Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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Morning Brew February 1 2024
Erik Schafhauser
Senior Relationship Manager
Summary: Can Data convince Powell to cut in March?
Good Morning
Quite a day behind us and more to come.
Lower German inflation and a very low ADP Employment number boosted risk sentiment while disappointing tech earnings and a huge disappointment in New York Community Bancorp weighed.
The FOMC left the rates unchanged as expected and the press conference was basically in line with expectations until Powell stated near the very end that he saw rate cuts in March as unlikely.
The Dow lost 0.8%, the S&P 1.6% and the Nasdaq 2.23%, the biggest losing day in months. Alphabet ended the day down 7.5% and New York Community Bancorp fell by 37.7% on a disappointing earnings release and dividend cut. The Vix made a decent leap and volumes were 20% above the average.
In Switzerland, Bank Julius Baer reported higher write offs and the CEO is resigning with immediate effect most likely linked to the Benko Group. Shares were indicated up 2%
Yields remained lower as traders are now convinced that there will be no more tightening, 10 years are now 3.95 back below the important 4%.
The USD Index is higher with EURUSD at below 1.08 (1.0790) GBPUSD 1.2655 and USDJPY 146.80. Gold and Silver are at 2043 and 22.90, Bitcoin 42k. Charu wrote summary on FX from here
With he Fed clearly data dependent, the Nonfarm payroll comes into focus and of course there is quite a lot of data and earnings out today before that.
Keep your seatbelts fastened!
Key Events:
Thursday
- Data JP& China PMI, Sweden Rate decision, Bank of England International PMI, US Initial Jobless claims
- Earnings: Apple, Roche, Amazon, Meta, Merck, Shell, Honeywell, Sanofi
Friday
- Data US Nonfarm Payrolls
- Earnings: Keyence, ExxonMobil, AbbVie, Chevron, Regeneron Pharmaceuticals, Bristol-Myers Squibb
Expiries
Physically Settled Futures
LEG4 will expire 2 Feb at 16:00 GMT.
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