2023/02/26 (178) Column

Fixed Income Is Finally Yielding Again
After The Lehman Brothers Disaster In 2008


In its “Investment Outlook 2023”, Credit Suisse forecasts low growth in the global economy of just 1.6 percent for the year, as well as a recession in the euro zone (-0.2 percent in 2023) and/or in Great Britain. While central banks are likely to slow or end monetary tightening in 2023, according to the lender, Credit Suisse does not anticipate rate cuts in any of the major economies. Against this background, this year 2023 should offer even more attractive opportunities than 2022 fixed income investments, i.e. investments over a certain period of time in fixed-income securities such as bonds. In turn, equities are likely to remain subdued at least in the first half of 2023. “Sectors and regions with stable earnings, low debt and pricing power will do better,” according to Credit Suisse.

However, as soon as there are signs of an about-face in monetary policy, interest-sensitive, high-growth sectors could also become attractive again. So maybe in the second half of 2023. If the scenario I expected, what the US monetary policy of the Fed occurs. However, the latest US inflation figures did not give me reason to believe in them anymore. That`s why I closed our long 4XSetUp om Dow Future at 34,000 with a Stop price. I still expect US inflation to fall below the current interest rate as early as July 2023. However, I do not expect US inflation to fall again as quickly as, for example, the US unemployment rate after the outbreak of the corona virus. We are likely to spend more time on the inflation rate timeline than we fundamental US Wall Street bulls would like to be. And that`s why I have now refrained from my previous expectations that US inflation would fall to up to 2% by the end of this year 2023. So it will take a little longer in 2024 for the USA to grow out of US stagflation again; even with higher growth rates than inflation worries at the same time again..
DEVISE 2 DAY 48h
– Last News About What Drives The News Media

Secret service plans counter-offensiveNew EU sanctions on Russia in effect
Military intelligence: Ukraine plans spring offensive
Macron wants to travel to China

Secret service plans counter-offensive
Ukrainian President Volodymyr Zelenskyj sees the tenth package of EU sanctions, which came into force on Saturday, as an important blow against the aggressor Russia. “It is powerful, directed against the terrorist state’s military industry and financial sector and against the propagandists who have drowned Russian society in lies and are trying to spread their lies around the world,” Zelenskyy said in his nightly video message.

New EU sanctions on Russia in effect
The EU this time sanctioned 87 additional individuals and 34 organizations it believed were contributing in one way or another to Russia’s war against Ukraine. Among them is Alfa-Bank, which is considered Russia’s largest privately owned financial institution. Also included on the sanctions list were deputy ministers, Russian government officials, those responsible for the deportation and forced adoption of Ukrainian children, and new members of the Russian Federation Council. According to the Council of Member States, the EU has now put 1,473 people and 205 organizations on the sanctions list on the grounds that they undermine or threaten the territorial integrity, sovereignty and independence of Ukraine. Among other sanctions regimes, the EU has now also imposed sanctions on eleven other members and seven institutions linked to the Russian mercenary group Wagner.

Military intelligence: Ukraine plans spring offensive
According to the deputy head of the Ukrainian military intelligence service, Wadym Skibizkyj, he expects his army to launch a counter-offensive against the Russian occupiers this spring. “I think we’ll be ready for a counter-offensive in the spring,” Skibizkyj told the newspapers of the Funke media group. However, the exact time depends on several factors – such as the delivery of western weapons, which are very important for the attacked country.

