Euro Gets Crushed ahead of Inflation and GDP Numbers

It has been a brutal month for the euro. Business surveys already point to a recession and traders are worried Russia might cut off the gas and paralyze the economy completely. The upcoming batch of inflation and GDP data on Friday are unlikely to change this narrative. Instead, a turnaround in the euro will require […]

Oil Outlook: Bulls to Disrupt Current Stabilisation?

Oil prices had been dropping from the 14th of June yet since the 18th of July seem to show some stabilisation. Yet let’s have a look where fundamentals are currently leading oil prices. We make a start with the weekly US oil market data. On Friday the 22nd of July the Baker Hughes oil rig […]

Cliff Notes: FOMC Pivot Their Guidance as the US Economy Stagnates

Key insights from the week that was. The past week has been notable for a global resurgence in risk appetite despite a run of data pointing to deteriorating US economic growth. Principally this is because the softer tone of US data and the FOMC’s recognition of it implies a receding risk of rate hikes in […]

Technical Recession Equals Buy Stocks

US GDP had a nasty surprise for everybody overnight, unexpectedly falling by 0.90%, when market expectations were for a modest 0.50% gain. That marked two consecutive negative quarters of US growth, meaning that for many economists, the US is now in a technical recession. Off course, if you put a group of economists in a […]

10y Yield’s Technical Picture Risks Deteriorating Dramatically

Markets Core bonds went through the roof yesterday. The US yield curve bull steepened with changes varying between -15.1 bps (5y) to -4.3 bps (30y). The 10y yield’s technical picture risks deteriorating dramatically if the drop below the lower bound of the sideways 2.70/3.50% trading range gets confirmed in coming days. German Bunds outperformed, losing […]

Eurozone Rate Hike: A Big Step for ECB, But a Small Help for Euro

The European Central Bank increased its key rate by 50 points to 0.50%. This is more than average analyst forecasts, based mainly on old comments from Bank members. However, rumours of a more decisive move surfaced in the last few days when a period of silence was already in effect. This situation repeated what we […]

RBA to Lift the Cash Rate to 3.35% by February 2023

We have revised our profile for the RBA cash rate cycle to include 50bp moves in both August and September; followed by a step down in the pace to 25bp increases at every meeting from October to February 2023. The terminal cash rate forecast has been revised up from 2.6% to 3.35%. Under this policy […]

The End of a Messy Week

Volatility was the winner overnight, with a multitude of data points and events leaving market price action messier than a teenager’s bedroom. The European Central Bank surprised markets by lifting policy rates by 0.50%, ending over a decade of negative interest rates. The Euro has already been rallying, but its gains were tempered by the […]

ECB’s TPI isn’t 'That' Straightforward, and Snap Earnings Could Reverse Appetite in US Big Tech

The European Central Bank (ECB) rose its three policy rates by 50bp at yesterday’s monetary policy meeting, versus 25bp expected by analysts. But the ECB decision wasn’t a big surprise given that many investors were expecting to see the ECB to come up with a bigger rate hike after the EURUSD fell below parity last […]

Cliff Notes: Inflation Still of Paramount Concern as Risks to Activity Build

Key insights from the week that was. In Australia and abroad, it was a quiet week for data, keeping the focus on monetary policy. At home, the July RBA minutes and speeches by RBA Governor Lowe and Deputy Governor Bullock made clear there is more work to do to contain inflation and related risks. The […]