Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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Key Stories from the past week: Tesla Super-Surge & McDonald’s Burger Scare
Saxo
Plenty of stock specific news this week with the likes of Boeing in-and-out of union deals, McDonalds with an E. coli scare, and Tesla results marking the crescendo of the week’s events. In commodities, crude futures stalled with two-sided risk keeping prices rangebound. Meanwhile, yields have seen price action on the back of US election jitters, BoC rate cut, varying economic data and a slew of Fed and ECB speakers. More below on this week’s key stories.
Tesla’s Q3 earnings report was the big positive surprise of the week. The carmaker’s shares surged 22% on Thursday in the biggest single day rally since 2013. Tesla reported surprisingly strong earnings and forecast as much as 30% growth in vehicle sales next year and the company turned a corner with the Cybertruck which generated profit for the first time. Furthermore lower material costs and an expanding energy business also contributed positively. Despite the positive outlook for 2025, we witnessed some profit taking among Saxo Bank clients following the results.
Tesla Soars In Thursday Pre-Market: Here's What's Driving The Surge
Tuesday this week the US center for Disease Control & Prevention (CDC) issued a food safety alert linking an E. coli outbreak to McDonald’s quarter pounders. The statement reported dozens of incidents across 10 states, several of which included hospitalization. Initial reaction saw McDonald’s stock plunge more than 9% in after-hours & opening down about 6% ($315 - $295) on Wednesday as investors seemed to brace for short-term implications. The main fear among investors is that the situation could develop akin to what Chipotle experienced in 2015, where a years-long E. coli battle resulted in hundreds of incidents & a substantial hit to market cap. Saxo saw a 10% increase in number of client positions, remaining primarily long however with slightly more short positions opened this week.
McDonald’s E. Coli Outbreak Raises Key Questions for Investors
Yields in US rose to a 3-month high on the 10-year yield as market continues to increasingly price-in a potential Trump presidency with possible tariffs, reduced taxes as well as repricing of Fed cuts. USD was stronger across the board, which was most visible in against the Japanese Yen ahead of Japanese elections this weekend that can see a disconnect between the Japanese government and BoJ. USDJPY hit a 3-month high of 153.18. Based on the above we see little change in client positioning where clients remain primarily short.
What the "Trump Trade" Means for Your Bond Portfolio - And How to Protect It
Next week all eyes will be on key earnings releases from several Magnificent 7 members and many other big names. Highlights include Google-parent Alphabet (Tue) Microsoft (Wed) Meta (Wed) Amazon (Thu) Apple (Thu).Markets will also be looking for any clues on FED's stance on inflation as data comes in throughout the week. Key data releases include UK Budget (Wed), US Jobless-/continuing claims (Thu), US non-farm payrolls (Fri), US Manufacturing PMI (Fri). It will also mark the final week before the US election, set to be held November 5th 2024.
Please also note that daylight savings (summer time) ends this Sunday (27th October) for EU & UK, which means clocks will go back 1 hour across these locations. Be mindful of trading hours between different time zones.
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