The End Of An Uninspiring Week

WHERE WE STAND – Happy Friday one and all, a short & sweet note this morning to round out what’s been a pretty dull week, all told.

Trade was again relatively quiet on Thursday, with participants still hunting around desperately for a narrative, or a catalyst, to latch onto, and markets meandering in the meantime. Stocks did trade a touch softer, however, as Wall Street pulled back from record highs, while the dollar also took a leg lower against most G10 peers.

In contrast, gold continues to shine, with the yellow metal rallying to fresh record highs, and a test of $3,000/oz still looking like a question of ‘when’ rather than ‘if’. That’s the point at which the bulls may re-assess, and perhaps take some profit, but upwards momentum should continue in the meantime, with haven demand continuing to linger.

That demand has also helped the JPY, with USD/JPY having briefly traded sub-150 yesterday for the first time since early-December. A ramping up of bets on further BoJ hikes has also given the JPY a helping hand, with the JPY OIS curve now discounting 37bp of further tightening by year-end, around 5bp more hawkish than a week ago.

Yesterday’s data docket brought little besides the weekly US jobless claims figures, which were as near as makes no difference in line with expectations, initial claims having risen 219k in the week to 15^th February, coinciding with the survey week for the February NFP print.

Treasury Secretary Bessent’s BBG TV interview, meanwhile, was also of some interest, particularly amid comments that terming out US debt is “a long way off”. In essence, despite Bessent’s previously stated desire to pivot away from the current chunky degree of T-bill issuance, such a shift doesn’t seem imminent. This, as well as comments in Wednesday’s FOMC minutes around potentially slowing/ending QT amid the ongoing debt ceiling negotiations, have made the outlook for bonds increasingly supportive, particularly at the long-end.

LOOK AHEAD – Typical, a quiet week sees Friday bring the busiest data docket of the week!

The latest round of ‘flash’ PMI surveys are likely to be of most interest to participants, though it’s tough to imagine the figures telling us much we don’t already know – the eurozone economy continues to rebound very modestly, the UK economy continues to lose momentum, and the US economy continues to outperform peers.

Elsewhere, this morning sees the latest UK retail sales, and public borrowing, figures drop, with the latter probably of more importance ahead of Chancellor Reeves’s ‘Spring Statement’ at the end of next month. Other notable releases today include Canadian retail sales, US existing home sales, and the final read on UMich consumer sentiment.

Finally, be alert to the potential for gapping risk in the EUR, Bunds, and the DAX on the Sunday night/Monday morning re-open, with federal elections being held in Germany this weekend. Exit polls should drop from around 5pm GMT, about an hour before the FX market gets up and running for the new trading week. An in-depth election preview can be found here.