rental prices. Likewise, EZ core inflation remains significantly above typical levels. Oil markets have entered an unstable equilibrium following recent inventory drops.
Bilal Hafeez, Viresh Kanabar
US CPI met expectations. July MoM headline and core CPI came in at 0.2%, in line with expectations and unchanged from June. Core goods deflation deepened, while OER was roughly unchanged from July.
Richard Jones
Last week, the Bank of England (BoE) hiked rates for a 14th straight time, raising its key policy rate (Bank Rate) from 5% to 5.25%.
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