Hawkish Sintra noises may be drowned out by the Treasury market – Societe Generale
02.07.2024, 11:23

Hawkish Sintra noises may be drowned out by the Treasury market – Societe Generale

When will the US Dollar's (USD) appeal fade? Not yet, as the US sucks up all the rest of the world’s savings, partly because the US is exceptional, and partly because it has marched to a different tune to the rest of us on its fiscal/monetary policy mix in recent years, FX strategist at Societe Generale Kit Juckes notes.

Treasury market to overshadow Sintra economic forum

“The US net international investment position is deteriorating dramatically after a brief respite. Rising US equity prices make the data and it takes two to tango, but the charts are striking. European Central Bank (ECB) showed 2023 data for the big surplus and deficit economies. Japan, Germany and China are the biggest net owners of foreign assets, but they’re midgets by comparison to Uncle Sam!”

“We saw concerns about the outlook for fiscal policy after the Presidential election come back to haunt the Treasury market. I’m not sure why anyone is more worried about this issue now than a few days ago, but any upward pressure on Treasury yields will simply strengthen the US Dollar further.”

“Today’s focus will be on Eurozone CPI and unemployment data, is JOLTS, and the ECB’s Sintra conference. The message from the ECB is that they are not going to rush rate cuts. Relative ECB/Fed expectations are shifting marginally in favour of the Euro (EUR), but the political backdrop, on both sides of the Atlantic, favours the dollar.”

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