Friday, 24 June 2016 Rates: Core bonds surge as UK quits EU. Market tumult expected
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- Susanna Cooper
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1 Rates: Core bonds surge as UK quits EU. Market tumult expected The Brexit favours core bonds that make a huge step higher. We expect central bankers to promise unlimited liquidity to safeguard market stability. The Fed rate cycle might be aborted, while peripheral bonds may have a rough time and see spreads widen sharply. Swaps should underperform core bonds. Currencies: Euro and sterling hammered as UK quits EU This morning, global currency markets are wrong-footed by the UK deciding to leave the EU. Sterling and the euro are sold aggressively. The decline is reinforced as markets reduced pro-bexit positions earlier this week. Cable dropped 17 big figures at some point. The yen and the dollar logically are the preferred safe havens. Calendar Headlines S&P Eurostoxx50 Nikkei Oil CRB Gold 2 yr US 10 yr US 2 yr EMU 10 yr EMU EUR/USD USD/JPY EUR/GBP The UK voted yesterday to leave the EU, setting the country on an uncertain path. According to the BBC, projections showed voters backed the leave camp by 52% to 48%. Rating agency S&P warned that the UK is likely to lose its AAA credit rating as the political, financial and economic risks associated with the EU exit will likely lead to a credit downgrade in the near future. The Bank of England issued a statement saying it will take all necessary steps to meet its responsibilities for monetary and financial stability, adding that it has undertaken extensive contingency plans and is working closely with HM Treasury, other domestic authorities and overseas central banks. Sterling dropped more than 10% against the US dollar with cable trading at its highest level since EUR/GBP is trading around 0.81, above this year s highs and the highest level in two years. The euro is hit hard too with EUR/USD trading around USD/JPY dropped temporarily below 100, but reversed part of its losses, trading currently around Global core bonds rally on safe haven flows, pushing yields sharply lower. The US 10yr yield drops almost 30 basis points, hovering around 1.45%. The German 10-yr yield trades 25 basis points lower around -0.15%. Gold profits from save haven demand, trading currently more than 5% higher. The gold price rose temporarily above $1350/ounce, but reversed some of its gains, trading currently around $1330/ounce. Crude oil prices suffer from riskoff sentiment with the Brent hovering around $48.5/barrel and the WTI around $47.5/barrel. Asian shares trade sharply lower this morning with Japanese ones hit the hardest (-8% for the Nikkei) due to a sharply higher yen boosted by safe haven flows. Elsewhere losses are more contained (-3%/-5%). Chinese stocks outperform (-1.5%) probably supported by state backed buying. + P. 1
2 US-Ger Rates Core Bonds jump higher as UK leaves the EU US yield -1d 2 0,5738-0, ,9918-0, ,502-0, ,3458-0,1691 DE yield -1d 2-0,6690-0, ,5910-0, ,1091-0, ,4448-0,2211 While final results are not yet available, it looks certain that the Leave side has won the Brexit referendum with an approximately 52%/48% outcome. The BBC and ITV have confirmed the Leave victory, as election specialist declared that the lead of the Leave cannot be made undone by the remainder of the votes to be counted. Markets react vigorously, as they were positioned for a Remain victory. Repositioning is the name of the game short time. This may lead to overreactions initially, that may be corrected partially. However, the long term consequences could afterwards deepen the initial market reactions. Initial fundamental thoughts about the meaning of Leave This is a political earthquake that will have reverberations for a very long time. It means the irrevocability of the ever closer economic and political boundaries between European states has been broken. It will never be the same again. This event might bolster euro scepticism in a number of other EU and EMU countries and might lead to more referenda and will oblige the European elite to change its politics profoundly. It