The data-heavy week most certainly lived up to its billing, as the cross-currents from major CB surprises and key data points led to a volatile week in fixed-income markets. The Chinese Politburo (pledged support for nEV, tech companies and regional debt issues, but crucially the market is still waiting for the fine details), Fed (data dependent), ECB (at restrictive?), US Corp month-end demand for USD, US GDP outperforming low expectations (2.4% Q2) and BoJ (soft Tweak).
The majority of the uncertainty comes from the USD smile. The market wants to sell USD as it is happy to see the Fed approaching the end of this hiking cycle and continues to bet on a US recession. However, the fiscally fuelled US data (IRA Act) continues to defy (forecasted) gravity. With China and Europe struggling, the formers fiscal policies promising but not clear, the US Exceptionalism story just won't go away. The RoW growth is simply too weak to outperform the US. As a result, the market pushes a softer USD narrative as the US soft landing appears, but this is different to a global soft landing, as the probabilities for a hard landing rise in Europe. Are the deteriorating economic conditions in Sweden and New Zealand harbingers of what is to come in the Eurozone and UK?
The key narratives that drove markets last week
MishTalk: Four Measures of Inflation, What’s the Fed Watching the Most?
Brent Donnelly: Friday Speedrun: July 28, 2023
Christophe Barraud: Top 10 Macro/Financial Charts of the Week
JPM Global Data Pod Weekender: These data are juuust right!
TKer by Sam Ro: Stocks make more sense when you look forward, not backward
The Felder Report: Investors Go ‘All In’ On The Soft Landing Narrative
Looking forward to another MAJOR week ahead: BoE, RBA, NFP, AHE, CAD Employment and Treasury issuance
Scotiabank: The Global Week Ahead: Lessons From Canada’s Immigration Experiment | Post (scotiabank.com)
Westpac: RBA Board to raise the cash rate by 25 basis points at the August meeting – maintain tightening bias
Brent Donnelly has excelled himself once again, adding Friday Speedrun to his vast catalogue of publications (AM/FX, Alpha Trader and the Art of Currency Trading). Friday Speedrun gives you an easy-to-understand and super quick rundown of the week in global markets.
"Gasoline futures suggest that prices at the pump, already their highest in three months, have further to rise."
Source: John Authers (Bloomberg) via
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Thanks for the shoutout!
Thanks