Ahmed Ibrahim’s Post

Macro-News round-up: #MarketNews Europe: Yesterday, Bloomberg Tv interviewed the president of ECB, Christine Lagarde. Some ECB officials have expressed the opinion that the policy rates of the bank ought to be lowered in the summer. when she was asked about her position on this, Lagarde responded, "I would say it's likely too." The greatest risk, she warned, is if the ECB eases policy too quickly and then needs to return to tightening, "because we would have wasted all the efforts that everybody else put in in the past 15 months." That said, remember that Europe's inflation rate, released yesterday, was 2.9%, up from 2.4% in November. Lagarde also said that money markets were "not helping the fight against inflation" since they were overly confident that rate reduction will be implemented this year sooner than anticipated, If this sounds familiar, it is because we have been warning you about it for the last few weeks in this report. The European session, for the moment, recovers some of what was lost during yesterday's session, where some European stock markets lost close to 1%. DAX40 is up about 200 points and is now above 16 500. EE.UU: Let me remind you that today we will have important data: Initial jobless Claims, Fed GDPNow, Crude Inventories & Philadelphia Fed manufacturing index. Tomorrow we will analyze some of their impact. Geopolitics: Things are not getting any better worldwide. Tensions in the Middle East continue to rise. Following the drone attack on a US-flagged container ship in the Gulf of Aden, the US and the UK conducted a new series of air strikes on Houthi targets in at least five Yemeni provinces. In addition, Pakistan launched another attack on Iranian territory. According to Anadolu Agency, Pakistani fighter jets and drones flew some 20 km inside Iran to attack terrorist hideouts with modern weapons. According to Iran's official news agency IRNA, seven foreign nationals were reportedly killed in the attack. Could this be a US-ordered retaliation for Iran's attacks on opposition close to US troops in northern Iraq and Syria? Commodities: Overnight, crude oil prices had a slight upward rally, with Brent crude approaching $78.50 a barrel. However, during the European session, we can see that the price has again fallen back by around a dollar. The apparent lack of response of crude oil to this series of conflicts could be signaling a serious structural problem for the global economy, such as a contraction in fuel demand, which would definitely indicate that the world economy is slowing down and we are entering a period of recession. #MacroNews, #FinancialNews, #FED, #dollar, #InterestRates,

STRATEGY REPORT/WEEK AHEAD--Eventful Spring IMF. The “Higher For Longer” Theme Refuses To Go Away.......1. It was an eventful Spring IMF, without a doubt. Typically, the biannual IMF/WB meetings come and go without leaving much to talk about, and most certainly not delivering extreme market moves. Not this one…The 2024 Spring IMF meetings delivered very significant news headlines, not least the attack of Israel against Iran last Thursday night, one that moved markets very aggressively while investors were attending diverse dinner parties and cocktails in DC. For context, during the prior week the US 10-year went from yielding 4.5% on Monday, to 4.68% on the 16th, down to 4.56% on the 18th, back up to 4.65% on that same 18th, and down to 4.5% after the military response of Israel on Thursday night. Looking at EM, just to place things in perspective, the futures markets were forecasting that the Central Bank of Brazil would be cutting rates to 9.7% three weeks ago (down from the current 10.75%), but markets are now forecasting that the BCB will only be able to reduce rates by +/- 25bps in all of 2024 –an outsized move happened during the speech of Campos Neto in our event last Wednesday morning, one that was initially supposed to be private but was later made public at the request of the authorities. If I had to choose a phrase to describe the perceived client consensus after listening to public officials and pundits during these IMF meetings we would use “the higher for longer has resurrected”. 2. It is important to note that since the onset of the pandemic, the volatility of the Fed Funds futures market has been quite extreme. To place things in perspective, just during this last yearly period the market has gone from forecasting as early as June 2023 that by December 2024 the FOMC would have delivered 5 Fed Funds cuts (-25bps each), to the market later changing to 2 cuts in October 2023, to forecasting 7 cuts in January of 2024, and with the market now forecasting only 1-2 cuts for year-end 2024. As argued before in other notes, I believe that the market will once again pivot towards forecasting much more aggressive actions IF we see ONE poor NFP (of +/- 100k m/m) and/or ONE soft Core PCE of +/- 0.1% m/m (instead of 0.3% m/m) in the next two to three months. Keep in mind that Core PCE averaged 0.16% m/m in the second half of 2023, and had it not been for the “one-off” of September (0.3% m/m) tied to an outsized increase in owners’ equivalent rent, the average sequential increase would have amounted to only 0.12% m/m. Also, as can be seen in the graphs presented above and below, expecting owners’ equivalent rent and motor vehicle insurance to continue in their ongoing deceleration paths is logical from a statistical standpoint. Good luck this week!

