Momentum Models Remain Bearish on UK Rates
Bilal Hafeez, Ben Ford
Momentum models (-0.8% WoW) registered negative returns across FX (-0.4% WoW), rates (-1.4% WoW) and equities (-1.0% WoW).
Bilal Hafeez, Ben Ford
Momentum models (-0.8% WoW) registered negative returns across FX (-0.4% WoW), rates (-1.4% WoW) and equities (-1.0% WoW).
Bilal Hafeez, Ben Ford
Rates momentum models (+0.4% WoW) outperformed FX and equity momentum models (-0.1% WoW) over the past week. Rates momentum models are the best-performing models over a three-month time frame (+3.4%). FX (+0.6%) followed while equity (-3.0%) struggled.
Bilal Hafeez, Ben Ford
Momentum models signal lower UK yields. This aligns with Henry’s bias in the front-end of the curve. They also agree with our bearish US rates bias.
Bilal Hafeez, Ben Ford
Momentum model signals sit in contrast to our view to fade CHF strength. They are also yet to get fully on board with our bullish USD basket trade (vs EUR, CHF and GBP).
Bilal Hafeez, Ben Ford
Momentum models are moving towards our view that GBP/CAD will trade lower over the next six months. They also back our bias to expect European equities to underperform US equities.
Bilal Hafeez, Ben Ford
Momentum models are moving towards our view that GBP/CAD will trade lower over the next six months. They also back our bias to expect European equities to underperform US equities.
Bilal Hafeez, Ben Ford
Momentum models back our view to be long 10Y JGBs vs 10Y USTs (target: -400bps) and long EUR/CHF. They also back our bias to expect European equities to underperform US equities. They disagree with our view for GBP/CAD to trade lower over the next six months.
Bilal Hafeez, Ben Ford
Momentum models are supportive of our hawkish views for both the Federal Reserve and European Central Bank. They also support Ben’s view that there is little reason to turn short EUR/SEK yet.
Bilal Hafeez, Ben Ford
Market Implications Momentum models are supportive of our hawkish views for both the Federal Reserve and European Central Bank. They also support Ben’s view that there is little reason to turn short EUR/SEK yet.
Bilal Hafeez, Ben Ford
Momentum models support Mustafa and Henry’s view that there is value in being long 10Y Bunds vs USTs. They also support Ben’s view that there is little reason to turn short EUR/SEK yet.
Bilal Hafeez, Ben Ford
Global departures are plateauing, averaging 132k a day since mid-July (Chart 1). Historically, global departures have declined from here.
Bilal Hafeez, Ben Ford
Momentum models support Henry’s view that there remains room for relative BoE dovishness versus the ECB and the Fed, which he likes via a 2s10s GBP/EUR box and by being short 1Y1Y US OIS vs 1Y1Y SONIA.
Bilal Hafeez, Ben Ford
Momentum models were flat over the past week as gains in rates (+0.4% WoW) were offset by losses in equities (-0.3% WoW) and FX (-0.1% WoW).
Bilal Hafeez, Ben Ford
Momentum models slipped 0.3% WoW paring some of last week’s +0.5% gain.
Bilal Hafeez, Ben Ford
Global departures continue to rise, averaging 132k a day (Chart 1). That is a 5k increase from last month and 5.4% above 2019 levels.
Bilal Hafeez, Ben Ford
Momentum models progressed +0.5% WoW having stumbled for the first time in seven weeks in last week’s report.
Bilal Hafeez, Ben Ford
Momentum models progressed +0.5% WoW having stumbled for the first time in seven weeks in last week’s report.
Bilal Hafeez, Ben Ford
Momentum models stumbled after six weeks of positive returns with equity (-0.3% WoW) and rates models (-0.4% WoW) faring worse than FX models (0.0% WoW).
Bilal Hafeez, Ben Ford
Global departures keep rising at an average of 127.7k a day, 4.3% above 2019 levels (Chart 1).
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