The Saturday Hark Back - 28 Oct 2023
Capturing the themes of the week when there’s more time to digest them.
The Hark Back
The key narratives that drove markets last week:
A divergent week for assets as 'peak' US growth maybe behind us
Fixed Income - The market has comfort in the ECB pausing and the impending data being soft enough for the next move to be a cut (Nordea - ECB Watch: Permanent Pause). However, as highlighted yesterday in ROTTF one of the most important cross asset signals this week was US fixed incoming ending the week lower across the curve than where it started ... (H/T for Bill and his timely tweet)
Equities - SPX and Nasdaq down 2.0-2.5% on the week, although there were clear winners and losers from earning season. In fact, the Nasdaq euphoria across FinTwit to be 'only' down just over 2% is a surprise given it broke its 200sma. The expected CTA liquidation was not as initially strong as expected. (Watch next week for a failed break)
Commodities - XBT maybe hoarding all of the headlines but Gold's safe-haven status sees it outperforming stocks on the year (chart below - source @Barchart). How many had that as part of their trade plan for H2 when US real rates ripped higher?
Crypto - How much money will flow into a Bitcoin ETF? Here's one projection from Alex Thorn - Head of Research at Galaxy (Unchained podcast)
FX - dormant, watching in envy at their fixed income and equity colleagues. A choppy range bound week as AUD finds comfort on the 0.63 handle, EUR 1.05 and GBP 1.21. (JPM Global FX: Dollar dissonance). JPY bears tried to clear 150, but we've ended the week lower led by the reversal in US yields as well as hotter Tokyo inflation. Next week's BoJ is key... a further YCC widening would leave global duration vulnerable.
Elsewhere, there has been progress in the US as the House finds its new speaker (UBS Washington Weekly Podcast - House speaker Mike Johnson, Geopolitics) and UAW looks to have won a 25% pay rise for its members, holding the big 3 to account for staff sacrifices during the GFC (Bloomberg). Two of the main headwinds for the US economy have been solved quietly this week, although we may still have a government shutdown in Nov as Johnson looks to split the Ukraine and Israel funding bill into separate votes. The House Reps asking Biden, What is the end game in Ukraine?
As we head into the weekend, get some rest as next week is loaded with key events ...BoJ, Fed, Month end rebalancing, Treasury refunding and of course we get two important US data points ... NFP plus ISM.
Top 10 Reads of the Week on Harkster.com:
Steno Research - EUR Inflation Watch: A Dovish Surprise in the Making
Brent Donnelly - Friday Speedrun October 27
Stenos Signals - Central banks are insolvent. How do we deal with it
Chris March, Money: Inside and Out - Italian households keep the faith
The MacroTourist by Kevin Muir - WHEN THE MATH CHANGES
Brent Donnelly - What Part of the Yield Curve Does the Dollar Listen to?
The Blind Squirrel - 'Fishy' returns in private markets.
Christophe Barraud - Top 10 Macro / Financial Charts of the Week
The Last Bear Standing - Uncle Sam’s Tab
Nordea Macro & Markets - Back to the 70s?
The majority of these links appear in our new "HarksterPro - Intraday Market Colour" channel. If you click on "Select Channels", you should find under "Added Recently" our latest additions to the app. @HarksterHQ will use this new channel to flag good articles/sources of content as well as headlines/market moving events.
Top 5 Podcasts of the Week:
Unchained - SBF Casts Blame on Others For Key Decisions at FTX
JPM Global Data Weekender - Hold and seek
Bank of America - The time to own emerging markets is not now, but it may be near
UBS Top of the Morning - The week in review and preview
Morgan Stanley - China's Risk of a Debt Deflation Loop
The Week Ahead
Looking forward to next week...
Scotiabank - QT and The Refunding Tango
S&P Global - Week Ahead Economic Preview
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