also question the globalization that has alienated a large part of the populations, who felt that the benefits have gone to the so-called lucky 1% at the expense of the less fortunate big mass that haven t profited from the advantages. The unthinkable has happened. It might influence the Spanish elections (next Sunday), French and German elections (next year) to the US (November). The establishment parties might be hit hard and fringe parties may book more successes. The response of Europe will become clearer later this morning and in the next months, but temptation about talking for more Europe doesn t seem the right thing to do right now. US 10-year Note yield drops 30 basis points to 1.43% threatening alltime lows at 1.38% Gold surges $100/ounce on Brexit. Uncertainty for long is a market negative; risk premia to rise The result will bring a lot of uncertainty for markets for a long time. According to article 50, the UK must now officially notify its departure. That opens a period of two years during which negotiation will take place on the terms of departure. Here, the agenda will be decided by the EU, but the UK remains full member during this period. Higher risk premia are inevitable. P. 2
3 Economic uncertainty will mount and growth will get a hit in the UK, EMU and maybe even globally. This is positive for core bonds and negative riskier assets. We think the Leave vote will limit the powers of the ECB (even if the UK referendum concerned the EU not EMU). It is unlikely the ECB will be able, if needed, to make its policy even more aggressive. Especially Germany might draw a fat line in the sand. The ECB will increasingly be seen as part of the European unpopular elite. Inside the UK, the position of Cameron might soon become untenable and his replacement by Boris Johnson may follow. Given the outcome, it shouldn t surprise that Scotland goes to another referendum and also the position of North Ireland is subject of uncertainty. The Divide between London (big Remain majority) and the rest of England is also subject of thought. Infighting in the Conservative party and even a split is possible. Labour is unpopular too, which might give space to populist parties. R d R1 168,86 BUND 166,93 0,9400 S1 165,68 S2 163,61 Central bankers to safeguard stability We think that central banks will do what they always do when market stability is threatened. It will promise to guarantee unlimited liquidity against good collateral to stabilize markets and avoid accidents. For eventual rate changes it is too early, but a Fed Summer rate hike is now completely off the table. It is followed by US presidential elections, which may bear surprises too, meaning that even a December rate hike has become unlikely. UK future markets are unsure whether the outcome will lead to a rate cut or a hike. The former to offset economic weakness that now inevitably will follow or a rate hike to stabilize sterling. Historically, the BoE has chosen in such circumstances to cut rates and accept sterling weakness to rebalance the economy and support exports. UK bond markets haven t opened yet, but we expect a flight to safety to Gilts. Market reacts straightforward The market reaction was straightforward. Sterling is hammered (cable 1.34) and the euro loses moderately (1.10). USD/JPY fell at some point below 100. (see below for currencies). Asian equities crashed, especially Japan (-7/-8%) hit by yen strengthening. Other Asian bourses lose about 3%. European stocks will doubtless open with huge losses. Commodities decline in general, but gold, of course, surged irresistible, at some point by $100/ounce, before some profit taking occurred. Core bonds surge higher, German yields at new lows US Treasuries were bought massively in overnight trading with the 10-year yield now down 30 basis points to 1.43%, reaching our first Brexit target. The 1.38% all-time low might be a next target. The US 2-year yield dropped 24 basis points to 0.53%. Fed Fund futures have now erased all chances for a rate hike in 2016 and 2017, de facto ending the US rate cycle. The US curve shifted lower by 17 to 30 basis points, the belly outperforming. Japanese yields dropped too, but to a lesser extent. The 10-year JGB yield drops 5.5 basis points to -0.19%, retesting the lows. The Japanese curve trades now negative to the 15-year sector. P. 3
