Sep 21, 20233 min read

FOMC : hawkish pause, high(er) for longer.. / UST 2s 5.16% / NASDAQ breaking down / USD up

In 1791, Thomas Jefferson said: "To preserve our independence, we must not let our rulers load us with perpetual debt. If we run into such debts, we (will then) be taxed in our meat and our drink, in our necessities and in our comforts, in our labor and in our amusements''...sounds familiar ?
Powell: We are prepared to raise rates further if appropriate. The FOMC is not decided whether it’s reached a peak or not, Powell says. Markets are pricing in 50% of another rate hike this year >>> high(er) for longer, hawkish pause, how long higher etc AND the key IS employment from here on, not so much inflation (which is sticky, known known), for now the message is: one more hike this year and less easing in 2024
German carmakers in the line of fire of possible EU-China trade war/FT
NATO fractures : In U-Turn, Poland announces it will no longer arm Ukraine
The Federal Reserve may need to raise interest rates 3 more times warns Vanguard
Sweden’s central bank hiked interest rates for the eighth consecutive time on Thursday, taking the main rate to 4%, as the country continues to battle high inflation
Norway's central bank raised its benchmark interest rate by 25 basis points (bps) to 4.25% on Thursday to curb inflation, as widely predicted, and, in a surprise move, said it would likely hike again in December
SNB has entered "wait and see mode" it said on Thursday after a surprise decision to pause its current cycle of interest rate hikes (low inflation and strong CHF..)

Markets :

Equity markets breaking down technically, leaders like NVDA below 50dma etc, beware going into quarter-end, rates, usd, all about momentum, on the other side #URA doing just fine in this environment..
UST 10's 4.43% - high(er) for longer, much longer? even 10's JGB's at a huge 74bps... (its huge when it was 10 not long ago), highest since 2013, long way to go in the duration game, fiscal irresponsibility etc etc
USD stays firm(er), EMGFX could come under pressure, or a lot of pressure if yields continue to move higher..and force USD higher, watch out the likes of USDCNH 7.35 area for sentiment.. (one has to like MXN, but it's probably still a pretty crowded trade out there)