Macro Minutes

As hockey and basketball enter the last weeks of the regular season, central banks themselves are approaching the end of their hiking cycles. There is significant divergence among global central banks, ranging from a conditional pause from the BoC in January (which we expect to be reiterated this week) to ongoing tightening messages from the ECB and the Fed.Participants: Cathal Kennedy (Desk Strategy), Senior UK EconomistSu-Lin Ong (Research), Chief Australia EconomistSimon Deeley (Desk Strategy), Canada Rates StrategistElsa Lignos (Desk Strategy), Head of FX StrategyAdam Jones (Trading), Head of US Credit Algo Trading* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

Are markets being fooled by lags? Not unusual for this point in the cycle, some data is coming stronger and some weaker. Recently the market has taken its cue from strong labor market data which might be a mistake. It has only been 6-8 months since large-scale rate hikes started and with monetary policy lags being anywhere from 12-24 months, there is a possibility that the bond market is underestimating the timing and magnitude of the growth downturn. But the patterns are not uniform across countries and this episode examines some of the nuances.Participants: Jason Daw (Desk Strategy), Head of North America Rates StrategyRobert Hogue (Research), Assistant Chief EconomistBlake Gwinn (Desk Strategy), Head of US Rates StrategistPeter Schaffrik (Desk Strategy), Head of UK/European Rates & EconomicsAdam Cole (Desk Strategy), Chief Currency Strategist* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

The US payroll report sent shock waves through the fixed income market. Market pricing shifted aggressively - terminal pricing is now the highest in the cycle and finally consistent with the FOMC dots. Contagion has also spread to other markets. What now? Can the Fed keep hiking, can the BoC stay on hold, how much further will the BoE, ECB, or RBA go? And what are the implications for equities and FX? This episode delves into these topics.Participants: Jason Daw (Desk Strategy), Head of North America Rates StrategyBlake Gwinn (Desk Strategy), Head of US Rates StrategistPeter Schaffrik (Desk Strategy), Head of UK/European Rates & EconomicsElsa Lignos (Desk Strategy), Head of FX StrategyLori Calvasina (Research), Head of U.S. Equity StrategySu-Lin Ong (Research), Chief Australia Economist* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

Recent months have seen widespread hikes across most G10 central banks, but the potential for divergence is high in the coming months as some central banks are approaching the end of their hiking cycle.Participants: Peter Schaffrik (Desk Strategy), Head of UK/European Rates & EconomicsAdam Cole (Desk Strategy), Chief Currency StrategistSimon Deeley (Desk Strategy), Canada Rates StrategistAmy Wu Silverman (Desk Strategy), Head of Equity Derivatives StrategySu-Lin (Research), Chief Economist & Senior Corporate Relationship ManageRobert Thompson (Research), Macro Rates Strategist* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

While upcoming policy increments and terminal values for various countries are highly debatable, Can't, Won't, Don't Stop seems like an appropriate characterization of current near term central bank policy. To reiterate our message from late last year - 2023 could turn out to be as challenging as 2022 but for different reasons. 2022 was how high policy rates would go. In 2023 market expectations should become fractured into the hike, hold, cut camps.Participants: Jason Daw (Desk Strategy), Head of North America Rates StrategyBlake Gwinn (Desk Strategy), Head of US Rates StrategistPeter Schaffrik (Desk Strategy), Head of UK/European Rates & EconomicsElsa Lignos (Desk Strategy), Head of FX StrategyMichael Tran (Research), Global Energy Strategist* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

BoC/Fed/BoE/ECB are all on tap over the coming week. How high rates will go, whether there will be a quick U-turn to rate cuts in 2023 and by how much, is a central theme for markets that will influence not only yield levels and curve shapes, but also important for FX and broader risk assets.Participants: Jason Daw (Desk Strategy), Head of North America Rates StrategySimon Deeley (Desk Strategy), Canada Rates StrategistBlake Gwinn (Desk Strategy), Head of US Rates StrategistPeter Schaffrik (Desk Strategy), Head of UK/European Rates & EconomicsElsa Lignos (Desk Strategy), Head of FX Strategy* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

2022 was complicated, but it was dominated by a one-sided risk event - how high would rates go. 2023 should be even more complicated; policy scenarios could oscillate between various outcomes depending on the depth of the growth slowdown and inflation dynamics.Participants: Jason Daw (Desk Strategy), Head of North America Rates StrategyBlake Gwinn (Desk Strategy), Head of US Rates StrategyPeter Schaffrik (Desk Strategy), Head of UK/European Rates & EconomicsAdam Cole (Desk Strategy), Chief Currency StrategistAmy Wu Silverman (Desk Strategy), Head of Equity Derivatives Strategy* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

All year market pricing for terminal rates in most countries has been a moving target and one directional - higher. Last week the Fed signaled a slower pace of rate hikes but a terminal value that was higher than their previous forecast. Where does this cycle end?Participants: Jason Daw (Desk Strategy), Head of North America Rates StrategySimon Deeley (Desk Strategy), Canada Rates StrategistPeter Schaffrik (Desk Strategy), Head of UK/European Rates & EconomicsDaria Parkhomenko (Desk Strategy), FX StrategistLori Calvasina (Research), Head of U.S. Equity Strategy* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

Most central banks are at a maturing stage of the hiking cycle, putting terminal policy rates firmly in focus at upcoming meetings both sides of the Atlantic.Participants: Peter Schaffrik (Desk Strategy), Head of UK/European Rates & EconomicsElsa Lignos (Desk Strategy), Head of FX StrategyBlake Gwinn (Desk Strategy), Head of US Rates StrategySimon Deeley (Desk Strategy), Canada Rates StrategistMichael Tran (Research), Global Energy Strategist* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

A made in UK fiscal crisis has led to sharp rises in gilt yields, with the BoE's buyer of last resort interventions disappointing those expecting more QE-type operations. The yield rises have permeated to Treasuries and other developed markets, with important cross-asset implications.Participants: Jason Daw (Desk Strategy), Head of North America Rates StrategyBlake Gwinn(Desk Strategy), Head of US Rates StrategyPeter Schaffrik (Desk Strategy), Head of UK/European Rates & EconomicsDaniel Rico (Desk Strategy), Latin America FX Strategist* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts