The last few sessions have seen data showing the UK in recession, and some more hopeful signs that it might already be coming out. There’s less to look forward to this week, but that might not be bad news for Sterling.
Forexlive Americas FX news wrap: A mystery bid emerges in bonds
- Fed’s Williams: My view of economy hasn’t changed after January data
- ECB’s Muller: I would like to see Q1 wage data before moving on rates
- ECB’s Nagel: We should act on data, not steps by other central banks
- Baker Hughes US weekly oil rig count +6
- Oil falls with Gaza talks set to begin in Paris
Markets:
- Gold up $12 to $2035
- US 10-year yields down 6.7 bps to 4.51%
- S&P 500 up 2 points to 5088
- WTI crude oil down $2.06 to $76.55
- AUD leads, CAD lags
Friday’s US economic calendar was completely bare and if you look at the closing levels in FX, there is hardly any movement to be seen. But under the surface it wasn’t so quiet as we saw some strong USD selling in Europe that was countered in early North American trade before markets chopped sideways late.
It wasn’t clear what was driving any of the moves today, aside from oil selling on Gaza ceasefire hopes. Equities got some early bids on the FOMO follow through from yesterday’s huge rally but by the time of the European close, that gave way to profit taking and stocks finished flat.
The mystery was in bonds where the long-end was strongly bid. US 30-year yields fell 9.3 bps and finished on the lows and the lowest close since Feb 12. If there was some kind of geopolitical bid, you would expect oil to have moved in the opposite direction but with Gaza inching towards peace, that was hard to see.
One theory surrounded a German bank with exposure to US commercial real estate. That will be something to watch over the weekend, as bunds were also strongly bid. I’m sure we haven’t heard the end of the saga regarding the debts around emptying offices.
Perhaps there is something else going on or flows were dominating but I’ll be keeping a keen eye on whatever was driving the bid in bonds and (to a lesser extent) gold.
This article was written by Adam Button at www.forexlive.com.
US equity close: Some swings today to end a big week
This week was a big test for tech stocks and there was palpable anxiety in the lead-up to Nvidia earnings. But AI passed the test, leading to a huge rally last week. Those gains continued early today but profit taking soon crept in and markets finished about flat.
On the day:
- S&P 500 flat
- Nasdaq Comp -0.3%
- DJIA +0.3%
- Russell 2000 +0.1%
- Toronto TSX Comp +0.5%
On the week:
- S&P 500 +1.7%
- Nasdaq Comp +1.4%
- DJIA 1.3%
- Russell 2000 -0.8%
- Toronto TSX Comp +0.8%
This article was written by Adam Button at www.forexlive.com.
A leap year and PCE inflation highlights next week’s US economic calendar
Happy Friday.
It’s been a dismal week for economic data in the sense that there hasn’t been much of it. There is a bit more to chew on next week, including a PCE report that the Fed will be watching very closely. It’s a leap year in 2024 for the first time since Feb 2020, when the pandemic was starting to fill front pages.
Monday, February 26
Tuesday, February 27
Wednesday, February 28
Thursday, February 29
Friday, March 1
This article was written by Adam Button at www.forexlive.com.
Oil finishes the week on the lows
The oil market finished last week on an optimistic note, closing just below the $80 level and threatening to break to the highs since November.
Alas, the dam didn’t break and oil has slumped back to $76.62, finishing at the lows of the week. For most of the shortened week, oil was trading roughly flat but it slumped today, perhaps due to Israel-Hamas peace negotiations in Paris.That’s despite a US weekly oil inventory report that showed some tightness, particularly in products.
US refineries should be ramping up in the weeks ahead and stronger global growth is a tailwind but the main driver right now is OPEC and there are signs that producer discipline isn’t where it needs to be.
This article was written by Adam Button at www.forexlive.com.
What’s the market saying about forward inflation?
What’s the market saying about forward inflation?
Here’s a picture of 1-year forward 1-year inflation.
It’s risen but it’s not arguing for problematic inflation.
The two-year forward picture has been turning lower, presumably as the market prices in fewer rate cuts.
I think there’s a portion of the market that is always worried about inflation and the post-covid environment certainly expanded their numbers. There’s always the possibility of another run-up in energy prices or some kind of shipping shock but I really don’t see a problem here. Yes, inflation could run at 3.5% instead of 2% and the Fed may even need to hike again but we’re not on the brink of some kind of fresh inflation problem.
This article was written by Adam Button at www.forexlive.com.
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