Commodities | Global | Rates
Markets to Watch This Week: Short-Term Interest Rates, Global Tech and NatGas
- By Bilal Hafeez
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- 1 min read
In this report, we standardise price changes across different markets to allow for cross-market comparisons.
We’ve expanded the number of markets we track and what a stunning week we have just had. 2y interest rates in Australia, Sweden, Switzerland and Canada experience five standard-deviation plus moves last week (Charts 1 and 2).
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In this report, we standardise price changes across different markets to allow for cross-market comparisons.
We’ve expanded the number of markets we track and what a stunning week we have just had. 2y interest rates in Australia, Sweden, Switzerland and Canada experienced five standard-deviation plus moves last week (Charts 1 and 2). This made the two standard deviation moves in NZ and German 2y yields look small. In equities, Tesla, Microsoft, NVIDIA, and Google also saw two standard deviation jumps. It seems markets are expecting central bank hikes and selected tech to do well.
At the other end of the spectrum, UK natural gas prices fell by 2.4 standard deviations, the US 2s10s curve saw a two standard deviation flattening and iron ore prices fell by one standard deviation (Chart 3). Other markets that saw one standard deviation declines were Alibaba, Tencent, Indian stocks, the South African rand and Mexican peso. This suggests markets are worried about China tech and EM.
We’re experiencing huge dislocation in markets and the epicentre appears to be front-end interest rates on central bank hiking expectations, commodity markets and global tech stocks. Keep eye on these markets in the week ahead.
Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.