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 March 2 2023
Erik Schafhauser
Senior Relationship Manager
Summary: Rates and Tesla Weigh
Good Morning,
Tesla and rates weigh on risk sentiment this morning. The US 2 year rates rose to 4.9% and the peak Fed rate is testing the 5.5%. Der Spiegel Reports the US are evaluating sanctions against China.
Tesla failed to provide a clear date of an affordable EV. An outlook on lower production cost failed to excite investors and shares fell app 5% in the aftermarket.
Yesterday US equities had closed mostly lower with the Dow up 5 points – the S&P 500 and the Nasdaq lost 0.5% and 0.7%. Over night the US 30 loses 0.4%, the US500 as well as the US Tech 100 0.6% The GER40 falls to 15270.
Neel Kashkari, a voter in the rate-setting committee in 2023, saidhe is "open-minded" on either a 25 basis point or a 50 basis point rate hike in March acc to Reuters.
The higher rates let the USD rise and the USD Index rises to 104.70 from near 104.00 yesterday morning. EURUSD is now at 1.0640 GBPUSD 1.1980 and USDJPY 136.65.
Gold and Silver felt o 1833 and 20.88. Ole Hansen published a friendly note on the precious metals yesterday
Andrew Bailey, governor of the BoE said nothing had been decided in terms of whether a further hike in interest rates was necessary.
In a report on an ECB Policy meeting, Francesco Canepa points out that inflation in Europe is so far being accelerated by corporate margins much more than by wage hikes. Companies are raising prices by more than their costs rise and wages increase by less than inflation. That means profits rise while the standard of living falls.
Today the economic Agenda is thin except for the EU HICP and the US Initial Jobless claims. , the G20 in India could be interesting as well.
Thursday
Data: EU HICP, Employment
Earnings Merck Hapag-Lloyd Haleon Toronto-Dominion Costco Broadcom VMware Universal Music Marvell London Stock Exchange
Friday
Data: International PMI, ISM Services
Earnings: Canadian Natural Resources
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