4 U Regarding European bond markets, the 10yr yield fell in the opening about 25 basis points to a new low at -0.17%, approaching our -0.25% target. It pushed the yield curve below zero till the 15-year tenor. The 30-year German yield fell an unbelievable 36 basis points to 0.367%, a new all-time low. Regarding the shape of the curve, in Germany, the curve bull flattens. Peripheral bonds are very vulnerable and should be sold sharply. Extra uncertainty as Spain holds parliamentary elections this weekend. The Spanish and Italian 10-year yield spread narrowed in recent days about 30 basis points from levels around 160 basis points. We expect this narrowing to be more than reversed and if the 160 basis points is broken, the widening may go further. Losses will be still bigger for the higher betas Portugal and Greece. Especially the latter may be vulnerable as it might be next in line to quit EMU (not necessarily EU). Of course, bonds and other markets may swing wild today, looking for a new equilibrium, but the medium term direction should be clear. UK Brexit, the epilogue and nice eco calendar Today, the eco calendar contains the German IFO business climate indicator, US durable goods orders and final reading of US university of Michigan consumer confidence. The ECB will announce the allotment of its first TLRTO II tender. We give some comments on these, but it will be Brexit and the market and authorities reactions that will drive the markets. Bund future gaps open much higher, but somewhat lower now T-Note future surges higher P. 4
5 Currencies Dollar and yen: post-brexit safe havens EUR/UISD Yesterday, rebounds currency as markets risk-off were trade still eased confident on a positive outcome of the UK referendum EUR/USD and even USD/JPY and EUR/JPY were captured by a risk-on move Asian (currency) markets find themselves wrong-footed as the UK chooses for a Brexit USD/JPY drops to the 100-area EUR/USD falling below 1.10 R2 1,4128-1d R1 1,1131 EUR/USD 1, ,0286 S1 1,0913 S2 1,0826 On Thursday, the risk-on trade betting a Bremain outcome in the UK EU referendum slowed in Asia and early Europe. However, a sharp stop-loss unwinding of Brexit positions restarted later. EUR/JPY was a major beneficiary of this new risk-on move as both EUR/USD and USD/JPY rebounded. Markets had clearly adapted positions further to anticipate on a victory of the Remain camp in the UK EU referendum. EUR/USD closed the session at USD/JPY finished the day at with all eyes then turning to the UK. As the regional results from the UK vote filtered-through, it became soon clear that it would become a tough battle for the Remain camp. The results from Sunderland pulled the trigger for a first repositioning on global markets. Sterling nosedived and other markets were also wrong-footed. Asian equities and worldwide equity futures tumbled and triggered a standard risk-off trade. USD/JPY fell off a cliff and dropped temporary below 100. The BOJ issued a statement that it will provide sufficient liquidity and use swaps to guarantee financial stability. Japan FM Aso, said that Japan is concerned on the consequences of Brexit, including on its impact on the currency market. However, the comments on potential interventions remain guarded. Still markets assume that chances on coordinated action in one way or another have risen. This helped to slow the rise of the yen beyond USD/JPY 100. There were also already unconfirmed rumour of BOJ rate checking. In the same context, there were rumours that funds related to the government could enter the market. USD/JPY currently trades around awaiting the open of the European markets. The onshore yuan dropped to USD/CNY , the lowest level since early EUR/USD changed hands in the 1.14 area before the voting count started. The decline of sterling of EUR/JPY also pushed EUR/USD off a cliff. The pair dropped temporarily below the 1.10 barrier, but trades currently again around it. EUR/USD tumbles as markets are wrong-footed by Brexit outcome USD/JPY tests 100 barrier in the wake of the UK leaving the EU Tion Today,the eco data will be completely ignored. The focus will be on the fall-out from the UK Brexit vote. The Fed, the ECB and other major central banks will almost certainly announce measures to provide liquidity and support financial stability. Looking at the (absence) of comments from the BOJ on currency interventions, we assume that the major central banks will in a first stage abstain from openly targeting the swings on the currency markets, unless trading becomes really disorderly. P. 5
