Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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Morning BrewAugust 29 2022
Erik Schafhauser
Senior Relationship Manager
Summary: Risk Off / Bottom or not
Good Morning
Jerome Powell s address on Friday focused on rates being higher for longer and was perceived as more hawkish than expected – not so much in the level of rates but in the duration. He seems to be coning to terms with Steen Jakobsen's assessment.
After some digestion of the speech we Ravn a massive sell off across the board while causing the USD to appreciate. Indexes fell between 3 and 4% Dell fell 13%, Nvidia fell 9.2% Google 5.4% and Apple 3.7% Tesla 2.7%. What is curious is that trading volumes were low despite the high volatility.
The GER40 fell to 127708 low and is not 12800.
Bitcoin dropped to below 20k again as the USD Index surged to above 109 to trade 109.40 now, GBPUSD trades at 1.1665, EURUSD at 0.9930, Gold and Silver are 1721 and 18.60.
Hawkish comments out of the ECB so far do not boost the Euro substantially.
Germany and the UK are looking for ways to ease the burden of high energy costs ranging from VAT cuts to direct aid.
Fortescue Metals announced annual profit fell 40% despite record shipments of iron ore.
The Agenda is fairly empty for today and the focus will be on politics as well as the digestion of Powells message – have we seen the lows or will risk willingness recede further?
Economic Data:
Today: Austrian and German HICP, at 9:00 and 14:00, UK Holiday
Tuesday: Japan Unemployment Rate, Swiss KOF, EU consumer Conficence, US Consumer Confidence,
Wednesday: Norway GDP, CH Official reserves, EU HICP, Italy CPI
Thursday: IT, FR, DE and EU PMI, EU Unemployment Rate, US Initial Jobless claims, PMI
Friday: US Nonfarm Payrolls
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