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Markets to Watch This Week: US5s30s Inverts While Yen Continues to Struggle
- 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.
US bond yields have continued to sell off as the Fed looks to become ever more hawkish, Dominique expects a 50bps hike at the May FOMC meeting, while the US5s30s has inverted. US 2-year yields led the move, with 2-year yields up 4.1 standard-deviations in the past week.
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In this report, we standardise price changes across different markets to allow for cross-market comparisons.
US bond yields have continued to sell off as the Fed looks to become ever more hawkish, Dominique expects a 50bps hike at the May FOMC meeting, while the US5s30s has inverted. US 2-year yields led the move, with 2-year yields up 4.1 standard-deviations in the past week. Meanwhile, JPY/USD continued its decline as the BoJ pledged unlimited purchases of the Japanese 10-year over the days ahead. JPY fell 3.0 standard-deviations. Here are the details:
Other markets that saw 1+ standard-deviation rises last week included:
- Rates (yield): Canadian 2- and 10-year swap, Sweden 2- and 10-year swap, Australia 2- and 10-year swap, Norway 2- and 10-year swap, US 10-year, German 2- and 10-year, UK 2- and 10-year, New Zealand 2-year swap, and Japan 10-year.
- FX (vs USD): BRL, ZAR, and CAD.
- Commodities: Oil.
- Equities: Nikkei, Apple, Tesla, BOVESPA (Brazil), and Alphabet.
- Crypto: Bitcoin.
Meanwhile, markets that saw 1+ standard-deviation declines last week included:
- FX (vs USD): KRW and JPY.
- Equities: CSI 300 and Tencent.
- Credit: Euro High Yield.
This week, we continue to watch markets digest a possible 50bps hike, this is our base-case. Meanwhile, markets are pricing 75% chance of this ahead of Williams, Harker, Bostic, and Barkin speaking this week. In the US it is a busy week for data, non-farm payrolls will be the highlight; participation rate and wage growth will be key to watch. In Europe, this week there’s an opportunity for comments from ECB and BoE speakers, while European March CPI outturns are expected to show a further spike in price pressures. You can watch our week ahead preview with Andrew and Dominique here.
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.