Richard Jones
Summary Since peaking above 108 (intra-day) on 22 November, the US dollar Index (DXY) moved below 106 one week later and now trades just above 106, about 1.75% lower than that recent peak. Moves in US yields have been similar, with the 2-year yield now about 25bp off its peak two weeks ago and the […]
Richard Jones
When evaluating the performance of our momentum models we are considering the average performance across the one-, three-, and 12-month momentum models. Summary Momentum models were down -0.5% over the past week, with rates models down -1.1% WoW, FX models down -0.5% and equity models up +0.3% WoW. Momentum models are down -0.6% over a […]
Richard Jones
Summary EUR/USD has bounced about 2% since bottoming out on a 1.03 handle (intra-day) last week. This has coincided with a decline in US yields across the curve. Crowded short positioning, plus oversold technicals that are starting to unwind, have also contributed to the rise in EUR/USD. Market Implications We still think EUR/USD can rally […]
Macro Hive
Key Events G10 In the US, these are the key data prints: Personal income, spending and PCE – Friday. No surprise on core PCE, Powell has already told us that the Fed expects 2.8% YoY. Consensus forecasts on spending and income imply no real increase, which aligns with my expectations of slower consumption growth in […]
Bilal Hafeez
Charles Engel is Donald Hester Professor of Economics at the University of Wisconsin. He is also a Research Associate at the National Bureau of Economic Research.
Richard Jones
When evaluating the performance of our momentum models we are considering the average performance across the one-, three-, and 12-month momentum models. Summary Momentum models were down -0.1% over the past week, with rates models gaining +0.1% WoW, FX models down -0.1% and equity models down -0.5% WoW. Momentum models are flat in aggregate over […]
Richard Jones
Summary The USD Index (DXY) has rallied to a new YTD high in the past week. This rally is pausing ahead of 107, which is also the 2023 high. The RSI for the USD index recently indicated the DXY was overbought and is now starting to unwind. Market Implications We think the DXY is due […]
Richard Jones
Summary The UK 2-year yield hovers near last week’s six-month high. The Bank of England (BoE) Monetary Policy Review (MPR), following last week’s 25bps cut, broadly aligned with our expectations, without overly hawkish messaging. However, hawkish Fed pricing is feeding into BoE pricing, which challenges fading elevated UK short-end yields. Market Implications Despite the risks, […]
Richard Jones
Summary The US election triggered very choppy price action across all asset classes, with the USD especially volatile this week. USD/JPY, after spiking initially following the Trump victory, has pulled back considerably. USD/JPY price action makes us think further upside will not come easily, although volatility is likely to persist. Market Implications More USD/JPY downside, […]
Richard Jones
Summary Last week’s Japanese election saw the current ruling coalition lose its majority, starting a rare period of political uncertainty in Japan. Following very choppy price action, USD/JPY initially moved higher this week on this uncertainty, but now trades back near pre-election levels. The Bank of Japan (BoJ) kept rates on hold today but reaffirmed […]
Richard Jones
When evaluating the performance of our momentum models we are considering the average performance across the one-, three-, and 12-month momentum models. Summary Momentum models were down -0.5% over the past week, with equity models down -1.5% WoW, FX models down -0.1% WoW and rates models down -0.3% WoW. Momentum models are down in aggregate […]
Richard Jones
Summary USD/JPY has traded above 150 all week, closing above 152 for the first time since 30 July. Since troughing near 140 in mid-September, USD/JPY has rallied roughly 9%, with rising US yields as well as Japanese and US political the drivers. This has caught the Japanese Ministry of Finance (MoF)’s attention, whose top currency […]
Richard Jones
Summary This week’s UK inflation data was weaker than expected, with headline and core at the lowest levels since 2021. This has weighed on UK yields and GBP and increased the probability of two 25bp BoE rate cuts in November and December. Market Implications We expect further downside for UK yields and GBP. We like […]
Richard Jones
Summary Momentum models were up +0.1% over the past week, with equity models up 0.6% WoW, FX models down -0.1% WoW and rates models down -0.1% WoW. Momentum models are down in aggregate over three months, with rates models the best performing (-0.7%). Market Implications Momentum models have pared GBP/USD bullishness. Ben argues GBP has […]
Richard Jones
Summary Since the Federal Reserve (Fed) cut 50bp on 18 September, yields across the US treasury (UST) curve have risen. Post-FOMC, overbought technical indicators have unwound as yields have risen. We remain cautious of a further rise in yields after tomorrow’s US non-farm payrolls (NFP) report. Market Implications Our bias remains to buy USTs on […]
Macro Hive
Summary A Republican sweep (red WH and Congress) could result in stagflation and force the Fed to hike. Meanwhile, a Democratic sweep (blue WH and Congress) would likely align with the Fed’s current projections. Market Implications A Trump victory would likely lead to bear steepening in the yield curve, and a stronger USD especially vs […]
Richard Jones
Summary The Swiss National Bank (SNB) cut 25bp yesterday, less than the 35bp the market priced. The SNB significantly lowered its Swiss inflation forecasts from June, citing the strong CHF as a key driver of weaker inflation. The SNB was very clear it is ready to intervene in currency markets and says further interest rate […]
Richard Jones
Summary Switzerland’s August inflation data came in weaker-than-expected across the board. This would normally lead to CHF weakness, but softer global risk sentiment this week resulted in the currency tracking sideways, with CHF haven demand offsetting weaker Swiss data. As we wrote last month, we think the Swiss National Bank (SNB) will intervene in the […]
Macro Hive
Key Events G10 In the US, the main data points are: NFP – Friday. If the print shows no marked improvement on July and is below consensus for UE falling to 4.2%, the Fed will likely frontload rate cuts, starting with 50bp in September. JOLTS – Wednesday. The U/V ratio is more important than headline. […]
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