Read on the Trading Floor - 15 Mar 2024
Today’s focus… MoMo trades stalling, USDJPY vs US2s, Week Ahead
Macro Themes At Play
Theme 1 - MoMo trades correct
Theme 2 - BoJ
Theme 3 - Week Ahead Previews
Further reading and listening of note
Theme 1 - MoMo trades correct
Nikkei, Bitcoin, Nvidia, the leaders of the AI fueled peloton have started to drift back into the pack, showing signs of momentum blowouts as investors fear the Fed may under deliver on the promised hikes. CPI and PPI data have both surprised to the upside which has forced investors to push back their cuts to H2. However that now means they're priced around the November Pres Election. Does make one wonder if Powell can cut rates in September when Trump is let loose on the campaign trail? If the Fed miss June, will the cut need to be rolled into Q1 2025?
As a result, there is clear caution ahead of next week's meeting, chips being taken off the table as it will only take two board members to increase their 2024 dots and then the SEP will indicate "only" 2 cuts. Furthermore, The Wolf Den #924 - IQ highlight the technical analysis "clear bearish divergence with overbought RSI on multiple time frames" for XBT... this may well be a simple correction, cleanout the leveraged FOMO longs. If the Fed maintain their easing bias and with the halving still to come in mid-April, we may well be higher this time next week.
Unchained - Meme Mania
Coindesk - Bitcoin Trader Sees Prices Slumping to $60K as Crypto Bulls See $650M in Liquidations
Bloomberg - S&P 500 Falls as $5.3 Trillion Options Test Looms: Markets Wrap
Theme 2 - BoJ
The anticipation is building across our platform for the BoJ but it is noticeable that JPY did not benefit today from the multi decade high RENGO 5.28% wage agreement. Instead, USDJPY has tracked US2s weakness. Will they go in April rather than March? It will be a bigger shock to the system if they drop YCC, given how it has helped dampen global yield curves than the sole impact of a 10bps hike.
USDJPY vs US2s
Source: Tradingeconomics.com
Bloomberg - BlackRock, Man Group Reveal Big Japan Bets Before BOJ Decision
Bloomberg - Japan’s Blowout Wage Result May Spur BOJ March Rate Hike Chatter
HSBC - Under the Banyan Tree – A new era for the Japanese yen?
Gryning Times - Could the BOJ act next week?
Steno Research - Unions paving the way for Ueda
Japan Times - Japan’s labor unions win big pay raises for members
Bloomberg - Half of BOJ Watchers Still See April Rate Hike While Bets on March Move Jump
Theme 3 - Week Ahead Previews
BoJ, Fed and BoE dominate the horizon
ABN Amro - The Week ahead:
S&P Global - Week Ahead Economic Preview: Week of 18 March 2024
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