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Issuers Cuing Up, Dec'21 to Eclipse Dec'20


(H2) Monitoring Support


Decent Midcurve Put Fly Buying


EU Bank spread


Citi says Powell's Jackson Hole speech exceeded their already-dovish expectations, and is not yet fully priced into markets ("even though markets quickly reversed an initial dovish reaction", they say, that was a case of "buy the rumor, sell the fact").

They cite three reasons: 1) the early release of the Strategy outcome which reinforces the Fed's "proactive and forceful approach", 2) the employment goal's incorporation of inclusivity and asymmetry, 3) "the characterization of the importance of supporting inflation expectations reinforces the Fed's determination to push inflation expectations up over time".

Citi's base case "remains for higher US breakevens, lower US real yields, lower USD, higher EURUSD, lower US real yields and higher prices of risk assets and precious metals".

We may get some catalysts for such moves soon - Citi is eyeing next week's Fed-speak including Clarida and Evans, and sees the Sep FOMC remaining important, "as the Fed pivots from aiming asset purchases to market functioning to using them for accommodation."

MNI London Bureau | +44 203-865-3807 |
MNI London Bureau | +44 203-865-3807 |