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 November 2 2022
Erik Schafhauser
Senior Relationship Manager
Summary: And Nothing Else Matters
Good Morning
Ahead of the FOMC rate decision tonight, higher than expected job openings in the US – a number normally not closely watched – spooked traders hoping for dovish tones. US 10 Year Yields rose to above 45 again and the USD Index gained while equities gave up gains. US Indexes closed lower, with the Dow Jones slipping 0.24%, the S&P 500 0.41% and the Nasdaq 0.89%.
The overall expectation among analysts polled by Reuters is that we are likely to retest the USD Highs again, only 32% expect the Dollar to decline from here.
There seems to be some expectation for an intervention out of the BoJ around the FOMC so the Yen is on the move.
Looking at the FOMC, the expectation for a 75 BPS hike stands at 99%, takin the implied rate to 3.8%. The peak rate at the moment is seen at 5% in May 23 and any shift there will have a significant impact on market sentiment.
The rate decision is at 19:00 tonight due to the daylight savings time difference and the Press conference by Jerome Powell at 19:30.
Headlines:
Uber up 12% on good results
Reports that China may be considering loosening Covid restrictions boosted sentiment
HKEX has issue a notice that HKEX, including Stock Connect and its derivatives market will be suspended at 13:55 local time and there is no After-Hours Trading Session.
Oil prices rose more than 1% on Wednesday after industry data showed a surprise drop in U.S. crude inventories
Germany is likely to decide on subsidies to industry and households to deal with high energy costs
Economic data:
Wednesday: EU PMI, DE unemployment, FOMC Rate decision
Thursday: UK PMI and Rate decision, EU Unemployment, US PMI,
Friday; EU PMI, US Nonfarm Payrolls
Earnings:
Wednesday: Novo Nordisk, GSK, Booking, Qualcom, CVS,
Thursday: ConocoPhillips Cigna Corp, Amgen, Paypal, Starbucks, EOG, DBS,
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