6 Today, currency markets will be driven by the post-brexit risk-off trade The euro might remain under pressure The rebound of the yen slows as markets ponder the chance of official action Small less liquid currencies are (very) vulnerable, even against a weak euro The corrections in the likes of EUR/USD, EUR/JPY and USD/JPY went already quite far. Except for the yen cross rates these moves often developed in thin market conditions. At the same time, there will still be a massive repositioning out of all kinds of European and risky assets. In this context, there is no good reason to row against the tide until this repositioning finds a new equilibrium. In this respect, we keep a close eye on the intra-emu government bond spreads. Volatility will probably remain high for quite some time. The Spanish elections to be held this weekend are an additional source of uncertainty. We will probably see plenty of stop-loss moves triggering strange correlations. For now, we assume that the euro has entered a sell-on uptick is markets until the risk-off repositioning enters calmer waters. The context remains intrinsically positive for the yen, but we have the impression that markets are reluctant to push USD/JPY aggressively below 100 as they feel uncomfortable with the risk of Japanese (or even coordinated) action. The global risk-off context will probably also weigh on smaller currencies, even the ones of countries with strong fundaments as investors will avoid assets and currencies that are at risk to become illiquid. Sterling wrong-footed by Brexit decision R2 0,8314-1d R1 0,8117 EUR/GBP 0,8114 0,0437 S1 0,7994 S2 0,7717 The UK currency still gained slight further ground before the publication of the first Brexit results. Cable even filled offers north of However, as the first results came in, it became soon clear that the leave was much stronger than expected. The Sunderland results pulled the trigger for a sell-off of sterling and that move didn t stop anymore till it was 100% clear that the UK would leave the EU. Cable touched an intraday low near and trades currently near EUR/GBP jumped to the /15 area and trades currently near Volatility remains high at the start of the European session The Bank of England already indicated that it will take all measures to assure financial stability. In this respect it cooperates with foreign authorities. S&P is considering to cut the UK credit rating. Regarding sterling trading, the moves in cable understandably are much more aggressive than in EUR/GBP. For now we assume that sterling has entered a sell-on-upticks pattern until global markets find a new short-term equilibrium. We don t anticipated BoE interventions to support sterling. The Bank will probably accept this first repositioning and will only step in if the decline of sterling continues in a disorderly way from current reset levels. We also thinkthat the BOE will in the first place try to address a potential negative impact on growth rather than defend the currency to prevent a temporary spike in inflation. In this context there is no reason to try to catch the falling sterlingknife. EUR/GBP jumps on Brexit vote GBP/USD: from top to below bottom P. 6
