The Weekly Hark - 6 May 2023
Debt Ceiling X date, Fed pause, ECB on a journey to restrictive....
Will the Fed cut this summer?
The market believes the Fed have paused, but JPow hasn't awoken the animal spirits just yet …. global growth concerns (US recession, China re-opening support for commodities fizzling out) keep the USD from finding the middle of the USD smile, especially as regional bank stocks saw a wave of liquidation. As soon as First Republic was rolled into JPM, PacWest became the next in focus. Furthermore, the Fed have not confirmed the end of their cycle, JPow was clear that he disagreed with the cuts priced into the curve (one full cut by July pre-NFP) and even emphasised the probability of more to come as sticky core inflation, historically tight labour market and absence of recessionary data (in the short term) will keep the Fed from cutting (and they may even need another hike) especially if the regional banks are successfully ring-fenced.
5 important pieces that captured the key narratives of last week... Debt Ceiling X date, Fed pause, ECB on a journey to restrictive....
Regional Bank Stress (FRC rolls into PacWest): Saxo Bank - Equity update: US banks, European earnings, and Apple earnings
Fed (pause but options still open for more): Pepperstone - Interest rates markets betting on a Fed pivot – rate cuts incoming?
ECB (On a journey continues): SEB - ECB hikes by 25bps hike, intends to cease APP reinvestments in July
NFP (still doesn’t pay to bet against the ): Mish Talk - Jobs Rise by 253,000 and the Unemployment Rate Dips to 3.4 Percent in April
Debt Ceiling (X date brought nearer by Yellen): JP Morgan - Global FX : Fearing fear itself
Focus turns to US CPI, Debt Ceiling meeting between Biden/McCarthy, BoE, Turkish Elections and of course, bearish May seasonals….
Timothy Ash: Turkey - critical election looms.
Pepperstone: Trading The May BoE Decision: More Hikes To Come From The Old Lady
Adam Mancini: Is "Sell In May" Already Done? May 8th Plan
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