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.
Fickle traders favour risk
Michael O’Neill
FX Trader, Loonieviews.net
Summary: Financial markets are flickering between risk-on and risk-off against a fast-moving news backdrop.
John Maynard Keynes reportedly once said that “the market can remain irrational longer than you can remain solvent.” Apparently, markets can remain fickle for a long time as well.
Financial markets have switched between risk-aversion and risk-seeking like a skier on a slalom course of late. Most of the time, President Trump is the impetus for the quick moves. Yesterday, however, he wasn’t.
The president railed at China and the Federal Reserve in an interview with CNBC, stating that Chinese president Xi Jinping is the equivalent of the Fed in China and that China’s devaluation of their currency gives them a “tremendous competitive advantage.” In his mind, the Fed is the villain because they are “very, very disruptive.” Traders had heard it all before and ignored the bluster.
Trump was at it again this morning, but this time he accused the European Union of devaluing the euro. A Bloomberg Opinion tweet saying “Prepare for another summer of overtourism. The accessible price of travel in Europe has become a problem for locals and visitors alike” got his attention and he retorted “This is because the euro and other currencies are devalued against the dollar, putting the US at a big disadvantage. The Fed Interest rate way too high, added to ridiculous quantitative tightening! They don’t have a clue!
EURUSD traders ignored the tweet, and the single currency stayed rangebound in the 1.1302-30 band that has contained price action since mid-morning in New York, yesterday. Traders seem content to await European Central Bank president Mario Draghi’s speech on Wednesday. The US May PPI report was a non-event, and the greenback is unchanged since New York opened.
USDCAD is still consolidating losses from Friday. They better than expected Canadian employment report combined with the soft NFP result, triggered stop-loss selling and broke key support levels at 1.3330 and 1.3270. Downside momentum stalled after some conomists predicted the Bank of Canada would cut rates as early as October.
Wall Street is off to a good start, continuing the string of gains seen since last Wednesday.
Financial markets have switched between risk-aversion and risk-seeking like a skier on a slalom course of late. Most of the time, President Trump is the impetus for the quick moves. Yesterday, however, he wasn’t.
The president railed at China and the Federal Reserve in an interview with CNBC, stating that Chinese president Xi Jinping is the equivalent of the Fed in China and that China’s devaluation of their currency gives them a “tremendous competitive advantage.” In his mind, the Fed is the villain because they are “very, very disruptive.” Traders had heard it all before and ignored the bluster.
Trump was at it again this morning, but this time he accused the European Union of devaluing the euro. A Bloomberg Opinion tweet saying “Prepare for another summer of overtourism. The accessible price of travel in Europe has become a problem for locals and visitors alike” got his attention and he retorted “This is because the euro and other currencies are devalued against the dollar, putting the US at a big disadvantage. The Fed Interest rate way too high, added to ridiculous quantitative tightening! They don’t have a clue!
EURUSD traders ignored the tweet, and the single currency stayed rangebound in the 1.1302-30 band that has contained price action since mid-morning in New York, yesterday. Traders seem content to await European Central Bank president Mario Draghi’s speech on Wednesday. The US May PPI report was a non-event, and the greenback is unchanged since New York opened.
USDCAD is still consolidating losses from Friday. They better than expected Canadian employment report combined with the soft NFP result, triggered stop-loss selling and broke key support levels at 1.3330 and 1.3270. Downside momentum stalled after some conomists predicted the Bank of Canada would cut rates as early as October.
Wall Street is off to a good start, continuing the string of gains seen since last Wednesday.
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)