Barclays Investment Bank’s Post

What’s going on in short-term #liquidity markets around the world? Read our latest Global Liquidity Snapshot for the areas we’re watching: ➡️ The Federal Reserve, the Bank of England (BoE) and the European Central Bank (ECB) all cut rates in Q3, as US money market fund assets hit a record high in September. ➡️ We will be closely watching the outcome of the US presidential election as well as geopolitical tensions in the Middle East for their potential market impacts. ➡️ The market digested the Fed's first rate cut since 2020 without extreme price volatility, but we expect some marginal interest rate volatility going forward. Read more here: https://inves.co/4dATdFL

Recent market adjustments align more closely with central bank guidance, bringing us closer to perceived “fair value” and a long bias emerges in fixed income markets, prompting speculation about broader trends. FX markets are trading sideways and we question how to break the lethargy. Explore more insights. http://spr.ly/6044Xot80

The Rally is here? Global equities have broken out on the upside of a trading range that goes back to early 2022. That was when central banks, including the US Federal Reserve (Fed) and Bank of England (BoE), warned that interest rates would have to be raised sharply to rein in higher inflation. The MSCI All Country World Index, an equity benchmark, is now more than 15% above the high end of this trading range. Many major regional indices, including the US, UK, Europe ex-UK and Japan, are near all-time highs, https://lnkd.in/eCpBTNVS

🚨 Don't get complacent due to low volatility ❗ 👉 Coming into April, the JP Morgan G7 Volatility Index hit recently its lowest in more than two years, whilst JPM’s Global FX Volatility Index reached its lowest since Q4 of 2021 – that was back just before central banks embarked upon the most rapid monetary tightening cycle in forty years! 📈📉 Most analysts predict greater fluctuations to come as central banks lower interest rates at different speeds – any divergence here will drive FX prices! 💡 There are many factors that drive market volatility and cause directional movements in currencies, so whilst 2024 may have been slow out of the traps, there’s plenty to think about going forward. ✍ In this article, Harry Mills, Director at Oku Markets Limited, explores the impact of central bank policies on currency markets and learn how to navigate fluctuations. 📖 Read the article by following the link in the comments! #centralbank #jpmorgan #volatilityindex #foreignexchange

Global Interest Rate Outlook on July 10 @ 10am EST | 3pm UKT | 10pm HK Markets continue their adjustment as economic data shifts central bank action expectations and QT is back to being the norm across G3+, as are sovereign issuance requirements. And this still in a context of asynchronous cycles. - Will the US yield curve ever steepen? - Who will be filling the gap in EU sovereign funding now? - How long could the BoJ continue with tightening? - How far could the BoE go in cutting rates? Join our Global Interest Rate team - Ira Jersey, Huw Worthington and Stephen Chiu, CFA - as they address these and other questions around global yield curves. Followed by Q&A. Register here - https://lnkd.in/eyaUtQbc #fixedincome #rates #portfoliomanagement

Today in FX - Majors 1.2650 £/$ 1.1660 £/Euro 1.0850 Euro/$ 151.90 $/Yen 1.7180 £/Cad Markets Await Key Events Monday's trading session was rather subdued. Risk sentiment rebounded mildly, pushing equity markets higher and softening the greenback. Cable (GBPUSD) nudged higher while EURUSD did the same. The key events this week include US inflation and the Fed meeting minutes (both released tomorrow), as well as a monetary policy decision from the European Central Bank on Thursday. The overarching agenda this year is interest rates. When it comes to data releases, they will all be interpreted and reacted to via the lens of rates and when the major central banks will begin lowering them. Stay tuned, it should be an active week for FX markets.

The recent spike in both bond and equity market #volatility is not the key message. The gap between the #MOVE and the #VIX index since 2020 is. Given the unprecedented rise in global #debt, investors should focus more on the MOVE Index than the VIX. The chart shows that the two have decoupled, and the odds are high that this will remain so. With fiscal budgets out of control and central banks requiring more extraordinary monetary policy to keep yields down, (government) bonds have become structurally riskier. This starkly reduces the cushion bonds offered against adverse market circumstances and equity market drawdowns.

*FED MINUTES:* PARTICIPANTS REMARKED THAT THE FUTURE POLICY PATH WOULD DEPEND ON INCOMING DATA, THE EVOLVING OUTLOOK, AND THE BALANCE OF RISKS. ALMOST ALL PARTICIPANTS SUPPORTED THE DECISION TO BEGIN TO SLOW THE PACE OF DECLINE OF THE CENTRAL BANK'S SECURITIES HOLDINGS; A FEW COULD HAVE SUPPORTED A CONTINUATION OF THE CURRENT PACE. *(US SHORT-TERM INTEREST-RATE FUTURES ARE DOWN WHILE MARGINAL WEAKNESS SEEN ON EQUITY INDICES AFTER THE FOMC MINUTES. TRADERS STILL BETTING ON A SEPTEMBER START TO FED RATE CUTS. NO NAJOR DEVIATION IN MEETING MINUTES)* For information only

🔹It’s visible in the growing sensitivity of large swaths of the market to bonds, with two thirds of the S&P 500 moving in unison with yields 🔷 Mixed takeaways from the oil market and consumer prices this week raise the obvious question of whether bond yields will prove a friend or foe to traders across rate-sensitive strategies 🔷 Without bond yields going down a large chunk of the market has a significant valuation headwind,” said Andrew Lapthorne, SocGen’s head of quantitative research. 🔷 Yet traders are currently pricing in around six quarter-point rate cuts for this year — double than what the central bank projects Source: Bloomberg.

▶️ After ending 2023 with a bang, global stock markets started 2024 with a negative week. ▶️ The Bank of England, the US Federal Reserve, and the European Central Bank had all stopped increasing rates over the second half of the year as inflation continued to fall from its earlier highs. ▶️ There has already been a warning that inflationary fears are not yet over. Click here to read the full WeekWatch: https://bit.ly/3vtdTz8