27 May 2024 AM Source(s): Bloomberg News / Barron's /Dow Jones/ FT US Memorial Day holiday observed. Financial markets closed. UK financial markets are closed for Spring Bank Holiday. European shares struggled for traction after a European Central Bank official warned that policy will have to stay restrictive all year even as policy makers remain on course to cut rates next month. The Stoxx Europe 600 index was little changed in light trading, ____ ECB Will Need to Be Restrictive All Year Long, Lane Say * ECB chief economist comments in Financial Times interview * Officials have widely telegraphed a first rate cut on June 6 The European Central Bank is on track to start cutting interest rates next month but will need to keep policy in restrictive territory through 2024, according to ECB Chief Economist Philip Lane. ____ Fed’s Favorite Underlying Inflation Gauge Seen Cooling: Eco Week * Core PCE measure could see smallest advance of 2024 so far * Euro-zone inflation may pick up, but ECB remains poised to cut Federal Reserve’s first-line inflation gauge is about to show some modest relief from stubborn price pressures, corroborating central bankers’ prudence about the timing of interest-rate cuts. ______ Global & U.S. Market Preview: Government bond markets are off to a slow start given U.K. and U.S. holidays. U.S. inflation data later this week will also provide key input to direction. Focus will be on the European Central Bank's rate decision on June 6, where a 25-basis point rate cut is nearly a done deal ______ U.S. Central Bank: Yellen Says Higher Path for Rates Boosts Need to Lift Revenue ______ U.S. Economic Data Today: None ______ U.S. Treasury A.M. Yield Indications - FRIDAY CLOSE 1 Yr-T-bill @ 5.176% 2yr Note @ 4.921% 10yr Note @ 4.471% 30yr Bond @ 4.583% _____ U.S. Treasury Auctions: None ______ Global Economic Data: * China industrial profits * Germany IFO business climate * Hong Kong trade * Israel rate decision Global Events: * EU foreign ministers meet in Brussels to discuss Ukraine and Middle East. * ECB Governing Council member speaks at Bretton Woods history conference in Hangzhou, China. * ECB chief economist Philip Lane speaks in Dublin on inflation in the euro zone. * IMF holds discussions with Ukrainian authorities in Warsaw to review economic policies as the country seeks to unlock next tranche of $2.2 billion in aid. _____ Overnight Headline News: * BOJ Signals Room for Interest Rate Hikes After Price Shift * China Slammed in G-7 Show of Unity Threatening Trade Escalation * Norway Fund to Vote No on Exxon Director -- WSJ * German Business Outlook Improves as Economic Momentum Builds * Jeep, Ram Dealers Gripe as EV Cars Sit on Lots -- WSJ * Apple Bets on Giant User Base to Help It Win in AI * Musk’s xAI Raises $6 Billion in Bid to Challenge OpenAI * Norway’s Wealth Fund Opposes Exxon Director Over Climate * Walmart, Capital One End Credit-Card Deal in Wake of Lawsuit ********

