Back
16 Aug 2013
Flash: Rates chatter, GBP, EUR, USD – TD Securities
FXstreet.com (Barcelona) - Jacqui Douglas, Senior Global Strategist, Rates and FX Research at TD Securities said
in an extremely quiet week for data, markets will be obsessing over the move higher in global rates.
Key Quotes:
“The ECB and the BoE may have to start pushing back on these moves if their forward guidance is to have any credibility, and the Fed may have to send out the troops again to start reminding markets that tapering is a far cry from rate hikes. Who would have thought that an economic recovery would bring so much angst?”
“The big question right now is if the rise in UK rates is truly unwarranted, given the exceptional strength in the data, and if so, what the Bank of England is going to do about it. 10y gilt yields have now risen through their end-June highs, but the font end has been a little more contained, likely due to the threat from the BoE, verbal or otherwise. With what is essentially a UK data vacuum until the string of PMIs beginning on 2 Sept, gilt yields may end up being driven by what’s happening in bunds and Treasuries through the rest of the summer trading period”.
“The UK is not the only country seeing rates drift higher on better data, and with the ECB’s forward guidance looking a lot softer than that of the BoE’s, the ECB is going to have at least as tough of a time in keeping rates under wraps in an attempt to avoid dampening the recovery. Draghi is not attending Jackson Hole next week, but Constancio reportedly is, so we may hear something from him on the subject”.
in an extremely quiet week for data, markets will be obsessing over the move higher in global rates.
Key Quotes:
“The ECB and the BoE may have to start pushing back on these moves if their forward guidance is to have any credibility, and the Fed may have to send out the troops again to start reminding markets that tapering is a far cry from rate hikes. Who would have thought that an economic recovery would bring so much angst?”
“The big question right now is if the rise in UK rates is truly unwarranted, given the exceptional strength in the data, and if so, what the Bank of England is going to do about it. 10y gilt yields have now risen through their end-June highs, but the font end has been a little more contained, likely due to the threat from the BoE, verbal or otherwise. With what is essentially a UK data vacuum until the string of PMIs beginning on 2 Sept, gilt yields may end up being driven by what’s happening in bunds and Treasuries through the rest of the summer trading period”.
“The UK is not the only country seeing rates drift higher on better data, and with the ECB’s forward guidance looking a lot softer than that of the BoE’s, the ECB is going to have at least as tough of a time in keeping rates under wraps in an attempt to avoid dampening the recovery. Draghi is not attending Jackson Hole next week, but Constancio reportedly is, so we may hear something from him on the subject”.