Skibizkyj emphasized that Ukraine’s goal is the liberation of its entire territory – including the Black Sea peninsula of Crimea, which Russia had annexed in 2014. “We won’t stop until we have our country back in the 1991 borders. That is our message to Russia and to the international community.” The secret service agent also did not rule out attacks on arms depots in Russian border areas: “It is possible that we also destroy arms depots or military equipment on Russian territory, for example around the city of Belgorod. Attacks  on Ukraine are launched from there. That’s a threat to Kharkiv.”Macron wants to travel to China
French President Macron plans to travel to China in early April to try to end the war in Ukraine. The head of state announced this on the sidelines of his visit to the International Agricultural Exhibition (Salon de l’Agriculture) in Paris on Saturday, as shown in a video by the news channel BFMTV. Macron said he wanted to persuade the Chinese government to help stop Russian aggression and bring about peace. China has not yet condemned the Russian attack on Ukraine – this has long caused resentment among Ukraine’s western allies, as it did at the meeting of finance ministers of the G20 countries. He also very much regrets that the Chinese attitude has shifted, said Federal Finance Minister Christian Lindner on Saturday after the meeting with his colleagues from the leading industrialized and emerging countries in Bengaluru, India. On the first anniversary of the Russian invasion on Friday, China presented a position paper in which, among other things, it called for a ceasefire and negotiations. Western politicians and experts reacted with skepticism to disappointment, since the twelve-point document did not indicate any new initiative and also does not provide for the withdrawal of Russian troops from Ukraine.

The conflict in Ukraine is intensifying
– and that doesn’t bode well for rising stock markets.
But on the contrary! Unfortunately, high volatility on the foreign exchange market, in the yield curves, and/or commodities (precisely due to the geopolitical consequences of this local war) is likely to be inevitable. A good move from Macron, who, like every French president, sees himself as number 1 in the west, on our mainland Europe. As number 3 in the West; behind London and Washington. Just on an equal footing with Russia, with the Kremlin – because of the common political history, our political parents. And the world order after World War II – and or also after the 4 plus 2 agreement, after the Cold War, in the early 1990s. Just during the reunification of my home country Germany. Don`t understand me wrong; I don’t want to fool you, my dear readers! And assume that all but a handful of readers, if any, are interested in this war. So I think the French President’s idea is more than appropriate; to involve the Chinese and/or the Indian government at the same time. And see us, the so-called West, confirmed in the current Ukraine politics. Even if I personally would not prefer to see the problem negotiated militarily at the table. But after a year of war in the Ukraine, that no longer seems imaginable. So that we, the so-called West, should include the 2 major political powers, China and/or India, “under the roof of the UN”, as Federal President Steinmeier aptly put it in a speech last week, on our political side . And don’t get the idea of supplying Russia with weapons as well! Because sovereign states protecting their own borders in a self-determined manner should not only convince democrats in our so-called West. But rather also the Chinese and Indians. Should be in the interests of every statesman! And where should we, those interested in politics and politicians, find the best global international national rules than under the umbrella of the UN?
DEVISE 2 DAY Another 48h
– Last News About How Drives The Price Action

Bulls don’t want to bite and bears don’t dare to step out of the reserve. According to the PCE price index, the probability of a 50 basis point hike on March 22 has risen from 20% to 29%. A rate peak of 5.39% is now being priced in, with the key interest rate at 5.24% at the end of the year. PCE rose 5.4% yoy in January with the core rate at 4.7%. Both were above market targets, which should come as no surprise given already hot consumer and producer prices. Except for Block shares, most stocks are flat to weaker following last night’s reported earnings and outlook. Booking Holdings and Intuit are flat, with LiveNation slightly up and Warner Brothers Discovery under pressure. The fact that Boeing is pausing deliveries of the Dreamliner again to check the certification documents after an analysis error has a negative effect on the value.