07:45 Tuesday 19, 2023 European Markets Morning Bid: BOJ gives the gift of predictability December 19, 20236:34 AM GMT+1Updated an hour ago A look at the day ahead in European and global markets from Brigid Riley There were no surprises at the end of the Bank of Japan's December monetary policy meeting on Tuesday, which handed down the widely expected decision to leave ultra-easy policy settings and dovish forward guidance unchanged. There's still a crackle of anticipation left this Tuesday, however, over the BOJ governor's press conference at 3:30 p.m. (0630 GMT). The markets will be listening closely for any hints that Governor Kazuo Ueda may drop about when the central bank plans to make its much-awaited exit from negative short-term rates. More than 80% of economists polled by Reuters expect the Japanese central bank to say "sayonara" to its outlier policy by the end of 2024, with one-fifth saying the pivotal move could happen as early as January. It will be a communications challenge for the BOJ chief, who is expected to attempt a delicate balancing act: How to keep markets on their toes for the first rate hike in more than a decade by one of the world's most dovish central banks, without stirring up too much excitement. The yen gave up some ground against the greenback, briefly slipping as low as 143.78 per dollar in the wake of the decision, while Japan's Nikkei (.N225) rallied. The benchmark 10-year Japanese government bond yield edged down to 0.650%. In the meantime, MSCI's Asia ex-Japan index (.MIAPJ0000PUS) weakened slightly. As the BOJ battles to contain a market ready to boil over at the slightest hint of a policy reversal, the European Central Bank and the Federal Reserve are once again grappling with a wholly different sort of problem. Goolsbee will have another chance to clarify his stance during a live interview later on Tuesday. Atlanta Fed President Raphael Bostic is also scheduled to speak about the U.S. economy at a separate event. U.S. housing starts and a final reading of euro zone inflation in November top a light calendar for economic releases on Tuesday. Key developments that could influence markets on Tuesday: Euro zone final Nov HICP U.S. Nov housing starts Appearances by ECB policymaker Peter Kazimir and ECB board members Andrea Enria and Frank Elderson Fed's Raphael Bostic and Austan Goolsbee speak BOE Deputy Governor, Financial Stability, Sarah Breeden gives speech Page 1 end An office employee walks in front of the bank of Japan building in Tokyo, Japan, April 7, 2023

Global Week Ahead – Teeing Up July’s Markets Developments in the #weekahead could set the tone for July’s central bank communications and financial markets. Most of the market attention is likely to be upon several key macro updates and regional central bank decisions with many of our clients particularly focused upon a pair of Latin American decisions. US core PCE could land at 0% m/m and further inform Fed sentiment, Canadian inflation could inform July BoC cut pricing, and the state of Canada’s economy will be updated amid excessive negativity. Most Eurozone countries will release CPI. US Treasury auctions return. Politics will also play into developments. The first US Presidential debate will be set against the backdrop of Biden’s polling momentum as he has taken the lead in poll aggregators. Iran’s faux election is sure to bring more anti-western rhetoric with some potential risk to energy markets. Final polling this week will segue into the Sunday June 30th French legislative election as French spreads over bunds are four times wider than in 2021 but a far cry from the crisis in 2012 to date. Last minute polling will also focus on the following week’s July 4th UK election that has Labour’s Starmer firmly in the lead but losing ground to Reform and the Liberal Democrats that is nevertheless splitting the conservative vote. Please see the attached summary slide deck and go to our website for the full written publication. Key topics: - Political risk is just getting started - US Presidential debate could further inform polling - Final polling before France’s first round election - The last full week of UK election campaigning - Iran’s faux election - US core PCE could be very soft - Canadian CPI may inform BoC July pricing… - …with basket changes and housing’s rising effect - Tracking Canadian GDP, and why it’s better under the hood - BoC’s Macklem to speak about, well, everything! - Key US Treasury auctions return - Eurozone CPI: One of two before July’s ECB - Banxico expected to hold in the peso’s election aftermath - BanRep expected to deliver another large cut despite COP softening - Riksbank expected to stick to its script - BSP: Still thinking about August? - Turkey’s central bank likely to hold at a dizzying height - CPI: Australia, Tokyo, Malaysia, Singapore - Other global macro

US GOV Bonds: Surgical on the data 05.02.24 After a string of strong real data, the Fed said it will be prudent and 3 rate cuts expected this year, inflation expectations and yields have risen, the market is pricing just 2 rate cuts this year – 0.25 p.p each, the first in August, And two more in 2025. DXY Index 104.42 – strengthen due to geopolitics rather than the Fed rate, USDILS 3.67 –shekel weakened mainly due to dollar strengthening worldwide, and the price of oil 72.8/78.04 per barrel rose slightly, with energy companies talking about a shortage on the horizon.   The US and UK launch repeated attacks on targets in Iran and Iraq as a means of restraining Iran and its proxies. But effectively, the Red Sea Trade Route is under siege. And China pressuring the US not to support Taiwan's independence, while 33 Chinese warplanes over Taiwan underscore the Chinese threat to the island. Thus, directly in East Asia, and through its proxies in Ukraine and the Middle East – the terrorist China is imposing extortion by threat on countries around the world to achieve its goals: Chinese domination and coercion of obedience.   The US is opening an economic gap vis-à-vis the rest of advanced economies – being a domestic producer of most of its economic needs, but the global environment with much more inflation pressures directed mainly at the West by China. And if the U.S. doesn't strangle China with economic sanctions that threaten to bring it down economically, the reality of global terrorism is here to stay and expand. To say: The real economy does not support the financial markets and their price levels.   Thus, in the current global situation, in my view, it is better for central banks in the West not to change interest rates, and to find other ways to support economic activity. And especially to internalize: The world that existed before October 7 is no more, and not only for Israel.   From the Israeli perspective: politicians vs. reality different universes: the former calculate polls for elections, in reality 137 Israeli citizens held under Nazi terrorist , and IDF soldiers are fighting and are killed to free them and subdue terror, the threat on northern and eastern borders is real. Israel is already under a naval blockade with no end in sight. This is a significant deterioration in trade conditions, given that Israel exports high-tech (which weakened) and imports raw materials and consumer goods: how can one think that inflation will not rise further? due to shortage that will create volatility in it and in real activity. The 10-year gov yield increased slightly 4.233%, the shekel weakened due to dollar strengthening, the rate of 5-year CDS still at a record high of 121.90 (as of 2/2): the risk to the economy is not priced at all, in the USDILS rate nor in yields.   My recommendations: Underweight in risky assets being unjustifiably high, Overweight in USD, high liquidity in it, indexed gov bonds (US and Israeli) and commodities.  

