Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Access both platforms from your single Saxo account.
‘Huawei to hell’ toll paid in US dollars
Michael O’Neill
FX Trader, Loonieviews.net
Summary: President Trump upped the trade war ante yesterday and made Uncle Sam the toll collector on the “Huawei to hell”.
He signed the “Executive Order on Securing the Information and Communications Technology and Services Supply Chain.” Analysts say it is a direct shot at Huawei Technologies as Trump believes their products can be co-opted for us as state-sponsored spyware.
A spokesman for China’s Foreign Ministry said “For some time, the US has been abusing its national power to tarnish the image of and suppress specific Chinese companies, which is disgraceful and unjust. The world knows clearly what its intentions are. We urge the US side to stop oppressing Chinese companies under the pretext of security concerns and provide a fair, just and non-discriminatory environment for their normal investment and operation.” That is a rather tame response.
FX markets are jittery, and risk aversion is blowing in the wind. That wind has been blowing steadily since May 1. The Swiss franc and Japanese yen are the only currencies to have posted gains rising 0.74% and 1.48% respectively.
The US dollar pushed higher since New York opened following a string of better than expected economic reports. The Philadelphia Fed Manufacturing index was 16.6 compared to the consensus forecast of 9.0 and a four-month high. Initial jobless claims fell to 212,000 while Housing starts rose 5.7% compared to 1.7% in March. Today’s data support Fed Chair Jerome Powell’s view that “solid underlying fundamentals are supporting the economy, including accommodative financial conditions, high employment and job growth, rising wages, and strong consumer and business sentiment.”
USDCAD bounced off its New York opening low despite better than expected manufacturing shipments data. The 2.1% increase in March easily beat the 1.1% forecast, but the US data overshadowed the results. The blacklisting of Huawei reminded Chinese officials that Canada’s arrest of the Huawei CFO at the behest of the American’s was still a sore point. They upgraded the status of two Canadians suspected of spying from “detained” to “arrested.”
Wall Street traders ignored the latest US/China trade spat developments and focused on earnings reports. Walmart (WMT: NYSE) and Cisco Systems (CSCO: Nasdaq) beat earnings forecasts which put traders in a good mood. So did yesterday’s reports that the US would delay imposing tariffs on imports of EU cars.
Chart: Change in currencies against US dollar since May 1, 2019:
A spokesman for China’s Foreign Ministry said “For some time, the US has been abusing its national power to tarnish the image of and suppress specific Chinese companies, which is disgraceful and unjust. The world knows clearly what its intentions are. We urge the US side to stop oppressing Chinese companies under the pretext of security concerns and provide a fair, just and non-discriminatory environment for their normal investment and operation.” That is a rather tame response.
FX markets are jittery, and risk aversion is blowing in the wind. That wind has been blowing steadily since May 1. The Swiss franc and Japanese yen are the only currencies to have posted gains rising 0.74% and 1.48% respectively.
The US dollar pushed higher since New York opened following a string of better than expected economic reports. The Philadelphia Fed Manufacturing index was 16.6 compared to the consensus forecast of 9.0 and a four-month high. Initial jobless claims fell to 212,000 while Housing starts rose 5.7% compared to 1.7% in March. Today’s data support Fed Chair Jerome Powell’s view that “solid underlying fundamentals are supporting the economy, including accommodative financial conditions, high employment and job growth, rising wages, and strong consumer and business sentiment.”
USDCAD bounced off its New York opening low despite better than expected manufacturing shipments data. The 2.1% increase in March easily beat the 1.1% forecast, but the US data overshadowed the results. The blacklisting of Huawei reminded Chinese officials that Canada’s arrest of the Huawei CFO at the behest of the American’s was still a sore point. They upgraded the status of two Canadians suspected of spying from “detained” to “arrested.”
Wall Street traders ignored the latest US/China trade spat developments and focused on earnings reports. Walmart (WMT: NYSE) and Cisco Systems (CSCO: Nasdaq) beat earnings forecasts which put traders in a good mood. So did yesterday’s reports that the US would delay imposing tariffs on imports of EU cars.
Chart: Change in currencies against US dollar since May 1, 2019:
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)