The State of Markets
A brief review of all key upcoming events across the major regions of the globe & an overview of key recent market trends.
The State of Markets:
With softer US macro data in recent weeks, markets have started to re-price their expectations of Fed policy. Most notably, some cuts have been ‘priced back’ into the rates curve; US Treasuries have rallied (e.g. with 10 year yields down 24bps from their local peak in late February); and, linked to that, the US dollar has weakened (with the DXY down 1.1% last week).
That has been a tailwind for certain ‘liquidity sensitive’ assets. Gold, in particular, finally broke above its long term major resistance level last week (of $2,050-$2,070), while Bitcoin also delivered strong gains (+8.1%). As per the usual relationship, dollar weakness was a tailwind for equities, with several major US indices making new record highs (see key chart below).
The key question, therefore, is: How much more easing will the US rates market price in over coming days and weeks? And, after Friday’s somewhat soft payrolls report (with downward job revisions), will this week’s CPI print (due Tuesday) add to the case for Fed cuts? That data release will be watched closely, and is followed by PPI on Thursday. Outside the US, key data points include UK employment data (Tuesday) as well as Chinese money and credit growth (Tuesday) and house prices (Friday). Please see below for a full list of key data releases.
Fig A: US dollar index (scale INVERTED) vs. S&P500
(All in London time BST)
Events: N/A
Data: N/A
Earnings: Oracle.
Events: N/A
Data: US headline & core CPI (Feb, 12:30pm); UK employment, jobless claims & average weekly earnings (Jan, 7am); Chinese new yuan loans & money supply (Feb, 8am).
Earnings: N/A
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: US retail sales & headline & core PPI (Feb, 12:30pm).
Earnings: Adobe, AIA Group.
Events: N/A
Data: Chinese new home prices (Feb, 1:30am); US Michigan sentiment (March first estimate, 2pm).
Earnings: N/A
Extract from Quarterly Asset Allocation No. 57, 7th March 2024:
“US Macro: Sectoral and Structural Health”
“Apollo’s Torsten Slok Says Fed Will Not Cut Rates in 2024;
Chief economist flags surge in US growth, sticky inflation;
“Fed will spend most of 2024 fighting inflation,” Slok said.
Source: Bloomberg, 1st March 2024,
Investors’ views about the outlook for the US economy have been changing rapidly in recent months. Responses to the BAML fund manager survey illustrate that shift with ‘global growth expectations rising to a 2 year high’; ‘no landing’ expectations up since December; & ‘the percentage of investors expecting a global recession in the next 12 months’ falling to its lowest since early 2022. All of that, naturally, has driven a sharp rally in global stock markets from the local lows in October last year (with the global equity market +21% since then; US S&P500 +23%; & Japan’s Nikkei, for example, +27%).
Events: N/A
Data: US New York Fed 1 year inflation expectations (Feb, 3pm).
Earnings: Oracle.
Events: N/A
Data: US NFIB small business optimism (Feb, 10am); US headline & core CPI (Feb, 12:30pm); US monthly budget statement (Feb, 6pm).
Earnings: N/A
Events: N/A
Data: N/A
Earnings: Lennar.
Events: N/A
Data: US retail sales & headline & core PPI (Feb, 12:30pm); US business inventories (Jan, 2pm).
Earnings: Adobe, Dollar General.
Events: N/A
Data: US empire manufacturing (Mar, 12:30pm); US import & export price index (Feb, 12:30pm); US industrial & manufacturing production & capacity utilisation (Feb, 1:15pm); US Michigan sentiment (March first estimate, 2pm).
Earnings: N/A
Events: N/A
Data: N/A
Earnings: N/A
Events: Speech by the ECB’s Holzmann in Vienna (8am); ISTAT releases note on Italian economy (8am).
Data: German headline CPI (February final estimate, 7am).
Earnings: N/A
Events: Speeches by the ECB’s (11:45am) & Stournaras in London (2pm).
Data: German wholesale prices (Feb, 7am); Italian unemployment rate (Q4, 9am); Eurozone industrial production (Jan, 10am).
Earnings:
Events: Speeches by the ECB’s Hernandez de Cos at online youth event (9:40am), Schnabel at Money Market Contact Group in Frankfurt (11am), Hernandez de Cos at Economists Guild in Madrid (5pm), Guindos in fireside chat at Foros de Vanguardia (6pm) & Stournaras on Greek economy at LSE (6:30pm).
Data: N/A
Earnings: N/A
Events: Speeches by the ECB’s Vujcic in Croatia (9:35am) & Lane at Imperial College (2:30pm).
Data: French headline & core CPI (February final estimate, 7:45am); Italian retail sales (Jan, 10am).
Earnings: N/A
Events: Bank of England publishes quarterly bulletin article on investment (12pm).
Data: N/A
Earnings: N/A
Events: Speech by the Bank of England’s Catherine Mann on investing for growth: boosting productivity through higher public and private investment (11am).
Data: Employment, jobless claims & average weekly earnings (Jan, 7am).
Earnings: N/A
Events: N/A
Data: Monthly GDP estimate, industrial & manufacturing production, goods trade balance & construction output (Jan, 7am).
Earnings: N/A
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Data: RICS house price balance (Feb, 12:01am).
Earnings: N/A
Events: Bank of England publishes inflation attitudes survey (9:30am).
Data: N/A
Earnings: N/A
Events: N/A
Data: Japanese machine tool orders (February first estimate, 6am); Japanese headline PPI (Feb, 11:50pm).
Earnings: N/A
Events: N/A
Data: Chinese new yuan loans & money supply (Feb, 8am); Australian NAB business conditions (Feb, 12:30am); Australian CBA household spending (Feb, 10pm).
Earnings: N/A
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Data: N/A
Earnings: N/A
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Earnings: AIA Group, Hon Hai Precision, Foxconn Industrial Internet.
Events: N/A
Data: Chinese new home prices (Feb, 1:30am).
Earnings: N/A
(Long)View from London, 8th March 2024:
“What’s Going on with Gold? Plus Puzzling ECB Reticence”
Extract from Quarterly Asset Allocation No. 57, 7th March 2024:
“US Macro: Sectoral and Structural Health”
Extract from Quarterly Asset Allocation No. 57, 6th March 2024:
“Eurozone: Europe is Deleveraging!”
Monthly Commodity Update, 5th March 2024:
“Prices Turning: Uranium, Iron Ore and Oil”
(Long)View from London, 1st March 2024:
“Further (near term) Equity Upside Expected a.k.a. ‘Stay OW – Squeezing the Pips’”
Monthly Global AA No. 34, 29th February 2024:
“Increase Gold Exposure in Strategic Portfolios”
Longview Letter No. 142, 28th February 2024:
“How Strong is Russia’s War Economy? a.k.a. An analysis of Russian oil and gas flow (and overall fiscal position/economic strength”
Monthly Global AA No. 33, 27th February 2024:
“Chinese Equities: Switch from UW to OW A.k.a. Medium term (6 – 9 month) Rally Expected”