Here's our latest Global Markets Overview! A scan of monetary policy settings for the major advanced economies   United States: No change in the US Fed Funds Rate but a hawkish message. The Fed’s 20 September dot plot – its guidance for future rates – shows fewer cuts in 2024 and 2025 compared to its June outlook.   Japan: In a sign of increasing pressure to unwind its yield curve control, the Bank of Japan made an unscheduled purchase of $12.7 billion of Japanese government bonds to prevent yields from rising excessively.   Euro Area: In the Eurozone, the ECB increased its policy interest rates by 25bps in September. While this was not fully priced-in by money markets, it had little impact on short-term bond yields so, ultimately, it did not represent a major surprise.    United Kingdom: In a close decision, the Bank of England kept its benchmark rate unchanged at 5.25%. However, the policy committee also agreed unanimously to sell GBP 100 billion of its holdings of UK government bonds over the next year. This is consistent with their statement that “monetary policy would need to be sufficiently restrictive for sufficiently long to return inflation to the 2 percent target."   Canada: In early September, the Bank of Canada announced it had held its target for the overnight rate at 5%. The Bank is also continuing its policy of quantitative tightening. This is despite economic growth slowing sharply in the 2Q’23.   Australia: The Reserve Bank of Australia maintained interest rates at 4.1% at their October meeting. While goods inflation has eased, the Bank noted services and fuel prices remain concerning

Title: Impactful News and Data Shaping Global Markets, Gold, and Silver Trends Introduction: The interconnectedness of global markets has resulted in a myriad of factors influencing the stability and fluctuations in various financial assets, including gold and silver. News events and economic data releases play a critical role in shaping market sentiment, investor behavior, and the performance of these assets. This essay will analyze the potential news and data affecting global markets, gold, and silver during the week commencing Sun Oct 22, 2023. Macroeconomic Indicators: 1. Central Bank Policy Decisions: Monetary policy decisions by major central banks such as the U.S. Federal Reserve, the European Central Bank, and the Bank of Japan can significantly impact gold and silver markets. Any indications of interest rate changes, tapering of asset purchase programs, or adjustments to inflation targets can influence the demand for these precious metals, as they are often perceived as a hedge against inflation and currency depreciation. 2. Economic Growth Data: The release of key economic indicators like Gross Domestic Product (GDP), employment data, consumer spending, and manufacturing activities can impact global markets, gold, and silver. Positive economic data indicating robust growth may lead to increased investor confidence in equities, potentially reducing the demand for these safe-haven assets. Conversely, weaker-than-expected economic figures can trigger a flight to safety, potentially boosting the appeal of gold and silver. Geopolitical Developments: 1. Trade War Developments: Escalating or easing trade tensions between major economies, such as the United States, China, and the European Union, can have a significant impact on global markets and precious metals. The imposition of tariffs or the resolution of trade disputes can create volatility in equities and currencies, potentially driving investors towards the safety of gold and silver. 2. Political Instability: Political events like elections, referendums, or sudden regime changes can create uncertainty and impact market sentiment. Significant geopolitical events can lead to a flight to safe-haven assets, potentially boosting the demand for gold and silver. Commodity and Currency Market Influences: 1. Oil Prices: Changes in oil prices can have a ripple effect on commodity markets, as they impact production costs, inflation, and consumer spending. Various industries and countries are sensitive to fluctuations in oil prices, which can subsequently affect the value of currencies and, consequently, gold and silver.