Forex 10Y Government Bond Yields Commodities Stock Markets

DXY To 7-Week High German 10Y Around 11-Year High Brent Crude Falls 1% Strong Weekly Gains In China
EURUSD Weakens This Week US 10Y Rises To 3-Month High Gold To Yearly Low Hang Seng Plunges 3.4% Weekly
GBOUSD To New 7-Week Low 10Y JGB Above 0.5% Threshold European Shares End At 2-Week Lows
UK Shares Fall For 4th Day
Wall Street Books Worst Week 2023

Forex
DXY To 7-Week High
EURUSD Weakens This Week
GBPUSD To New 7-Week Low

DXY Rises To 7-Week High
The dollar index rose to above 105, the highest in seven weeks after the latest data showed the Fed’s preferred gauge to measure inflation accelerated more than expected in January, supporting the case for further monetary tightening from the Federal Reserve. The latest data showed core PCE prices jumped by 0.6% in January, the most since August, and above market estimates of 0.4%. The annual rate accelerated to 4.7% from 4.6% and surpassed forecasts of 4.3%. On the week, the DXY is up 1%, on track for a fourth consecutive weekly gain. Minutes of the latest FOMC meeting showed that Fed officials noted that upside risks to the inflation outlook remained a key factor shaping the policy outlook and that interest rates would need to move higher and stay elevated until inflation is clearly on a path to 2%. At the same time, the dollar has also benefitted from safe-haven demand stemming from growing geopolitical tensions between the US and China over the war in Ukraine.

EURUSD Weakens This Week
The euro depreciated towards $1.05, hovering around its weakest level since January 5th, as investors turned to the USD amid expectations that the Federal Reserve would stick to its hawkish monetary policy for longer. Recent data showed PCE prices in the US rose more than expected in January, while minutes from the Fed’s latest policy meeting released earlier this week suggested the central bank would remain on its rate hike path until data showed that inflation was under control.

GBPUSD To New 7-Week Low
The British pound weakened below $1.20, hovering around its lowest level since January 5th, as data pointing to still-tight labor market and sticky inflation in the United States bolstered expectations the Federal Reserve will maintain interest rates higher for longer. At the same time, the Bank of England is seen increasing Bank Rate by a further 25 bps to 4.25% next month to combat double-digit inflation, before ending the current tightening cycle that sent borrowing costs to the highest levels since late 2008.

10Y Government Bond Yields
German 10Y Rises Around 11-Year High
US 10Y Rises To 3-Month High
10Y JGB Hover Above 0.5% Threshold

German 10Y Rises Around 11-Year High
Germany’s 10-year bond yield rose back above 2.5%, heading towards its highest level for over a decade, as hotter-than-expected US inflation data, alongside a tight labor market, spurred worries of the Federal Reserve’s interest rates staying higher for longer. At the same time, remarks by European Central Bank officials dashed hopes of a quick end to the current tightening cycle.US 10Y Rises To 3-Month High
The yield on the US 10-year Treasury note, seen as a proxy for global borrowing costs, jumped to above 3.94%, its highest level in three months, as a batch of hot economic data strengthened expectations that the Federal Reserve will raise interest rates to a higher level and keep them restrictive for a longer period.

10Y JGB Hover Above 0.5% Threshold
The yield on the 10-year JGB was slightly above 0.5% in late February, topping the limit imposed by the Bank of Japan’s yield curve control as investors digested fresh price data and remarks from the BoJ’s incoming Governor Ueda on the future of monetary policy. Inflation in Japan rose to 4.3% in February, its highest since 1981. Meanwhile, the core index climbed to a 41-year record, remaining above the BoJ’s target for the ninth month, largely due to more expensive commodity imports.

Commodities
Brent Crude Falls 1%
Gold Retreats to Fresh Yearly Low

Brent Crude Falls 1%
Brent crude futures fell more than 1% to around $81 per barrel on Friday, as lingering concerns about a recession-driven demand downturn offset prospects of tighter global supplies. Hotter-than-expected US economic data fanned concerns of more Federal Reserve interest rate hikes that could weigh on demand at a time when inventories continue to rise. At the same time, the latest EIA report data also showed that US inventories rose by 7.648 million barrels to 850.6 million in the week ending February 17th, the highest level since September.

