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 05 August 2021
Erik Schafhauser
Senior Relationship Manager
Summary: Looking for Narrative
Good Morning
An interesting day in FX yesterday where the USD fist gave up ground – trading as low as 91.80 then fairly hawkish comments by Richard Calida caused a reversal. Gold and Silber tested the upper end of their trading range at 1831 and 26. EURUSD was within reach of the 1.1900. US 10 Year yields fell to below 1.15%before rising to 1.2% again.
Federal Reserve Vice Chair Richard Clarida stated "Commencing policy normalization in 2023 would, under these conditions, be entirely consistent with our new flexible average inflation targeting framework,"
Equities remained fairly strong despite Clarinda’s remarks and closed only slightly off the previous day. GM and ford weighed on blue chips. Both car makers declined, GM 8.9% and Ford by 5%. The Dow lost 0.92%, the S&P 500 lost 0.46%, and the Nasdaq gained 0.13%. Dax keeps trying to breach the 15700 but is failing so far.
Robin Hoods Options started trading and the stock temporarily rose to 85 after the IPO at 38.
The US reports 100k new corona infections, the highest number in 6 Months
Reuters released a poll of FX strategists, 63% state they are not confident that the USD will weaken in the next 12 months, and 57% expect volatility to increase
What to watch out for today? The Bank of England at 13:00 CET, no change in rates is expected but any comments on the asset purchase program will be of significance. In the US the initial Jobless claims at 14:30 CET give a little indication on the nonfarm payroll. With the delta variant on the rise, we could be seeing additional corona measures internationally.
On a hawkish statement by the BoE, Cable could rise above the 1.3900 with1.3925 and 1.3960
Citi stated yesterday a 10% equity market decline was very plausible, that will lead to some discussions.
Market participants seem to be al little on edge as we say yesterday in the FX moves, trade carefully.
Local Start Date | Local Time | Country/Region | Indicator Name | Period | Reuters Poll | Unit |
5 Aug 2021 | 08:00 | Germany | Industrial Orders MM | Jun | 1.5% | Percent |
5 Aug 2021 | 13:00 | United Kingdom | BOE Bank Rate | Aug | 0.10% | Percent |
5 Aug 2021 | 13:00 | United Kingdom | GB BOE QE Corp | Aug | 20B | GBP |
5 Aug 2021 | 14:30 | United States | International Trade $ | Jun | -73.9B | USD |
5 Aug 2021 | 14:30 | United States | Initial Jobless Clm | 31 Jul, w/e | 380k | Person |
5 Aug 2021 | 14:30 | Canada | Trade Balance C$ | Jun | -0.80B | CAD |
6 Aug 2021 | 05:00 | New Zealand | Reserve Assets Total | Jul | NZD | |
6 Aug 2021 | 08:00 | Germany | Industrial Output MM | Jun | 0.5% | Percent |
6 Aug 2021 | 08:00 | United Kingdom | Halifax House Prices MM | Jul | Percent | |
6 Aug 2021 | 08:00 | Norway | Reserve Assets Total | Jul | NOK | |
6 Aug 2021 | 08:45 | France | Reserve Assets Total | Jul | EUR | |
6 Aug 2021 | 09:00 | Switzerland | Forex Reserves CHF | Jul | CHF | |
6 Aug 2021 | 14:30 | United States | Non-Farm Payrolls | Jul | 900k | Person |
6 Aug 2021 | 14:30 | United States | Unemployment Rate | Jul | 5.7% | Percent |
6 Aug 2021 | 14:30 | United States | Average Earnings YY | Jul | 3.9% | Percent |
6 Aug 2021 | 14:30 | Canada | Employment Change | Jul | 150.0k | Person |
6 Aug 2021 | 14:30 | Canada | Unemployment Rate | Jul | 7.4% | Percent |
7 Aug 2021 | China (Mainland) | Exports YY | Jul | Percent | ||
7 Aug 2021 | China (Mainland) | Imports YY | Jul | Percent | ||
7 Aug 2021 | China (Mainland) | Trade Balance USD | Jul | USD | ||
9 Aug 2021 | 03:30 | China (Mainland) | PPI YY | Jul | Percent | |
9 Aug 2021 | 03:30 | China (Mainland) | CPI YY | Jul | Percent |
(Refinitiv)
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