Markets underestimate geopolitical risk as raft of elections looms, ECB’s De Guindos says “Markets sometimes are underestimating the potential impact of geopolitical risks that are there,” European Central Bank Vice-President Luis de Guindos told CNBC. Stock markets soared to record highs this year despite half the world heading for elections this year and ongoing wars in the Middle East and Ukraine. “What we are saying is that this is a potential vulnerability. That is a risk that we have to take into consideration when looking forward,” De Guindos said. Europe’s macroeconomic outlook is brighter — but markets may be underestimating the potential for sudden destabilization due to geopolitics, the vice-president of the European Central Bank said Thursday. “We are talking about the electoral cycle that is going to take place not only in the U.S., but as well in Europe. And simultaneously, we are referring to geopolitical risks. I think that, you know, markets sometimes are underestimating the potential impact of geopolitical risks that are there,” Luis de Guindos told CNBC’s Annette Weisbach. Markets are good at calibrating financial and economic risks but struggle to incorporate the separate dimension of geopolitical risk which is often viewed as an all-or-nothing binary, he said. Stock markets in Europe and the U.S. have soared to record highs this year, brushing past the impact of ongoing wars in the Middle East and Ukraine and a host of coming elections in which half the world’s adult population will head to the polls. The ECB on Thursday released its latest Financial Stability Report, which stated that euro area financial stability has improved due to a better economic outlook and falling inflation. Rising geopolitical risks present “considerable downside risks,” the ECB warned in the report. Risks remain “high” on a historical basis, it added, given factors such as rising debt service costs, signs of banking profits peaking, and the ongoing downturn in commercial real estate. The report attributes the rally in financial markets to analyst expectations of interest rate cuts from major central banks this year. “Growing signs of pricing-for-perfection [are] creating the potential for outsized market reactions to disappointments,” the report said. De Guindos said the ECB did not factor in any concrete outcomes when it comes to the results of the elections, but that overall they posed the possibility of additional fragmentation in the global economy. Source: https://lnkd.in/dSaENC8g

07:55 Tuesday 10, 2023 European Markets Morning Bid: Markets regain footing with focus back on Fed October 10, 20236:33 AM GMT+2Updated an hour ago A look at the day ahead in European and global markets from Brigid Riley With markets having mostly recovered their composure after the shocking recent developments in the Middle East, some dovishly construed remarks by Federal Reserve officials helped to settle investors' nerves as they headed into Tuesday. Top-ranking Fed officials on Monday suggested that rising yields on long-term U.S. Treasury bonds could substitute for formal monetary policy moves in terms of market effect, bolstering expectations that the U.S. central bank may not have to hike rates further. European stocks had come under pressure on Monday as news emerged about the conflict in the Middle East but the Euro zone blue chip STOXX 50 futures were up again in the Asian morning. Meanwhile, 10-year U.S. Treasuries managed their sharpest rally in more than a month at the Tokyo opening on Tuesday, on a combination of the dovish Fed remarks and demand for safe assets. Markets will have plenty more chances to hear from Fed officials, who will be out in full force at events on Tuesday while minutes of their September monetary policy meeting will be published on Wednesday. Then all eyes turn to U.S. CPI data on Thursday. Elsewhere, the IMF and World Bank annual meetings in Morocco get into full swing, with a range of leading global policymakers set to speak. European Central Bank President Christine Lagarde makes her appearance at the meetings on Tuesday, speaking after economic data the previous day added fuel to fears of a potential recession in Germany, the euro zone's largest economy. In Asia, more bad news emerged from China as the country's largest private real estate developer, Country Garden, said it might not be able to meet all of its offshore payment obligations when due or within the relevant grace periods. In corporate earnings news, PepsiCo looks set to post a rise in third quarter revenues later in the day, as consumers down more of the company's drinks even as prices rise. Key developments that could influence markets on Tuesday: - Sweden August GDP - ECB President Christine Lagarde participates in session at IMF/World Bank meeting - Fed's Raphael Bostic, Christopher Waller, Neel Kashkari, Mary Daly speak Page 1 end The U.S. Federal Reserve building is pictured in Washington, March 18, 2008.