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Writer's pictureStéphan
Mar 19, 20244 min read

BoJ dovish hikes, still buying JGB's, JPY weakens / RBA less hawkish / FOMC up next, all about the 'DOTS'



  • ExxonMobil CEO Darren Woods: “Everyone wants to reduce emissions, but nobody wants to pay for it” , meanwhile crude demand as high as ever...Morgan Stanley revises higher Brent price forecast, higher demand and geopolitics

  • BoJ dovish hike, RBA slightly less hawkish, US Bond market prepping for Dot Plot, with three cuts in question, May off the table, June maybe, July more likely as we speak. FOMC ''has no basis for a dovish tone'', particularly if inflation/growth show signs of pick up into summer

  • SNB sold roughly $150 billion worth of foreign currencies in the whole of 2023, ''to keep imported inflation down''

  • U.S Congress, White House agree on spending but may still miss deadline. A partial government shutdown this weekend could be brief, but Congress hasn’t left itself much time to act before funding runs out

  • JPM's Mislav: "...equity markets could have a drawdown over the next months both because of growth disappointments, and also due to continued sticky inflation prints and higher for longer Fed; ie, we might end up with the opposite from Goldilocks"

  • Canadian bankruptcy filings are skyrocketing with nearly 800 bankruptcy filings in January 2024 alone/Thread

  • Citi estimates that global cross-asset volatility is near a 15-year low, feeds on itself, as its done for long while, till one day for whatever reason 'it' changes, BoJ shift might have been one of those times, nope

  • China has accused Evergrande of committing fraud totaling $78 billion, making it the largest case of financial fraud in history, dwarfing that of Enron, WorldCom, FTX, and even surpassing Bernie Madoff's $68 billion ponzi

  • Many hospitals in China stop newborn delivery services as birth rate drops

  • Bitcoin crashed to $8900 on Bitmex - weird to say the least!

  • Markets : BoJ dovish hike, after weeks of prepping! JPY weakens, RBA drops hawkish tone (both pretty close depending on how you read it all), FOMC up next - see Saxo's below, 'dot plot' focus! USDollar picks up strength vs JPY,. CHF and AUD, though again no new levels per say. Equity markets should/will struggle a little together with higher USD, if/when 10's UST were to head towards 4.50-4.60%, which is the call on a break of 4.35%+


 

Summary:

  • The Federal Reserve is expected to maintain interest rates within the range of 5.25% to 5.5%. A decision to initiate tapering of Quantitative Tightening is imperative and may be made as early as this month, although it is more likely to occur in May.

  • As inflation proves persistent, markets will focus on the dot plot, likely to show only two rate cuts for 2024 versus the three cuts projected in December.

  • The Summary of Economic Projections (SEP) may reveal higher growth and inflation forecasts for 2024, while we expect 2025-26 to remain unchanged from December's projections.

  • US Treasury yields are likely to adjust higher across tenors, with 2-year yields testing resistance at 4.75% and 10-year yields breaking above 4.35% for the first time since November last year.






what a world




ExxonMobil makes first 2024 oil discovery in prolific Stabroek block offshore Guyana (worldoil.com) classic, you know why both countries are fighting over the territories..







Not just in St.Moritz





Chinese equity showing solid signs...January contrarian trade doing the job


USDJPY - better not break 152JPY or we go back to the 80's levels ! see here Japanese Yen - Quote - Chart - Historical Data - News (tradingeconomics.com) 160...180?... anything possible - interest rate differential is still 4 to 5% depending on how you look at it...





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