Recent Trading Articles

Friday, 14 July 2022 Please  click here  to read the PDF version Markets •          The post-payrolls/CPI bond market rally continued yesterday and reinforced existing trends in most other markets. The minutes of the June ECB meeting showed a strong commitment to continue the campaign to eradicate inflation. A 25 bps July rate hike is a certainty with probably more follow-up action to come as the MPC stays attentive to persistent high core inflation. Bunds added substantial gains early in the session, but then shifted to consolidation modus. In the end, German yields lost between 9.3 bps (10-y) and 6.2 bps …

Sunset Thursday, July 13, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • Yesterday’s US inflation numbers still resonated during European trading hours. Both headline and core inflation rose a tad less than forecast (0.2% M/M vs 0.3% M/M) with base effects pulling especially headline inflation (one last month?) significantly down. They triggered a huge rally in US Treasuries – extended to core bonds in general – and stock markets while pulling the dollar below first support levels on a trade weighted basis and against most majors. The absence of European eco data resulted in a countdown …

Thursday, 13 July 2023 Please  click here  to read the PDF version Markets •          Post-payrolls price action already suggested investors were ready to take up additional US Treasuries exposure in case of a mild US June CPI and this is exactly what happened. Both headline and core CPI rose 0.2% M/M versus 0.3% M/M expected. The headline Y/Y reading due to a positive base effected to declined from 4% to 3%. Core inflation also eased slightly more than expected from 5.3% to 4.8%. Yesterday’s report won’t prevent a Fed rate hike at the July 26 policy meeting, especially not given …

Sunset Wednesday, July 12, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • Today was one stretched countdown to the US inflation numbers without a lot of market fireworks in the run-up to it. Prices at the other side of the Atlantic generally came in slightly below expectations. Both headline and core inflation rose 0.2% m/m, missing a 0.3% analyst estimate. Yearly price pressures eased from 4% to 3% in the headline gauge and from 5.3% to 4.8% in the core. The bar was set at 3.1% and 5% respectively. It’s the slowest pace in about …

Wednesday, 12 July 2023 Please  click here  to read the PDF version Markets •          The up-move in US yields took a breather this week. Friday’s slightly softer than expected payrolls probably don’t change the Fed’s assessment on further tightening. However, with key resistance ahead (5.10% area 2-y; 4.09% area 10-y yield) it was time for bond shorters to reduce positions. On Monday, the NY Fed Survey on consumer expectations indicated that short term inflation expectations continued to fall 3.8% in June (from 4.1%). This might have accelerated the correction in yields going into today’s US June CPI release. US yields …

Sunset Friday, July 7, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets: • After yesterday’s US-data inspired bond market sell-off, (bond) markets temporary shifted into a lower gear, awaiting confirmation from the US payrolls report. Still, in the this ‘wait-and-see pause’, the natural drift in yields remained north. ECB speakers in the meantime held to their recent mantra. ECB de Guindos repeated that underlying price pressures remain strong even as most core indicators show some softening. The perfect narrative for keep all options open for September. Chair Lagarde in an interview stressed the need for fiscal …

Friday, 7 July 2023 Please  click here  to read the PDF version Markets •          Most major centrale banks recently said that they moved to ‘data dependent modus’. For some of them, this translates into a pause/skip or some other term giving them time to assess the impact of previous policy tightening on inflation and on growth. At least part of the policy makers and the market community assumed/feared that the tightening already put in place over the previous 12-18 months was at risk putting the economy on a path straight to recession. Quod non, so told yesterday’s US data. ADP …

Sunset Thursday, July 6, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets: • Markets took off this morning where they ended yesterday: by selling bonds. The move started as US traders returned from the 4th of July Holiday and accelerated a first time after a technical break of the 10y yield above 3.85/3.87%. FOMC Minutes delivered a second blow by showing more disagreement than expected over the Fed’s skip strategy. Some favoured a 25 bps rate hike, but accepted the status quo. Minutes showed a lot of references to resilient inflation and resilient growth with the influential …

Thursday, 6 July 2023 Please  click here  to read the PDF version Markets •          Core bonds fell yesterday. Underperformance of US Treasuries vs Bunds triggered a technical break in the US 10y yield. The reference added 7.6 bps to 3.93%, surpassing 3.90% (December 2022 correction high) with 3.92% (61.8% recovery on the October 2022 – April 2023 correction lower) following soon. The front-end of the curve added 1-6.1 bps with the 2-y yield gently closing in on the symbolic 5% barrier. Hitting that barrier also officially turns the page on the mid-March regional banking tremors. US yields had a rocky …

Sunset Wednesday, July 5, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • With markets awaiting the restart of US trading, the China Caixin services PMI confirmed recent disappointing data, pointing to a lackluster recovery in the Chinese economy. This put markets in a mild risk-off modus that deepened throughout the European session. According to the ECB monthly consumer expectations survey, consumers saw inflationary pressures easing. Perceived inflation over the previous 12 months in May decreased to 8.0% from 8.9%. Median inflation expectations for the next 12 months also eased slightly from 4.1% to 3.9%. Expected …