13 days ago

EURUSD jumps upon Villeroy's remarks #europe #fx #trading

European Central Bank Governing Council member Francois Villeroy de Galhau said the conditions are met for interest rates to be raised back above zero by the end of this year if the euro-zone economy doesn’t suffer another setback. Money markets are pricing in a 25-point increase in July and raised bets on the pace of tightening beyond that, seeing 95 basis points by year-end. German two-year bond yields hit 0.35% following Villeroy's comments and the euro jumped against the dollar.

#Bonds #Forex

21 days ago

US GDP softer than expected #stocks #growthissues #trading

The US economy unexpectedly contracted in the first quarter, dragged down by softer inventory growth, a persistent trade deficit, and to some extent by softer consumer spending. Gross domestic product fell at a 1.4% annualised rate (vs +1.1% expectations). Many analysts consider the print "misleading" as they state that the economy is still quite strong. But should coming economic data point to a softer growth, this could push the Fed to reconsider its monetary stance.

#Stocks #Bonds

35 days ago

#China vows easing, #yields drop, #stocks recover. #markets #trading #Fed $QQQ $SPY

Sentiment is driving this market, and it's ticking up slightly after China vowed easing measures to counter the economic fallout from its lockdowns. China is expected to cut the key rate and reserve requirement ratio. Similarly, traders cut back bets the Fed will increase rates this year from 9 to 8 hikes, still expected before the year ends (for a total of 2% interest increase). Yields on the shorter end of the curve continue to fall the most. As such, long-duration assets (with cash flows well into the future, high PEs stocks etc) and crypto continued higher in the recovering market sentiment. The ECB meeting and earnings from large US banks are in focus today.


50 days ago

Yields inverted. Any impact on #stocks? #spy #yields #trading

Yields on the 2-year Treasuries briefly exceeded those on the 10-year Yesterday, a first since 2019, a sign that bond investors are pessimistic about the long-term outlook. Historically, inverting yield curve, an abnormal state, did lead to recessions in the US as Fed officials pursued an aggressive tightening policy to combat inflation. But it is important to note that the inverting yield curve by itself has not been the catalyst for a drop in equity markets. Consequently, while yesterday's move is rare in its kind, it does not necessarily represent a threat to stocks in the near term.  

#Stocks #Bonds

79 days ago

Yields dive on deepening uncertainty #markets #bonds $TLT $VGLT

Rising uncertainty as a result of the widening conflict in Europe is sending investors to reassess the potential for interest rates to rise. In the last 24 hours, US 10-year treasury yields have dropped 10bp to 1.73%, a big drop from the level of 2.05% reached just 2 weeks ago, prior to the Russian invasion of Ukraine. Traders are bracing for more persistent uncertainty to affect not only the US Federal Reserve but also the European Central Bank. German 10-year bond yields are back in negative territory for the first time in a month. The two-year German yield has now slumped to -0.63%. Lower long-term yields are expected to be a net positive for long-duration risky assets, most often found in growth stocks. The big picture improves for stocks overall given their relative attractiveness versus the government bonds.

#Stocks #Bonds