All articles by Caroline Hay

  • Refinitiv

    Market predicts US soft landing - June 2024

    June 2024 (Magazine)

    A combination of Fed­eral Reserve chair Jerome Powell’s press conference and a slightly weaker-than-expected US April non-farm payrolls outcome succeeded in flipping the market back to a soft-landing narrative for the US economy. US Treasury bonds rallied sharply, taking other markets with them, while the yen weakened significantly against the dollar before recovering.

  • US bank failures through the past two decades

    Reluctance to drop interest rates disappoints the markets

    April 2024 (Magazine)

    US rates markets entered the year enthusiastically pricing in over 160 basis points of cuts through 2024, and have since had to push back hard on both the timing and magnitude of interest rate cuts now expected by year-end. 

  • US Treasury

    Contrasting global economic growth fortunes

    March 2024 (magazine)

    Economic growth patterns across the world paint a picture of contrasts, ranging from surprisingly robust in the US to soft and struggling in China, with the stagnant euro area narrowly avoiding a technical recession after posting zero GDP growth in the fourth quarter of 2023, following a 0.1% decline the previous quarter. 

  • New York Fed graph

    Conflict and elections set to dominate the investor landscape

    February 2024 (magazine)

    Middle Eastern tensions are running high, with violence flaring up across the wider region. Combined with the ongoing attritional destruction in Ukraine, this is impacting world trade, and it seems certain that international conflict will continue to be a source of great concern in 2024.

  • US unemployment rate (%), 2004-2022, source: Refinitiv

    Is the US economy finally heading for a soft landing?

    December 2023 (Magazine)

    Having come to terms with the higher-for-longer mantra, markets are grappling with ‘higher-for-even-longer’, as US economic resilience continues to challenge expectations of weakness while reducing the prospects for earlier interest rate cuts from the Federal Reserve. 

  • Is Sweden heading for a recession

    Fixed income, rates & currency: interest rates the big question

    November 2023 (Magazine)

    In August, when Fitch Ratings downgraded US debt from AAA to AA+, it cited an “erosion of governance” as one of the key reasons for its decision. September’s US government shutdown chaos will probably not have improved perceptions of US lawmakers’ proficiency to govern.

  • Refinitiv 2023 Oct

    Fixed income, rates & currency: Lean times to follow good summer?

    October 2023 (Magazine)

    The macro-economic news in the third quarter has been good, with better growth than expected and better inflation data than feared. In the final few months of the year, however, markets may have to deal with the potential for some softer economic news and possibly more negative inflation data, and not just from seasonal factors.

  • Colin Reedie_

    Credit investors ready for a possible US recession

    October 2023 (Magazine)

    Although 2023 has been ‘interesting’ so far, it has also provided relief after the challenges and financial asset mayhem of 2022, and a wide range of asset classes have posted positive returns to date.

  • Federal Reserve Bank of St Louis

    Fixed income, rates & currency: US debt crisis averted – what next?

    July/August 2023 (Magazine)

    The US debt ceiling crisis was resolved in June, avoiding potentially major fireworks, with a suspension of the limit until early 2025. This ensures that the next time the politicians have to fight about it will be after the November 2024 presidential election. Although markets were relieved at the temporary resolution, the process of rebuilding the very depleted Treasury cash balances – with some huge bill auctions planned – will drain significant liquidity from the system, which could put pressure on the rates market.

  • S&P Capital IQ

    Fixed income, rates & currency: Strong labour markets surprise

    June 2023 (Magazine)

    Global purchasing managers’ index (PMI) data, which measures the state of the US economy, has been mostly strong, although manufacturing indices have been considerably weaker than services, perhaps reflecting their greater sensitivity to higher interest rates.

