Macro Research

Tech Wreck 2.0

It’s quite clear certain parts of the market such as crypto, saas and other duration linked assets in Tech has recently had a fall from grace reminiscent of the .com bust. How deep this goes will depend purely on central bank policy, of which I’ve tried to argue a fall in risk assets is actually…

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Cromwell FX Market View

The Fed Continues to Rule

The week that was so anticipated finally arrived. The Fed raised interest rates by 50bps ruling out the possibility of 75bps. However by the end of the week, fed fund futures are still pricing in 82.9% chance of a 75bps hike in at the June 15 FOMC meeting, to 1.50-75% Most pairs found some level…

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Cromwell FX Market View

Big Gains for the US Dollar

The US Dollar was the overall winner last week making impressive gains across the board. A further firming of yields and speculation of further Fed tightening propelled the USD.  The market is now expecting a 50bps rate hike in May and could end the year between 2.5% and 3.5% depending on incoming data and developments…

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Cromwell FX Market View

US Dollar Grinds Higher

Last weeks rising yields continued. This led to a week of further downward pressure in bonds and interest rate rises. The Box and RBNZ both moved 50bps higher which caused risk assets to move lower.   The shortened week for the 4 day easter holiday saw the US Dollar grind higher. The flight from risk…

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Cromwell FX Market View

Sleepy Start, Explosive End

The week started as the following had ended. Markets were relatively quiet. The war in Ukraine had continued to ebb away from headlines and the markets were able to begin to focus on other factors.   The US Dollar ended the week the strongest despite the mixed start. The markets waited until the Fed minutes…

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Macro Research

After Inversion Comes?

In my first note, I asked the question, will the yield curve invert? With 5s30s and more importantly the 2s10s inverting on 31/03/22, the guessing game is over! The inversion although an important part to start a countdown on a risk off set up. It’s a steepening of the yield curve that comes after an…

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Cromwell FX Market View

Quieter Week – But Eye of The Storm?

The week was quieter on many fronts. The continued war in Ukraine has now seems to have completely stalled for the Russians. The announcement of a more focused approach on the Donbas region seemed to indicate that a move for total control over the control had failed. Continued talks did not prove to garner any…

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Cromwell FX Market View

Rising Yields a Cause for Concern

The war in Ukraine seemed to move from the spotlight as any developments continued to stall the main themes for the week was the continuing rising yields.   The Yen was the biggest loser as global yields surged except the JGB. The BoJ has clearly put a cap on 10-year yields and the resulting widening…

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Macro Research

The First Warning Signs

The bond market and in particular certain yield curves are starting to flash warning signs: 5s-30s inverted this week for the first time since 2006. This information is useful and not so useful depending on your time horizon. Let’s answer why it’s useful first, it’s telling you in simple terms that growth will slow, and…

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Cromwell FX Market View

War Stalls and Fed Hikes

The week saw the current war in Ukraine stall. With this we saw the Euro gain slight momentum   GBP gained as the BoE again raised rates by 25bps. However this was not enough for the currency to gain any real upside momentum. The market had eyed a potential 50bps rise and with less than…

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Cromwell FX Market View

Markets Remain Stable Ahead of Fed

The week saw some level of stabilisation after the previous 2 weeks of roller coaster markets. Ukraine continued to dominate the headlines but with no further escalation the markets sought to remain calmer than previous weeks.   The USD which had seen safe haven status over the last 2 weeks gave up some ground to…

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Macro Research

Don’t Fight the Fed

The phrase “Don’t fight the Fed” is normally attributed to the reaction function of central banks once a crisis is underway. What does it mean? Simply put, once risk assets have been sold off, normally the Fed would step in and buy bond, i.e., quantitative easing plus cut interest rates, this would provide liquidity therefore…

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Cromwell FX Market View

War Continues to Take Its Toll

The week was once again dominated by the continued invasion in Ukraine. Euro was the worse performer of the week as the attack on the Zaporizhzhia nuclear power station brought the real issues of the conflict into focus.   The war in Ukraine has generated two clear effects in FX markets: The European currencies most…

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Cromwell FX Market View

Putin’s War Begins

The week was dominated by the build up of forces and eventual invasion of Ukraine. Though not unexpected by the markets the actual event still took them by surprise.   Risk assets initially tumbled on Thursday as reports of the invasion broke but by late on Thursday staged a complete comeback and had turned positive…

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Macro Research

Will The Fed Hike in March?

With the war between Russia and Ukraine dominating headlines inflation numbers not seen since the early 80s and what could be the first Fed rate hike this month. I want to break down how different Fed speakers are looking at how much to hike by.   At a very basic level we can say that…

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Cromwell FX Market View

Ukraine / Russia Continues to Dominate

The ongoing military build-up in eastern Europe continued to dominate the market headlines. In the early stages of the week there was general optimism about the situation, with risk rallying on hopes of the situation getting diffused. However, in the latter part of the week the fear of escalation returned, and risk assets got sold.…

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Cromwell FX Market View

Ukraine in Focus

It seems not a week goes by without some level of event driven volatility. Late in the week rumours of Russia /  Ukraine escalation saw Euro move lower. Oil surged to a new 7 year high and Equities lost ground. In the background we still see the Fed tightening rates ahead. Investors were concerned that…

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Macro Research

Is The Yield Curve About to Invert?

Since Q4 of 2021 to today we have had wild swings within fixed income markets. As G10 central banks have taken notice of rising inflation and bit by bit have had to drop the “transitory inflation” line. This has led to the front end (2 Year yields) rising dramatically and pricing in a more hawkish…

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