Garton Global | Weekly Market Digest
Market shifts are underway, key data is looming, and central bank actions are on the horizon.
With UK rate cuts expected, haven flows intensifying, and global growth concerns rising, it’s crucial to reassess your FX strategy.
Stay ahead of the curve by connecting with the Garton Global team today.
Last Week: What Moved Markets
UK gilt yields fell as markets priced in fastest rate-cut cycle since 2008
● UK gilt yields fell as investors reacted to forecasts of aggressive Bank of England rate cuts, with rates expected to drop by up to 100 bps over the next six months.
● The anticipated easing cycle reflects mounting concerns over slowing growth and persistent disinflationary pressures.
● Sterling softened and rate-sensitive assets rallied as markets adjusted to the prospect of looser monetary policy through 2024.
Swiss franc surged as haven flows intensified on trade fears
● The Swiss franc surged to a decade high against the dollar, driven by investor demand for safe-haven assets amid worsening global trade tensions.
● The rapid appreciation raised concerns over deflation and export competitiveness, placing pressure on the Swiss National Bank to act.
● Two-year bond yields dipped below zero as markets priced in further rate cuts to stem the currency’s rise.
US dollar slipped as growth contracts and tariff risks mount
● The US dollar slipped after GDP data showed the economy contracted 0.3% in Q1, the first decline since 2022, driven by front-loaded imports ahead of new Trump-era tariffs.
● Investor confidence weakened as President Trump’s trade policies and sweeping government cuts raised fears of prolonged economic disruption.
● Treasury yields edged higher while gold and foreign currencies gained, reflecting shifting capital away from US assets.
This Week: What to Watch
Dollar steadies as trade rhetoric softens, but risks persist
● Dollar recovery stalls after April’s worst monthly performance since Nov 2022; tensions with China remain unresolved.
● Trump moderates auto tariffs, edges closer to trade deals with India and South Korea, easing some investor fears.
●Markets still price in 90bps of Fed cuts by year-end amid Q1 contraction and persistent global recession concerns.
Fed pause in focus as markets eye tone, not action
● Fed expected to hold rates steady; no new projections, leaving statement and Powell’s tone as key signals.
● Markets price in over 50bps of cuts by year-end; policymakers still wary of inflation risks from tariffs.
●Less dovish tone could disappoint rate-cut bets and offer modest support to the dollar this week.
Key Events
Monday May 5th
All Day UK Bank Holiday
07:30 Swiss CPI
15:00 US Services PMI
Tuesday May 6th
23:45 New Zealand Employment Change & Unemployment Rate
Wednesday May 7th
19:00 US Fed Funds Rate & FOMC Statement
Thursday May 8th
12:00 BOE Official Bank Rate
13:30 US Unemployment Claims
Friday May 9th
21:40 BOE Gov Bailey Speaks
13:30 Canadian Unemployment Rate
Have a great week,
The Garton Team.
Contact the Garton Global Team and schedule a meeting here: https://calendly.com/n-walsh-garton-global/30min