Recent Trading Articles

Sunset Wednesday, May 31, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • Core bonds extended this week’s gains during European trading hours as the data drum echoed yesterday’s sound. Additionally, risk sentiment soured following dismal Chinese figures this morning. French inflation fell by 0.1% M/M in May (vs 0.3% consensus) with the Y/Y-figure come down from 6.9% to 6% (vs 6.4% expected). As was the case in yesterday’s Spanish and Belgian figures, energy prices were the main culprit though the inflation decline was more broad-based. German regional data soon pointed to a similar story with M/M …

Wednesday, 31 May 2023 Please  click here  to read the PDF version Markets •          Correction time yesterday on the EMU and US yield markets after last week’s hawkish repositioning. The trend was already visible on Monday in thin European trading and deepened. A further easing of Spanish inflation (HICP -0.2% M/M and 2.9% Y/Y from 3.8%; core CPI declining from 6.6% to 6.1%) and Belgian headline inflation (5.2% Y/Y from 5.6% Y/Y) were a good enough reason for investors to pick up bonds after their recent setback. German yields ceded between 10.4 bps (5-y) and 6.9 bps (30-y). US data …

Sunset Tuesday, May 30, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • We got the first national inflation releases today in the run-up to the European figure on Thursday. Belgian (non-harmonized) inflation decelerated from 5.6% in April to 5.2% in May (see below). The Spanish number came in below consensus with HICP easing from 3.8% to 2.9% vs the 3.3% expected. Monthly prices unexpectedly dropped 0.2% amid a fall in fuel prices and a smaller food price gain. Core CPI (national reading) slowed from 6.6% to 6.1% vs 6.4% consensus. Germany, France and Italy are …

Tuesday, 30 May 2023 Please  click here  to read the PDF version Markets •          On Friday, strong US eco data (durable goods orders, spending and income data and, last but not least, PCE deflators) all supported the market repositioning that already dominated the price action earlier last week. Markets now acknowledge that with inflation holding stubbornly high (Core PCE 4.7% Y/Y) and no imminent signs of a US recession, the Fed will most likely be forced to raise its policy rate by 25 bps in June or July (fully discounted). The US 2y yield closed above the 4.50% mark (4.56%). …

Friday, 26 May 2023 Please  click here  to read the PDF version Markets •          UK bonds crashed for a second day straight with yields adding 10.6-19.2 bps across the curve. UK money markets discount an additional 100 bps tightening by December following the big upside CPI surprise Wednesday morning. Sterling initially revisited YtD highs but unable to force a break higher, technical return action kicked in. EUR/GBP eventually closed narrowly above 0.87. Bonds in the US and Germany slid as well with huge underperformance of the former. US yields ripped between 0.9 (30-y) and 15.6 (2-y) bps higher. Second-tier but …

Sunset Thursday, May 25, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • UK gilt yields one again caught the attention today. They initially add another  6.5-10 bps following yesterday’s ugly CPI surprise which will almost certainly force the Bank of England into additional tightening. This time though, the long end of the curve joined the short end, which could mean markets have taken a less pessimistic view on the growth implications of a tighter monetary policy. Tomorrow’s UK retail sales are to give a glimpse on the resilience of the UK consumer. Is this the …

Thursday, 25 May 2023 Please  click here  to read the PDF version Markets •          Core bonds traded very choppy yesterday. Surging UK core inflation lifted not only gilt yields (23.7 bps at the front end!) but also German and even US yields in early morning dealings. Stubborn inflation could require an even more forceful reaction not only from the BoE. This together with the ongoing US debt ceiling stalemate weighed heavily on stocks (EuroStoxx50 -1.8%, Wall Street losing around 0.7%), in turn triggering some safe haven flows to core bonds in a move that lasted until the early afternoon. Then …

Sunset Wednesday, May 24, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • In the statements accompanying the March and May policy decisions, the Bank of England ‘guided’ that ‘If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required’. If these pressure would fade, the debate was open. Two policy members already voted to leave the policy rate unchanged as they assessed that the impact of the energy price shock and other cost push inflation to be unwinding. Using market interest rate curves, inflation even was seen …

Wednesday, 24 May 2023 Please  click here  to read the PDF version Markets •          Yesterday’s PMIs for the UK, Europe and US all showed similar characteristics: the manufacturing sector is under (intensifying) pressure but the all-important services economy is booming. Core bonds (initially) slipped with a massive underperformance from UK gilts. Yields on the British island shot up between 8.2 and 9.4 bps. Both German yields and US yields eased from their intraday highs. The former still rose around 1 bp across the curve. Rates in the latter ended 1.2-2.6 bps in the red after having risen up to 6 …

Sunset Tuesday, May 23, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • At first sight, EMU May PMI’s were close to expectations. The composite measure eased slightly from 54.1 to 53.3 (vs 53.5 expected), but still suggests solid growth. The dichotomy between a further contraction in manufacturing (44.6 from 45.8) and strong services growth continues (55.9 from 56.2). This divergence was also visible in pricing behavior. According to S&P global, average prices for goods and services rose at the slowest pace in 25 months. However, prices rises remain high by historical standards. Especially the services …