IC Markets’ Post

For UK Financial Professionals. Our latest Treasury & Investment Office update is now live. Lower inflation data in the US and Eurozone this past week bolstered the narrative of slowing inflation. Read the full update here:https://ow.ly/ApGa50QfsSX

Check out my article in the August/September issue of the Bloomberg Markets Magazine exploring the sectors that performed the strongest the last three times the terminal fed funds rate was hit. Big thanks to all those that helped put it together! Track How Sectors Performed Once Interest Rates Reached A Peak By James Conroy (Bloomberg Markets) --  The Federal Open Market Committee raised its target rate to a range of 5.25% to 5.5% at its July 26 meeting. Is this the end of the Federal Reserve’s tightening cycle? Chair Jerome Powell was characteristically equivocal, saying Fed policymakers would keep evaluating economic data. “Looking ahead, we will continue to take a data-dependent approach in determining the extent of additional policy firming that may be appropriate,” Powell said.   Maybe markets can speak more clearly. Use the World ­Interest Rate Probability function to see whether traders expect additional hikes.  Read more here: https://lnkd.in/eXbe97Us

Dashing all hopes of Mr Market’s fairy tale landing, the world's most powerful central banker stunned markets with a hawkish tone in the first FOMC meet of 2024. We have been right all along the past month as we predicted that Mr Market's premature rate cut expectations (March) were incorrect. Furthermore, we are now more confident about the macro trajectory of the US economy. More details in "Regime Change"! #markets #investing #economy #macro

Here are 3 things our Chief Economist George Lagarias, MBA would like you to know in the closing week of the year: 1. Markets are now pricing in six rate cuts next year, beginning in March. 2. Inflation is coming down but remains volatile and there is no evidence of a deep recession. 3. Three rate cuts in the last months of 2024 is not the same thing as three (or six) cuts starting in March. The bullish move that started in early November will, at the very least, be met with resistance. Read the full update here ➡ http://maza.rs/6045ib80t #Insights #Inflation #Economy

It was a pleasure to join #CNBC’s Worldwide Exchange, hosted by Frank Holland to discuss this week’s FOMC monetary policy meeting. The Committee is almost certain to leave the target range unchanged at 5.25-5.5%. The labor market is still hot to the touch and core CPI remains sticky. For the May CPI release, the headline index was flat, leaving the over-year-ago rate at 3.3%. Our US Economics team now looks for only one Fed cut this year in November. The big question is the median dot for ’24. We think the 2024 dot will show two cuts for the year, but there is a risk for only one. Having very clearly signaled a 25bp cut, the ECB delivered that move and the direction of travel is still downwards. Our European Economics team sticks with its call that the ECB will cut again in September and December. Elections are an undercurrent, and results for the European Parliament and three major EM economies – South Africa, India and Mexico – this past week brought material surprises and greater market volatility. In the European Parliament elections, the right and far-right have made significant gains, largely at the expense of the greens and centrists. The upcoming snap legislative elections in France also carry significant consequences. The commodity sell-off stands out, and our commodity strategists believe that the summer inventory draws should be enough to get Brent oil back into the high $80s-$90 range by September. #jpmorgan #CNBC #FOMC

Here's how Federal Reserve interest rate hikes can put downward pressure on commodity prices: * **Stronger Dollar:** When the Fed raises interest rates, it makes holding US dollars more attractive to investors. This increases demand for dollars, causing its exchange rate to strengthen relative to other currencies. Since many commodities are traded in US dollars, a stronger dollar makes them comparatively more expensive for buyers using other currencies, potentially leading to lower demand and prices. * **Higher Borrowing Costs:** Interest rate hikes make borrowing money more expensive for businesses and consumers. This can dampen overall economic activity and reduce demand for commodities used in production and consumption. For example, lower industrial output due to higher borrowing costs could lead to decreased demand for metals and oil. * **Investment Shift:** With higher interest rates, investors might find bonds and other fixed-income investments more appealing compared to commodities. This shift in investment focus can lead to decreased demand for commodities, potentially lowering their prices. It's important to note that the effect of interest rate hikes on commodity prices can vary depending on the specific commodity and other market factors. Some commodities, like precious metals such as gold, might see a more complex response where they act as a hedge against inflation, potentially rising in price initially.

U.S. Financial Market Update: The Week Ahead Last Updated on Aug 21, 2023 POWELL AT JACKSON HOLE: The Kansas City Fed’s annual economic policy symposium in Jackson Hole, Wyoming begins Thursday. The theme of this year’s conference is “Structural Shifts in the Global Economy.” Fed Chair Jerome Powell is scheduled to speak Friday morning on the domestic economic outlook. Investors will listen closely for clues in Powell’s comments about policymakers’ updated views on the risk of a potential reacceleration in U.S. inflation. Minutes from the July 25-26 Federal Open Market Committee (FOMC) released last week indicated “Most participants continued to see upside risks to inflation…” – BRICS SUMMIT IN SOUTH AFRICA: Leaders of the BRICS group of emerging nations (Brazil, Russia, India, China, and South Africa) attend a summit in Johannesburg this week. The agenda includes discussions on the formation of a common payments system to conduct more trade within the group in their own currencies to counter the U.S. dollar system. The formation of a working group to discuss the long-term goal of creating a potential joint currency to challenge the U.S. dollar is expected. Read the full TheWeekAhead_20230821_Centier here.  https://lnkd.in/gd2Vs2Kg #FinancialMarkets #FedMeeting #FOMC #USDollar #CentierBank

Get ready for the week ahead in Global Markets in just 60 seconds! 🌎 📅 MONDAY Bank of England policymaker Catherine Mann, one of two hawks who abandoned votes for a rate hike at Thursday’s meeting, will deliver a speech on productivity in Belfast on Monday. In Japan, attention will be on minutes from the BoJ’s last meeting and the Summary of Opinions for insights on how the central bank may follow up on its historic interest rate hike. 📅 TUESDAY US durable goods orders are set to rebound by 1.3% in February, following the largest decline since April 2020. 📅 WEDNESDAY Chinese President Xi Jinping may meet with US business CEOs in Beijing, China. 📅 THURSDAY Interested in a career in banking? Take our M&A Finance Accelerator simulation in partnership with UBS www.amplifyme.com/mafa 📅 FRIDAY The Federal Reserve’s preferred measure of underlying US inflation Core Personal Consumption Expenditures price index is seen rising 0.3% on the heels of its biggest monthly increase in a year. Although it's a market holiday, Fed Chair Jerome Powell will also make remarks at the San Francisco Fed’s monetary policy conference in a live-streamed discussion. In Europe, we will see the release of preliminary March inflation figures for Spain, France, and Italy. #markets #trading #investing #finance #applications

The commodity sell-off is happening despite the prediction of a summer inventory draw because of a few reasons: * **Concerns about slowing global growth, particularly in China:** China is a major consumer of raw materials, and its economic slowdown is reducing demand for commodities. * **A strong US Dollar:** A strong dollar makes commodities more expensive for buyers using other currencies, further dampening demand. * **Shifting expectations for US Federal Reserve policy:** The Federal Reserve is expected to raise interest rates in the near future, which can put downward pressure on commodity prices. While some analysts, like the commodity strategists mentioned, believe summer inventory draws will push oil prices back up, the overall economic climate is creating a headwind for commodity prices.