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Responses were collected on 23 November 2023.
Macro Hive Network
The UK is seeing two tailwinds right now. First, services sector activity is back in the black, driven by a recovery in consumer sentiment. Second, sentiment is rebounding from low levels.
This week, we see this theme translating to more bullishness on GBP among our network. Participant 5 likes being long Cable as better-than-expected UK growth prospects coupled with a dovish Fed should boost GBP/USD. For similar reasons, Participant 16 is long GBP vs both EUR and USD, while they also see sentiment still being too bearish on the UK as the BoE has reiterated their desire to stay on hold.
Henry has a slightly different view. He still sees the UK cutting rates before the Fed as the labour market has loosened faster than expected. He thinks receiving May 24 SONIA is attractive. Another way to play it is versus the Fed; a good option is here in the SONIA and SOFR Mar24/Mar25 calendar box.
Elsewhere, dollar bearishness continues. Participant 7 is now long EM carry – via BRL and MXN against the USD. Mirza mostly agrees, but with both having rallied sharply of late, is reluctant to chase at these levels.
Bilal’s Trades and Views
We added three trades this week.
- Long 10Y Bund vs 10Y BTP (target 200 bps; stop 155 bps) – read here.
- Long 1y1y vs 2y3y SOFR – read here.
- Receive BRL DI K25 (target 9.50%; stop 10.80%) – read here.
DM
Rates
- Long 10Y Bund vs 10Y BTP (target 200 bps; stop 155 bps) – read here.
- Long 1y1y vs 2y3y SOFR – read here.
- Receive May 2024 SONIA (target 25 bps cuts) – read here.
- Long 10Y Gilt (FX hedged) vs short 10Y OAT (target -100 bps; stop -25 bps) – read here.
- Pay Apr-24 EUR-OIS (target 0 bps) – read here.
- SONIA and SOFR Mar24/Mar25 calendar box (target 0 bps) – read here.
- 5s10s UST steepener (target 15bps) – read here.
- Pay 1Y1Y US OIS (target 5%) – read here.
- Short US10Y vs USD hedged 10Y JGBs (target -450bps) – read here.
Equities
- Long homebuilders and regional banks – read here.
EM
FX
- Long EUR/CZK (target 25:60; stop: 24:00) – read here.
Rates
- Receive BRL DI K25 (target 9.50%; stop 10.80%) – read here.
- Receive 5Y ZAR swap (target 7.50%; stop 8.75%) – read here.
Commodities