7 Calendar Friday, 24 June Consensus Previous US 14:30 Durable Goods Orders (May P) -0.5% 3.4% 14:30 Durables Ex Transportation (May P) 0.1% 0.5% 16:00 U. of Mich. Sentiment (Jun F) :00 U. of Mich. 1 Yr Inflation (Jun F) % 16:00 U. of Mich Yr Inflation (Jun F) % Japan 01:50 PPI Services YoY (May) A 0.2% 0.2% UK 10:30 BBA Loans for House Purchase (May) Germany 10:00 IFO Business Climate (Jun) :00 IFO Current Assessment (Jun) :00 IFO Expectations (Jun) France 08:45 GDP QoQ YoY (1Q F) 0.6% / 1.4% 0.6% / 1.4% 18:00 Total Jobseekers (May) 3506K k 18:00 Jobseekers Net Change (May) Italy 10:00 Retail Sales MoM YoY (Apr) 0.4% -0.6% / 2.2% 11:00 Hourly Wages MoM YoY (May) % / 0.6% Events Moody s Updates Ratings of Germany, Austria, Greece, Belgium and Luxembourg 01:00 Fed's Kaplan Speaks in New York 11:30 ECB Allotment of First TLTRO-II Programme Saturday, 26 June Spanish General Elections P. 7
8 Contacts 10-year td - 1d 2 -year td - 1d STOCKS - 1d US 1,50-0,20 US 0,58-0,18 DOW ,07 DE -0,11-0,17 DE -0,66-0,08 NASDAQ for Exch - NQI #VALUE! BE 0,38-0,08 BE -0,57-0,08 NIKKEI ,02 UK 1,36 0,04 UK 0,50 0,01 DAX 10257, ,03 JP -0,18-0,04 JP -0,27-0,03 DJ euro ,86 USD td -1d IRS EUR USD (3M) GBP EUR -1d -2d Eonia EUR -0,345-0,005 3y -0,237 0,776 0,925 Euribor-1-0,36 0,00 Libor-1 USD 0,51 0,51 5y -0,120 0,955 1,092 Euribor-3-0,27 0,00 Libor-3 USD 0,59 0,59 10y 0,370 1,361 1,445 Euribor-6-0,16 0,00 Libor-6 USD 0,73 0,73 Currencies - 1d Currencies - 1d Commoditie CRB GOLD BRENT EUR/USD 1,1049-0,0291 EUR/JPY 113,27-4,98 193, ,8 48,7 USD/JPY 102,5-1,79 EUR/GBP 0,8111 0,0431-1d 1,72 52,40-1,60 GBP/USD 1,3617-0,1146 EUR/CHF 1,0793-0,0080 AUD/USD 0,7368-0,0163 EUR/SEK 9,4525 0,14 USD/CAD 1,3028 0,0225 EUR/NOK 9,4701 0,11 Brussels Research (KBC) Global Sales Force Piet Lammens Brussels Peter Wuyts Corporate Desk Joke Mertens Institutional Desk Mathias van der Jeugt France Dublin Research London Austin Hughes Singapore Shawn Britton Prague Research (CSOB) Jan Cermak Prague Jan Bures Petr Baca Bratislava Research (CSOB) Marek Gabris Bratislava Budapest Research David Nemeth Budapest ALL OUR REPORTS ARE AVAILABLE ON This non-exhaustive non exhaustive information information is based on short-term is based forecasts on for expected short developments term forecasts on the financial for expected markets. KBC Bank developments cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice. P. 8
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Rates: Haemorrhage on bond markets US Treasuries were hit by a quadruple whammy yesterday. More extremely strong US eco data turned out to be the straw that broke the camel s back. Add higher oil prices,
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KBC Market Research Desk Havenlaan 2, 1080 Brussels Rates: Engulfing patterns suggest more upward potential for German yields A strong German Ifo business confidence and positive risk sentiment following
More informationHeadlines. Thursday, 20 December Rates: Fed doesn t live up to market expectations. Currencies: Markets flunk the Fed.
Rates: Fed doesn t live up to market expectations The Federal Reserve delivered a dovish hike yesterday: a policy rate hike of 25 bps but a lower median rate forecast for 2019 with 25 bps. Investors clearly
More informationCurrencies: EUR/USD testing range top ahead of the US payrolls
Rates: Big day ahead Today s eco calendar heats up with EMU CPI, US Payrolls and US non-manufacturing ISM. We have a positive intraday bias for core bonds especially if this week s risk/oil rally shows
More informationCurrencies: Euro remains in the defensive, but losses remain modest
Rates: Italian credit spread returns above 300 bps Risk sentiment on stock markets and developments in Italy will probably remain today s main trading themes. Main EMU equity indices are sliding towards
More informationTuesday, 13 March 2018 Headlines US stock markets parted ways yesterday Risk sentiment on Asian stock markets is mixed overnight
Rates: US CPI won t shift thinking about next week s FOMC Focus turns to US CPI today. We don t think that the outcome, even in case of a disappointment, will dramatically shift expectations about next
More informationHeadlines. Friday, 09 December Rates: With ECB gone, focus turns to Fed. Currencies: Euro weakness and USD strength post-ecb.
Friday, 09 December 2016 Rates: With ECB gone, focus turns to Fed Markets will further digest yesterday s ECB policy decisions. They cemented the front end of the European yield curves for longer, but
More informationEMU core inflation boosted by early Easter?
