Read on the Trading Floor - 09 May 2024
Today’s focus… BoE, Biden, Weapons, Gaza and much more
Macro Themes At Play
Theme 1 - BoE headlines a quiet (summer) session
Theme 2 - Biden's Rafah warning
Theme 3 - How do Trump/Biden's policies impact markets
Further reading and listening of note
Theme 1 - BoE headlines a quiet (summer) session
After an historically wet winter, today feels like the first day of "heat" and sunshine in London and as a result, one could be forgiven if it felt like we were suffering through the slow summer doldrums that normally dominate in July/August markets. Asia's session was quiet and London only got going when BoE hit the docket.
Bailey was happy to maintain optionality, the board signalled cuts are most likely on route this summer but crucially didn't pre-commit given the uncertain volatility that they and the mkt can expect from the April CPI print. Thus, the June vs August debate was unresolved and we must wait for the April inflation data set. ING highlight that "April is the month when much of the service-sector basket is subject to annual price hikes, and experience from this time last year shows this can be unpredictable."
There was something for everyone....
GBP bears will be happy the MPR forecast the 2yr inflation projection to hit 2%
GBP bulls will be happy the BoE didn't change their forward guidance and once again suggested a need for restrictive rates for a prolonged period
SNB, Riksbank... who's next to cut in G10? Will we see coordinated action from Global DM's this summer? Given their high real rates, will the Fed also join the party?
ING - Bank of England inches one step closer to a summer rate cut
FT - Bank of England signals summer cut as it holds rates at 5.25%
The Gryning Times - Closely Coordinated
The Economist - Could America and its allies club together to weaken the dollar?
Forward Guidance - Alfonso Peccatiello: The Fed Put Is Back, Bull Steepener Base Case
Theme 2 - Biden's Rafah warning
Do outside forces have any influence over Israel and Hamas? The action on the ground continues and after last weekends on/off ceasefire it seems the peace talks are clearly struggling for momentum. All week the outside calls have been for a ceasefire, will Biden's weapon ultimatum be sufficient to get both sides back to the table?
Axios - Biden: If Israel invades Rafah, "I'm not supplying the weapons"
Politico - Netanyahu escalates, Biden acts, EU watches
Axios - Johnson, McConnell demand White House give details on Israel weapons pause
Theme 3 - On the campaign trail
As we approach summer markets, and the election now falls between the 3m and 6m vol buckets, focus in Harkster Research Inbox has turned to the impact the candidates proposed fiscal policies will have on markets, the deficit and of course inflation. Finally given the billions that are being spent on the campaign, there is a trend in the literature following the money. The larger the funding the higher the probability of victory.
Saxo Bank - How either US presidency may affect the financial markets
Steno Research - MACRO NUGGET: TRUMP VS BIDEN
Axios - Inside Biden's CEO seduction
Axios - How Trump's economic wishlist could reignite inflation
Rabobank - F is for Fed; Biden; Trump; and the 1980s
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Top Pieces
Discovered on Harkster.com
Bloomberg - Arm Shares Fall After Company Gives Tepid Annual Forecast
Motorhead - Diary of a Tesla Short Seller: Musk Lies About FSD While Tesla's Q1 Results Rank Near the Bottom
ZeroHedge - This Is What Happened After Several Schools Banned Cellphones
Macro Hive - Is Immigration Adding to Inflationary Pressures?
Fortune - Post-Brexit shoppers shift from London to tax-free Paris and Milan in ‘lost opportunity’
ING - Asia week ahead: Growth from Japan and inflation reports from China and India
Apollo - Tech Jobs Leaving California
FT - China’s trade returns to growth on back of AI equipment imports
WSJ - Buybacks Are Back: Corporate America Is on a Spending Spree
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