Clear and present HAWKISHNESS
FOMC Sep. minutes provided little relief for bond bulls desperately seeking catalysts to stem the rise in yields.
The view
Most committee members agreed that inflation risks are tilted to the upside while the committee unanimously voted on the “prudent” hike.
Dual forces of geopolitically fueled energy shortages and the global capex boom continue to pressure yields.
Global Macro managers are adjusting to developments with the sentiment growing that long FI exposure is more of a liability than a asset.
Global markets & economic data
- US
FOMC minutes signaled the committee was in consensus on September’s rate hike and agreed another hike in Q4 could be “appropriate”. Oct. Michigan Consumer Sentiment readings plummeted back towards multi-year lows spurred on by rising prices.
- Switzerland/UK/Europe
The Swiss Unemployment Rate remained unchanged at 3% and consumer confidence marginally improved. Recent UK housing data signaled a slowdown in buyer interest. German Aug. Industrial Production rose 2% m/m, ahead of expectations.
- China/Japan
Chinese FX reserves fell to $3.4T in Sep., dropping by $38b due to a stronger USD and rising US Treasury yields. Japan’s consumer confidence index fell slightly from August’s six-month high.
Disclaimer: This material has been prepared by MASTERPIECE ADVISORS for informational purposes only and should not be construed as financial advice. Investments in hedge funds are speculative and involve a high degree of risk. This material is confidential and may not be disclosed without the express written approval of MASTERPIECE ADVISORS.
Weekly market notes every Friday from Aaron Sweeney after the closing bell.