Recent Trading Articles

Tuesday, 23 May 2023 Please  click here  to read the PDF version Markets •          The Fed’s two biggest hawks yesterday coloured trading which until then turned out to be non-directional. Kashkari from the Minneapolis Fed said it’s a close call between a pause and a hike in June, adding that the former wouldn’t mean tightening is over per se. St. Louis Fed president Bullard called US recession worries overstated and expects some 50 bps more rate hikes sooner rather than later this year. SF’s Daly and Atlanta’s Bostic argued for caution but their comments were largely dismissed. US yields went …

Sunset Monday, May 22, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • Markets struggled for direction. A backloaded calendar is at least part of the reason. First up are European, British and US PMI business confidence indicators. They’ll gain much attention as the May edition will have captured the effect, if any, of the financial turbulence in full. For all three regions, they are expected to come in at solid levels (for the services sector at least). The Fed will release its policy meeting minutes on Wednesday and the UK publishes April inflation figures. US …

Monday, 22 May 2023 Please  click here  to read the PDF version Markets •          US Treasuries and German Bunds parted ways on Friday after a joint 10 bps surge the day before. Yields in the US still rose between 1.3-4.8 bps with the belly underperforming. They easily overcame a setback in the first hours of the American trading session, when Fed chair Powell said credit stress may limit the need for new rate hikes. It put the spotlight on a growing FOMC division. Several other Fed governors last week were much less convinced of the idea of such a pause. …

Wednesday, 17 May 2023 Please  click here  to read the PDF version Dear reader, There will be no KBC Economics-Markets reports on Thursday, May 18 and Friday, May 19. We resume our publications on Monday, May 22. Markets •          US treasuries extended their underperformance against German Bunds yesterday as some data beats strengthen the notion that the US customer isn’t backing down yet, hinting at a more resilient economy. Core US retail sales rose by 0.6% M/M with the control group even gaining 0.7% M/M and providing a solid start to Q2. The NAHB housing index increased a fifth consecutive …

Sunset Tuesday, May 16, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • There was a mild risk-off vibe at the European start this morning. Stocks slid 0.4% and core bond yields eased several bps in the US and Germany. But sentiment improved gradually and equities turned flat. Core bond yields bottomed and even show minimal daily gains in the US after the April retail sales. Considering the upward March revisions, the broadest (headline) gauge was more or less in line with expectations. Core measures including the control group (a solid 0.7% m/m) even topped analyst …

Tuesday, 16 May 2023 Please  click here  to read the PDF version Markets •          Fed speakers show growing divergence on how to proceed with monetary policy. Atlanta Fed Bostic (non-voter) is inclined to pause at the June meeting, but he confirmed that the committee is still out on the issue. If he had a bias between going up or down as a next move, it would still be up. Resilient consumer spending and tight labour markets pose upside inflation risks even as the Fed’s earlier tightening measures will start having a bigger impact. Bostic pointed to the load of data …

Sunset Monday, May 15, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • There was little hard eco news to guide markets at the start of the week. In its spring forecasts, the European Commission raised its forecasts for EMU growth to 1.1% for 2023 and 1.6% for 2024 (was 0.9% and 1.5% in February winter forecast). The better performance is due to a ‘terms-of-trade countershock’ caused by declining energy prices, by abating supply constraints, improved business confidence and a strong labour market. The EC also took notice of a decline in headline inflation due to …

Monday, 15 May 2023 Please  click here  to read the PDF version Markets •          May University of Michigan consumer confidence unexpectedly set the tone for the final WS trading session of last week. The headline indicator fell more than expected, from 63.5 to 57.7, the lowest level since July of last year. Markets zoomed in on the forward looking inflation expectations component of the report though. 1-yr forward inflation expectations fell less than hoped, from 4.6% to 4.5% with long term (5-10yr) expectations picking up from 3% to 3.2 % (vs 2.9% consensus), the highest level since March 2011! Similar …

Sunset Friday, May 12, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • UK markets apparently needed some time to let yesterday’s Bank of England meeting outcome sink in. Another 25 bps rate hike was accompanied by similar hawkish guidance that more could follow should inflation be more persistent. Bank of England Chief Economist Pill today already stressed that upside inflation risks remain. Despite an higher implied policy rate path and significantly lower energy prices, the BoE’s preferred model delivered upward revisions to February’s inflation forecasts. Average double digit inflation in Q1, a more resilient economy and …

Friday, 12 May 2023 Please  click here  to read the PDF version Markets •          A dovish global sentiment dominated trading in the run-up to the Bank of England meeting. The UK central bank as expected raised its policy rate by 0.25% to 4.5%. Two members out of nine still preferred to keep the policy rate unchanged. Recent stronger growth data, higher than expected inflation and a solid labour market fulfilled the BoE’s condition of ‘more persistent (inflationary) pressures’. Even more, the BoE raised its forecasts for growth and inflation while the unemployment rate will be lower for longer. The forward …