Central Bank Watch – Week Ahead Focus BoJ, BoC, Norges, Turkey and ECB

It’s been a quiet start to the year for central bankers, the coming week brings them out confronted by a new round of developments such as the shipping crisis in the Middle East that injects further uncertainty into their plans. We have decisions from Bank of Japan (Tuesday), Bank of Canada, Bank Negara Malaysia (Wednesday), Norges Bank, South African Reserve Bank, Central Bank of Turkey and the European Central Bank (Thursday). Then we have the January 31st FOMC meeting and … Continue reading “Central Bank Watch – Week Ahead Focus BoJ, BoC, Norges, Turkey and ECB”

Bond Traders Weekly Outlook: What Would a 2024 Global Yield Spike Do?

The bond market has thrown out a challenge to traders and Fed officials and ask themselves was last quarters rip your heads squeeze rally a head fake in an ongoing global bond bear market? Do they downplay the odds of a surprising stronger U.S. economy than forecast? Labor markets remain tight, while many politically motivated pundits call victory on what is in reality already elevated inflation above the 2% goal. We saw UK and Canada both report stronger-than-expected inflation. it … Continue reading “Bond Traders Weekly Outlook: What Would a 2024 Global Yield Spike Do?”

Using Bid to Cover Ratios to Gauge Bond Auction Strength

Interest rate and therefore bond price volatility has picked up in the past eighteen months as Central Banks have tried to rein in inflation, easy money and regain a semblance of control. With this swift move in rates since October we watch to see if the market chases lower yields with stronger bid-to-cover ratios. The bid-to-cover ratio is a simple way to measure auction strength as it balances demand and supply. In the US with debt seemingly increasing by the … Continue reading “Using Bid to Cover Ratios to Gauge Bond Auction Strength”

Bond Traders Weekly Outlook: Treasuries 2s10s Spread Eases with Input Prices

U.S. Treasuries rallied this week with ten-year yields reversing 11 of the previous week’s 17 bps jump, while MBS yields reversed all of the 24-bps surge. Two-year Treasury yields sank 24 basis points this week, with yields 11 bps lower over two weeks. This week’s action alleviated some more pressure on the 2s10s spread, expanding it by 15 bps to -20 bps. Market expectations for the policy rate at the December FOMC dropped a notable 30 bps this week to … Continue reading “Bond Traders Weekly Outlook: Treasuries 2s10s Spread Eases with Input Prices”

Central Bank Watch – Week Ahead Focus China, Lagarde, Indonesia and Biege Book

Quiet start to the year for central bankers, National Bank of Poland, Central Reserve Bank of Peru and Bank of Korea decisions all as expected. We did get a hotter CPI print before the January 31st FOMC meeting and with those expectations for the Fed’s preferred PCE measure of inflation on January 26th. Nothing is expected from that statement-only outcome and markets have reduced punts for rate cuts at the March 20th and May 1st meetings. Ahead this week we … Continue reading “Central Bank Watch – Week Ahead Focus China, Lagarde, Indonesia and Biege Book”

Consumer Inflation in December Rises Most in Three Months

Consumer prices have been proving sticky in the US, accelerating the most in three months in December. The CPI increased 3.4% in the year through December. On a monthly basis, it also rose by more than forecast, up 0.3%, the most in three months and above forecasts of 0.2%. The CPI core, excluding food and energy rose 0.3% in December from a month earlier and on an annual basis increased 3.9%. The Fed favors the core metric as a better … Continue reading “Consumer Inflation in December Rises Most in Three Months”

Global Bond Market Performance in 2023

The year 2023 will go down as one of the most traumatic and destructive bond markets on record, for the extreme moves, the money lost, the bank collapses as a result and the glaring statement it made. The statement that many Banks, Treasuries, Politicians and Central Banks have no idea what they are doing with regards to risk and money management and influence. We came from 2022, a year of slowly rising rates at year end with ZIRP in effect … Continue reading “Global Bond Market Performance in 2023”

Catalysts that Empowered 2023’s Treasury Bond Sell Off and Rates to Soar

Interest rates began rising before the end of 2022, then after the first Federal Reserve meeting of 2023 bonds began to fall more sharply, meaning rates rose more steeply. This led to a number of crises that became self-fulfilling such as the Regional Bank crisis. The Federal Reserves’ reaction eased liquidity as the banks were bailed out. This established the next legs of catalyst in the bond rout and with-it soaring interest rates globally. On July 27th the Bank of … Continue reading “Catalysts that Empowered 2023’s Treasury Bond Sell Off and Rates to Soar”

Central Bank Watch – Week Ahead Focus on Final CPI Before January 31st FOMC

No surprise with the FOMC minutes as expected though they did the expand rate cut dialogue to remind it isn’t over yet for ates, possibly. For the Fed Thursday brings the final CPI print before the January 31st FOMC meeting and with those expectations for the Fed’s preferred PCE measure of inflation on January 26th. Nothing is expected from that statement-only outcome and markets have reduced punts for rate cuts at the March 20th and May 1st meetings. We also … Continue reading “Central Bank Watch – Week Ahead Focus on Final CPI Before January 31st FOMC”

Risk Repriced to Start off 2024

The first week of 2024 had markets scale back bets for the start of a rate cut cycle, simply markets had got ahead of themselves. U.S. Treasuries spent the week selling off as expected with the short covering and bonus enthused rally of 2023 fully sated for now. 2024 has flowed on from how U.S. Treasuries finished 2023, on a mixed note with longer tenors showing relative weakness while the short end underperformed into the impending three-day weekend. This week’s … Continue reading “Risk Repriced to Start off 2024”