Recent Trading Articles

Wednesday, 5 July 2023 Please  click here  to read the PDF version Markets •          We’ll move quickly over yesterday’s uninspiring day which lacked guidance from the eco calendar as well as from the US (celebrating 4th of July). German yields fell up to 3.9 bps at the front while adding 5.3 bps at the longest tenor. After Monday’s sell-off, UK Gilts marginally outperformed Bunds from the 5y tenor on with yields easing 2.3-2.9 bps across the curve. European stocks traded with a soft downward bias. The EuroStoxx50 finished 0.16% in the red. The euro underperformed G10 peers on currency markets. …

Sunset Tuesday, July 4, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • The US is closed for Independence Day and there’s no economic data scheduled for release in Europe either. Things can’t possibly get more dull for traders and the likes. A speech by German ECB member Nagel didn’t hold much information other than the by now well-known “a July hike is a done deal, we’ll see in September”. Rates in the country rise a few bps, especially at the long end of the curve (30-y +4.9 bps) though under much lighter volumes than usual. …

Sunset Monday, June 26, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • The German IFO business climate index brought a message similar to last Friday’s EMU PMI’s. Sentiment in Europe’s biggest economy has clouded over considerably, Ifo reported. The overall index dropped from 91.5 to 88.5. In particular, companies turned markedly more pessimistic on expectations (83.6 from 88.3) but current assessment was also softer than last month (93.7 from 94.8). Ifo explicitly mentions that ‘weakness in the manufacturing sector is steering the German economy into turbulent waters’. Many companies in the sector rate their order …

Monday, 26 June 2023 Please  click here  to read the PDF version Markets •          Core bonds ended last week on a solid footing. German Bunds outperformed US Treasuries in more of a one-off reset after very weak French PMI’s. German yields fell by 10 bps to 15 bps with the belly of the curve outperforming the wings. US Treasuries lost 5 to 6 bps across the curve. Risk sentiment took a hit with main European and US equity indices losing 0.5% to 1%. The dollar profited in this environment, with the trade-weighted (DXY) index closing at 103.16 from a start …

Sunset Friday, June 23, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • European June PMIs disappointed on all accounts. The manufacturing rout continued, unexpectedly easing from 44.8 to 43.6. Services have long compensated but are now also showing a loss of momentum, retreating more than expected from 55.1 to 52.4. The composite series fell to 50.3 (-2.5 points) as a result. Diving into some details, new business inflows declined for the first time since January. This was driven by an increasingly sharp downturn in manufacturing. Services registered only a modest increase. Backlogs fell at the …

Friday, 23 June 2023 Please  click here  to read the PDF version Markets •          Focus turned to the Bank of England (+50 bps to 5%), the Norges Bank (+50 bps to 3.75%), the Swiss national bank (+25 bps to 1.75%) and the Central bank of Turkey (CBRT +650 bps to 15%) yesterday. One way or another, they all had to cope with stickier than expected inflation, at least partially due to a resilient labour market keeping demand at a higher level than what is needed to bring inflation sustainably back to target. It might be coincidence, but none of the …

Sunset Thursday, June 22, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • Today’s central bank decisions confirmed that the ‘high(er) for longer’ paradigm is stronger than it has ever been in this cycle. Banks that held some kind of benign neglect approach (Norges Bank, Bank of England) were forced to surrender, forced by unacceptably stubborn (core) inflation. Even the Turkish central bank made a U-turn in its unconventional approach, admittedly less pronounced than markets hoped for. The ones that were already convinced on the need for a longer period of restrictive policy (Swiss National bank) …

Thursday, 22 June 2023 Please  click here  to read the PDF version Markets •          (Much) higher than expected May UK inflation temporarily sent trembles through global bond markets yesterday morning, but in the end spill-overs outside the UK remained limited. With headline inflation holding at 8.7% Y/Y (0.7% M/M) and core inflation accelerating from 6.8% to 7.1%, pressure on the Bank of England is mounting the reaccelerate the pace of rate hikes starting at today’s meeting. The 2-y initially jumped more than 15 bps (new top near 5.1175%), but yields closed off the intraday highs (2-y +9.3 bps; 30-y +5.9 …

Sunset Wednesday, June 21, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • UK May Inflation data and Fed Powell’s semi-annual Congressional testimony before the House Financial Services Committee were key today. Powell’s testimony still takes place after finishing this report, but the text of his statement is already published (cf infra). UK May inflation data awakened markets. Headline inflation rose 0.7% M/M holding the Y/Y measure unchanged at 8.7% (expected to slow to 8.4%). Core inflation also maintained an elevated monthly pace of 0.8% M/M raising the Y/Y reading from 6.8% to 7.1%, the highest level …

Wednesday, 21 June 2023 Please  click here  to read the PDF version Markets •          The natural upside drift in yields since last week’s-FED/ECB-meetings ran into resistance yesterday. Disappointment on a smaller than expected reduction in the Chinese prime loan rates and softer than expected German May producer prices (1.4% M/M and 1% Y/Y) were mentioned as a potential driver for the setback in yields. Looking at the intraday price pattern, we’ re not fully convinced on this explanation. Whatever the reason, both yields and stocks were ripe for some repositioning, with UK markets taking the lead after their recent impressive …