Read on the Trading Floor - 28 Nov 2023
Today’s focus… 2024 a return to stagnation?
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Macro Themes At Play
Theme 1 - 60/40 portfolios are back...
Don't look now, but your pension is fighting back, having hit the canvas in the early rounds of 2023, it’s dusted itself off and is now enjoying a late round flourish. SPX drifting higher, fixed income rallying as the year ahead previews promise recession and peak rates. Risk parity is back as 60/40 portfolios grind stronger into month end.
In a vacuum of top tier data, the market is focused ignoring a wave of CB appearances that continue to send the same "higher for longer" message.
Reuters - BoE leads central bank chorus on need for restrictive policy
Econostream - ECB’s Nagel: Current Interest Rate Hiking Cycle Not Necessarily Over
FT - Top Fed official signals more rate rises may not be needed as US economy slows
Econostream - ECB’s de Cos: Can’t Expect Interest Rates to Return to a Neutral Level in the Short Term
The repricing in global fixed income markets remains the principle focus of content consumed on Harkster.com, such as....
BNYM Short Thoughts - The Fed's Financial Conditions Dilemma
Apollo Academy's Daily Spark - Fed Futures Pricing in "No Landing"
Saxo Markets - Fixed-income: Biggest rally in US 10-year Treasuries since August 2011
Bloomberg - Traders See as Much as 250 Basis Points of US Rate Cuts in 2024
Brent Donnelly - Back to Reality?... Comparing 2019 economic conditions to now.... (I hope this doesn't mean G10 FX vol is heading to a 4-5 handle... oh dear)
Theme 2 - Notes from the Buy Side ...
As asset allocation for 2024 takes centre stage, its important to track the notes from key AM's putting money to work…
Charles Schwab 2024 Preview - U.S. Outlook: One Thing Leads to Another
Man Institute: Views From the Floor - Can China Reclaim its EM Crown from Rising Star India?
Ashmore - The narrowing path
Theme 3 - HF's remain long USD...
Relative to the aggressive November repricing of the USD vs EUR, AUD, CNH and JPY, positions have reduced but are far from back to neutral levels. This may provide more fuel for Dec USD seasonals? Without a material uptick in US data or a new message from the Fed, the combined impact of the street closing books down for 2023 as well as reserve management rebalancing to start Dec may extend this USD sell off.
Source: Bloomberg
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Top Pieces
Discovered on Harkster.com
Detailed analysis of the quota's / negotiations behind the OPEC+ delay and impending Nov 30th deadline
MacroVisor - OPEC's Surprise Move
2024 to bring a soft landing, mild recession and consensus is now leaning towards a record high for SPX
Cyber Monday.... the economy moves online and away from brick and mortar stores
ISA changes to come in the March budget
Private equity, private lending to get fresh capital (but risks remain in the unchartered/unmarked waters)...
Reuters - Norway wealth fund could invest $70 bln in private equity
Blind Squirrel Macro (The Pod) - Hear me out! Leveraged Finance, but no marks!
Following his visit to San Fran, Xi is visiting Shanghai for the first time since 2021 and he will visit (yet to be named) tech companies ...
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