EMU core inflation boosted by early Easter? EMU CPI climbs out of negative territory After being negative for one month, euro zone headline inflation came out flat in March, beating the market consensus,
More informationCurrencies: USD/JPY extends risk-on rebound; EUR/USD going nowhere
Rates: Bonds correct lower as risk-on rally continues Bonds got additional headwind from signs Italy may finalize its bank bailout plan and Spain and Portugal won t be fined. In the US an ugly 10 yr Note
More informationCurrencies: Payrolls to decide on next directional move of the dollar
Rates: Bar for payrolls too high after the intense sell-off? The sell off in US Treasuries accelerated this week and the bar for today s payrolls is high (200k consensus, decline in unemployment rate and
More informationCurrencies: USD in consolidation modus ahead of ECB and Payrolls
Rates: ADP employment more important than usual? US yield resistances remain under severe test (2y: 1.3%, 5y: 2%; 10y 2.55%; 30y 3.13%), with even small breaks at the front end of the curve, suggesting
More informationCurrencies: EUR/USD slide continues as doubts on EU economy continue to weigh
Rates: Stuck in no man s land Global core bonds are stuck in no man s land following last month s decision by both the ECB and the Fed to stay side-lined in assessment mode for the next months. More range-bound
More informationCurrencies: Sterling near the recent lows ahead of Carney s press conference
Rates: German bonds eke out modest gains in lackluster trading The risk-on sentiment faded in the past 24 hours, giving some modest support to the traditional safe havens. German bond gains were limited,
More informationRates: Panic in (Chinese) equities and oil stimulates safe haven bond buying
Rates: Panic in (Chinese) equities and oil stimulates safe haven bond buying More disarray in equity and commodity markets push global core bonds higher, while peripheral bonds remain largely shielded
More informationHeadlines. Wednesday, 14 November Rates: Italy raises the stake with the EU. Currencies: Dollar rally taking a breather.
Rates: Italy raises the stake with the EU Italy didn t change its draft budget, raising the stake with the EU. The EC can now forward the issue to ECOFIN, possible resulting in starting up an excessive
More informationRates: US stock market swoon triggers test of 2.8% support in US 10-yr yield
Rates: US stock market swoon triggers test of 2.8% support in US 10-yr yield A heavy sell-off in US tech shares pulled general stock markets lowers and lifted core bonds via safe have flows. US Treasuries
More informationCurrencies: Dollar struggles, but EUR/USD doesn t set new correction top
Monday, 17 July 2017 Rates: Wait-and-see ahead of Thursday s ECB? Today s thin eco calendar probably won t impact trading. Q2 earnings reports could influence markets via risk sentiment. Overall, we expect
More informationMarkets. Rates. Wednesday, 10 January 2018
Wednesday, January 8 Markets Rates,, -, - Policy Rates,7,,,7,, -, -, EURIBOR M / USD LIBOR M ECB FED BOE ECB Deposit EURIBORM USD LIBOR M The Fed raised its policy rate by bps to.-.% in December and confirmed
More informationHeadlines. Wednesday, 07 March Rates: Cohn s resignation vs hawkish comments by Fed Brainard
KBC Market Research Desk Havenlaan 2, 1080 Brussels Wednesday, 07 March 2018 Rates: Cohn s resignation vs hawkish comments by Fed Brainard The US Note future gapped open higher overnight on White House
More informationMarkets. Rates. Wednesday, 08 February 2017
Markets Rates 6 - Policy Rates,,8,6,, -, -, EURIBOR M / USD LIBOR M ECB FED BOE ECB Deposit EURIBORM USD LIBOR M No policy changes at the start of 7. The Fed holds its strategy of tightening policy at
More informationHeadlines. Wednesday, 24 January Rates: More outperformance of US Note future vs Bund? Currencies: USD is fighting an uphill battle.
Wednesday, 24 January 2018 Rates: More outperformance of US Note future vs Bund? Short covering in an oversold US Treasury market started after US yields failed to pierce through key resistance levels
More informationHeadlines. Friday, 17 November Rates: Cautiousness ahead of the weekend? Currencies: Dollar fails to extend rebound. Calendar.
Internal Rates: Cautiousness ahead of the weekend? US Treasuries outperform this morning as US political risk showed another dimension. Risk sentiment will to continue to play a key role today. The proof
More informationCurrencies: Dollar shows no clear trend, but USD/JPY nears key support
Rates: US 10-yr yield closing in on 2.3% support Today s eco calendar won t inspire trading, suggesting sentiment-driven action. If yesterday s risk aversion persists, the US 10-yr yield could eventually
More informationCurrencies: Key US data to decide on next directional USD move
Friday, 14 July 2017 Rates: US inflation data key with Fed comments in mind US inflation data will probably be determining for today s trading session. Recent warnings by several Fed governors suggest
More informationBrent oil is holding under $45/ barrel after yet another decline during US trading hours yesterday.