  • Kate Hollis
    Asset Class Reports

    Fixed income – New beginning for bond investors

    May 2023 (Magazine)

    A painful 2022 for fixed income means attractive opportunities and a possible normalisation in risk and return

  • Federal Reserve Bank of St Louis

    Fixed income, rates & currency: Optimism fades on mixed data

    April 2023 (Magazine)

    January’s market optimism has been subsiding, as forecasts for inflation and US Federal Reserve policy shift the outlook further to the hawkish side. However, the macro picture is not clear. Markets hang on to every new piece of data to clarify the outlook, be it non-farm payrolls, the consumer price index (CPI) or the US Job Openings and Labor Turnover Survey (JOLTS). 

  • WTI crude oil prices (NYMEX), Feb 2003–Feb 2023

    From soft landing to no landing

    March 2023 (Magazine)

    Once again, the US jobs market has shown its capacity to surprise forecasters, if not astonish them. January’s non-farm payroll numbers came in way above consensus forecasts, swiftly reversing markets’ dovish take on that week’s central bank actions, with bond markets handing back much of their earlier gains.  

  • Office for National Statistics Monthly Wages and Salaries Survey

    Is the US heading for a soft landing?

    February 2023 (Magazine)

    Rare though they are in history, a soft landing for the US economy seems to be the consensus forecast, a view aided by news of a sharp contraction in the Institute of Supply Management (ISM) Services Purchasing Managers index in December. The jobs market also looks like it is slowing down and there are signs of a cooling off in wages, with lower-than-expected average hourly earnings reported in December’s non-farm payroll report. 

  • Japan government bond (JGB) 10-year yield and inflation-indexed bonds (JGBi) 10-year yield

    Fixed income, rates & currency: Inflation strengthens its grip

    January 2023 (Magazine)

    Whereas news of the hostilities in Ukraine may be losing their potential to shock and dislocate the world economic order, inflation news has maintained its powerful hold over financial markets across the world throughout 2022, with many economies recording their highest inflation levels for decades.

  • Luca Paolini

    US dollar strength and the issues facing institutional investors

    December 2022 (Magazine)

    Most central banks across the world are raising interest rates – some more aggressively than others – but it is proving hard for any of them to out-hike the US Federal Reserve. The resulting widening interest rate differentials have been an important factor in the appreciation of the US currency.

  • US Bureau of Labor Statistics

    Fixed income, rates & currency: Recessions - but when?

    December 2022 (Magazine)

    With the fourth consecutive 75bps hike in rates delivered in November, US Federal Reserve chair Jerome Powell suggested that the pace of the hikes might be slowed in the coming months (so slightly dovish), but then said that the terminal rate and how long it would be held was more important than the speed of tightening (back to hawkish). The initial dollar sell-off was unwound by the end of the press conference.

  • Composite Indicator of Systemic Stress (CISS)

    Fixed income, rates & currency: The return of extreme volatility

    November 2022 (Magazine)

    The emergency measures swiftly enacted by policymakers and central banks in March 2020, as we locked our communities, schools and businesses down, unsurprisingly created huge volatility in financial markets.

  • US dollar index DXY

    Fixed income, rates & currency: Central banks act tough

    October 2022 (Magazine)

    This year’s Jackson Hole Symposium, an annual high-level event sponsored by the Reserve Bank of Kansas, yielded relatively little policy news. But the fighting talk from the US Federal Reserve and others was striking. Fed chair Jerome Powell’s speech was markedly more hawkish than expected, while Isabel Schnabel, board member of the European Central Bank, referred to the need for central banks to act ‘forcefully’ because “both the likelihood and the cost of current high inflation becoming entrenched in expectations are uncomfortably high”. 

  • Global supply shortages:price changes

    Fixed income, rates & currency: inflation battle in full swing

    July/August 2022 (Magazine)

    As we reach the midpoint of the year, there is little sign that the second half of 2022 will be any less turbulent than the first. The conflict in Ukraine slogs on – a destructive war of attrition, pain and fear. The repercussions are huge, global and unpredictable, be they surging energy prices or impending, but acute, shortages of basic foodstuffs, or of semi-conductors, so vital to 21st century life.