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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CROSS ASSET
- Once again, much focus on the higher front-end of the UK Gilt curve and money markets bringing forward pricing for the expected beginning of a tightening cycle from the BoE. Money markets now pricing circa 25bps for December this year, with rates seen reaching 1% by November 2022.
- Despite the move in UK fixed income, GBP is seeing no reprieve, with the currency strictly mid-table against the rest of G10.
- This isn't a new phenomenon, with sell-side commenting on the divergence between FI / FX, with some speculating higher rates in the near-term will crimp a consumer already exposed to high energy and import prices and a greater tax burden in 2022.
- Forward-looking GBP/USD 3m risk reversals capture the date of a possible BoE rate hike and remain heavily in favour of puts over calls, reinforcing the narrative that GBP may not benefit from the imminent beginning of higher rates.
- Chart below shows EUR/GBP failing to keep pace with a widening gap in EZ/UK rate expectations:
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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