Thursday, 22 June 2017 Rates: Core bonds remain resilient, partly because of oil sell-off Risk sentiment and oil prices could guide global trading. Core bonds can profit in a daily perspective if oil extends
More informationTuesday, 25 October 2016 Headlines US equities Asian equities can t fol ow up on WS gains yesterday and trade mixed.
Rates: 129-26 support US Note future back in play? Risks for US eco data are on the upside of expectations. In combination with upcoming US supply and a rising probability of a December rate hike, we expect
More informationCurrencies: US stays in the defensive as markets ponder Fed rate hike intentions
Rates: US yield support holds amid sell-off on stock markets Tuesday, 20 November 2018 US Treasuries ended near opening levels, finding a balance between technical considerations (key US yield support)
More informationCurrencies: Dollar propelled higher as June rate hike is again a real option
Rates: Hawkish market re-pricing after FOMC Minutes Hawkish FOMC Minutes showed that most participants would find it appropriate to hike rates in June if labour market conditions and inflation continue
More informationHeadlines. Wednesday, 04 May Rates: Core bond stage strong rally as risk-off sentiment returns
Due to National Holidays, there will be no KBC Sunrise on Thursday the 5th and Friday the 6th of May 2016. Next KBC Sunrise will be published on Monday the the 9th of May 2016. Rates: Core bond stage strong
More informationHeadlines. Monday, 12 September Rates: Sell-off bonds contained, but now joined by equities and oil
Rates: Sell-off bonds contained, but now joined by equities and oil The sell-off on bond markets continued on Friday. ECB Rimsevic and Fed Rosengren reminded markets that there is risk central banks will
More informationHeadlines. Tuesday, 27 February Rates: Powell to confirm Fed s path to policy normalization
KBC Market Research Desk Havenlaan 2, 1080 Brussels Rates: Powell to confirm Fed s path to policy normalization Over the previous days, core bonds staged a cautious technical rebound as investors were
More informationRates: Higher oil pushed Bunds lower, but US Treasuries resilient
Rates: Higher oil pushed Bunds lower, but US Treasuries resilient It looks like markets are awaiting the FOMC meeting before giving core bonds an eventual new direction. Core bonds remain under pressure,
More informationHeadlines. Friday, 24 November Rates: Range bound trading going into the weekend? Currencies: EUR/USD holds within reach of 1.
Rates: Range bound trading going into the weekend? Traded volumes are expected to remain low today with US trading desks thinly staffed on Black Friday. A strong German IFO and progress in German formation
More informationHeadlines. Tuesday, 05 March Rates: First 10y Greek bond sale in almost a decade. Currencies: EUR/USD correction off 1.14 resistance continues
Rates: First 10y Greek bond sale in almost a decade Yesterday s market correlations were very loose amid an empty eco/event calendar. The US non-manufacturing ISM spices trading today. We expect a strong,
More informationMarkets. Rates. Wednesday, 10 May 2017
Wednesday, May 7 Markets Rates 6 - Policy Rates,,8,6,, -, -, EURIBOR M / USD LIBOR M ECB FED BOE ECB Deposit EURIBORM USD LIBOR M The Fed and ECB kept their policy unchanged but key meetings are lining
More informationCurrencies: Sentiment data (ZEW) to ease euro downside pressure?
