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 December 13 2024
Erik Schafhauser
Senior Relationship Manager
Summary: A great Friday the 13th
Good morning,
Central Banks were the second most interesting part of the day:
- The SNB cut rates by 50 bps, proving traders had a better grasp on the Central Bank's position. SNB's Schlegel maintained the rhetoric of willingness to intervene if required, and the SNB still has room for further interest rate moves. Negative rates remain a possibility.
- The ECB delivered the expected 25 bps cut but was a bit murky on the overall outlook.
The US PPI came in higher than expected by 0.2 percentage points, causing US yields to rise while sparking a wave of selling in precious metals and a surge in the USD Index to 107. Equities gave up some ground, falling approximately 0.5%, with the underlying moves being fairly small. Warner Bros was the outlier, rising 15% on a restructuring notice, stating it will separate the streaming and TV businesses.
Heading into Friday the 13th, Gold is trading at 2689, Silver at 30.96 - a 4.2 fall from yesterdays high, EURUSD at 1.0460, GBPUSD at 1.2630, and USDJPY at 152.75. The GER40 is at 20400, the US500 is at 6060, and Bitcoin failed again to hold above 100k, trading at 99600.
The UK GDP just came in at a disappointing 1.3% vs. 1.6% expected. From here, today's agenda is thin, and we will either see a quiet day or an erratic one. The reaction we saw in Gold and Silver yesterday showed that there seems to be little conviction in positions at the moment. Traders are not sure where we are heading and are quick to take profits or cut losses.
Next week will be busy again with loads of data and rate decisions. The Trump transition, as well as any key developments in the Middle East, can move markets as well.
Friday
- Data Japan Tankan, France CPI, US Import Prices
Monday
- Japan Machine Orders, China Retail Sales, International PMI
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