Gold Retreats to Fresh Yearly Low
Gold sank to below $1,815 per ounce on Friday, set to notch a 1.5% decline on the week to its lowest level year-to-date as hotter-than-expected economic data added to worries of aggressive monetary tightening. Core PCE prices, the Federal Reserve’s inflation gauge, accelerated above expectations and underscored the FOMC’s fear of upside risks to inflation, as uncovered in the release of the latest minutes.Stock Markets
Strong Weekly Gains In China
Hang Seng Plunges 3.4% Weekly
European Shares End At 2-Week Lows
UK Shares Fall For 4th Day
Wall Street Books Worst Week 2023

Strong Weekly Gains In China
The Shanghai Composite dropped 20.32 points or 0.62% to end at 3,267 on Friday, falling for the third session in a row, dented by a pullback in US stock futures ahead of the PCE index release, the Federal Reserve’s preferred price gauge. Traders were also cautious after Thursday’s report from the Asia Wall Street Journal revealed that Chinese President Xi Jinping was preparing to shake up the leadership of the country’s financial system by reviving a Communist Party body to tighten political control over economic affairs. Meanwhile, the PBoC governor Yi Gang will retire soon, his successor being a veteran banker and reportedly Jinping’s key associate.

Hang Seng Plunges 3.4% Weekly
The Hang Seng tumbled 341.31 points or 1.68% to close at 20,010.04, its lowest finish since December, 30th, 2022, retreating for the fourth successive session.

European Shares End At 2-Week Lows
European shares closed in the red on Friday, with the STOXX 600 index retreating 0.9% to a two-week low and Germany’s DAX 40 falling 1.5% to its lowest level since February 1st, after hotter-than-expected PCE price index from the US bolstered expectations the Federal Reserve will keep rates higher for longer.

UK Shares Fall For 4th Day
Equities in London extended losses into a fourth session on Friday, with the blue-chip FTSE 100 falling below the 7,900 mark to record a 1.4% weekly fall, as investors fret about the global economy’s health as central banks worldwide move aggressively to tamp down inflation.

Wall Street Books Worst Week 2023
The Dow closed 336 points lower on Friday after dropping 450 points during the session, while the S&P 500 and Nasdaq 100 were down 1% and 1.7%, respectively, as investors remain worried after another stronger-than-expected inflation report signaled further rate hikes by the Federal Reserve. The Personal Consumption Expenditures (PCE) price index, the Fed’s preferred measure of inflation, accelerated to 4.7% in January, well above expectations. On top of that, a different report showed that US consumer spending rebounded sharply last month amid solid income growth, pushing back on the idea of a policy pivot any time soon.DEVISE 2 DAY 48h
– Where I Was Wrong, Where I Was Right

The Market is under pressure since two, three weeks!
The Market? Yes, the US WallStreet, in New York – the stock market.
But not the US Yield Curve, in Chicago, which is more expensive than years; than decades! At that is the crucial point; why the stock market is breathing out; last days, last weeks.

However,
we stay long in EURUSD, long in the DAX Future, and/or also (since the beginning of last week before) now long in the ADIDAS share & BITCOIN. And since last thursday, even last week, we`re back short in UKOIL also.

Nevertheless it itches me again to formulate a new 4XSetUp in the DOW Future. And that because i don`t realize a bullisg technical chart, right now. That`s why i will write a new long Technical Analysis 4XSetUp only if at least the technical picture looks bullish again. Because currently, at least in my personal subjective individual opinion, it still looks rather bearish in the short term. And that just before the upcoming US labor market data next week and/or much more the US inflationnumbers in the calendar week after next week. So I prefer to wait a little longer. Because going anti-cyclically long in the DOW Future, let alone in the NASDAQ Future, only because of the hope of worse than expected US labor market figures and/or lower than expected inflation numbers, is too speculative for me. That`s why the motto for this week, in relation to the DOW chart, is observe, analyze, and/or evaluate. And if you dare, you can get long in the DOW Future this week again. But at least I want to have a weekly candle in the plus in my back to go long again. That’s the minimum; even if it smells and/or tastes old school…