Rates: Looking for clues from the ECB US investors return after the long weekend, but the US eco calendar is razor-thin. EMU investors look for signs of improvement in the forward-looking German ZEW expectations
More informationHeadlines. Wednesday, 14 March Rates: US political uncertainty takes the upper hand. Currencies: US political noise weighs on the dollar
Rates: US political uncertainty takes the upper hand The bar to beat today s US eco data isn t that high. However, we don t think that investors are willing to set up big new short positions in core bonds
More informationHeadlines. Wednesday, 18 November Core bonds end session little changed. Dollar holding near the recent highs. Calendar
Wednesday, 18 November 2015 Core bonds end session little changed. German bonds continue to outperform US Treasuries, even as the end table shows little differences. The Bund still profits from dovish
More informationCurrencies: Dollar to maintain benefit of the doubt going into the Fed meeting
Rates: Equity sell-off eases, but sentiment remains fragile Global core bonds gained ground on Friday as fear of a global slowdown overshadowed ongoing progress in US-Sino trade talks and strong US data.
More informationCurrencies: Dollar off the recent lows, counting down to the election result
Tuesday, 08 November 2016 Rates: Listless trading ahead of US presidential election outcome Today s trading session will be low-volume and range-bound ahead of the US presidential election results. We
More informationHeadlines. Monday, 03 September Rates: Risk sentiment will set the tone in absence of US investors
Rates: Risk sentiment will set the tone in absence of US investors US markets are closed for Labour Day, suggesting low volume trading especially given the thin calendar. Development in emerging markets
More informationHeadlines. Friday, 18 January Rates: Eco data vs risk sentiment. Currencies: dollar shows mixed picture. EUR/USD to bottom out?
Rates: Eco data vs risk sentiment A WSJ article suggested that the US pondered dropping Chinese tariffs. Risk sentiment improved, even if the headlines were later denied by a US Treasury official. Downside
More informationHeadlines. Thursday, 20 April Rates: Working off overbought conditions. Currencies: dollar still going nowhere. Calendar
Rates: Working off overbought conditions Today s eco calendar contains US weekly jobless claims, Philly Fed business outlook and EMU consumer confidence. Data aren t expected to inspire trading, but a
More informationCurrencies: Sterling rallies ahead of key meeting between EU s Juncker an UK PM May
Rates: More clarity in FOMC Minutes? Investors will be looking for more clues about future Fed policy in Minutes of the January meeting. Consensus is building that the Fed will adjust the balance sheet
More informationRates: Core bonds rally on weak US durables, tumbling oil & soft FOMC
Rates: Core bonds rally on weak US durables, tumbling oil & soft FOMC Thursday, 28 July 2016 The US and German curves bull flattened on a variety of impetus. The FOMC keeps its options open, but doesn
More informationCurrencies: Will payrolls give a clear enough signal for a directional USDD move?
Rates: US 10-yr yield retests lost support US payrolls are expected to rebound following a dismal February figure. This week s US eco data managed to ease global growth worries somewhat with the US 10-yr
More informationHeadlines. Friday, 12 January Rates: Hawkish ECB Minutes are bearish for Bunds. Currencies: EUR/USD nears again range top.
Rates: Hawkish ECB Minutes are bearish for Bunds Hawkish ECB Minutes surprised markets yesterday. They suggest changes to the ECB s forward guidance early this year. The German 10-yr yield is heading for
More informationMonday, 17 October 2016 Headlines US equities closed the session Fed chairwoman Yellen
Rates: US 10-yr and 30-yr yields break above important levels The US 10-yr and 30-yr yields broke above resistance levels on Friday evening as Fed chairwoman Yellen floated the idea of letting the US economy
More informationCurrencies: Dollar probably needs excellent payrolls to extend rebound
Rates: Payrolls strong enough to overrule Fed? Core bonds proved to be more resilient of late as the ECB and Fed respectively signaled no haste to start the normalization process and to step up the gradual
More informationCurrencies: dollar extends correction after rejected test of the recent highs
Rates: Treasuries correct higher, but eyes on US eco data The eco calendar heats up in the US with non-manufacturing ISM, ADP employment and weekly claims. Risks for the ISM are on the upside of expectations,
More informationRates: Chinese President reaches out to US to unlock trade conflict
Rates: Chinese President reaches out to US to unlock trade conflict Risk sentiment improved overnight after Chinese President XI Jinping called in favour of a more open Chinese economy and lowering import
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