Turkey CenBank raised main interest rate to 30% from 25%, but w/inflation at ~60%, real rates are still very heavily negative
The hike continues what many see as a return to more orthodox monetary policy under Governor Hafize Gaye Erkan, a former executive of First Republic Bank & Goldman Sachs, who was appointed in June after President Recep Tayyip Erdogan won a close-fought re-election. Erkan now hiked rates by a cumulative 2150bps. Source: Bloomberg, HolgerZ
VIX seasonality perfection???
Source: Equityclock.com, TME
Oil, diesel crack sread soar after Russia bans diesel, gasoline exports
With Diesel prices already soaring, recently sending the diesel crack to 2023 highs and assuring that refiners have another blowout quarter, Russia just handed a gift to the Exxons of the world when it "temporarily banned" exports of the diesel in a bid to stabilize domestic supplies, adding pressure on already tight global fuel markets. “Temporary restrictions will help saturate the fuel market, that in turn will reduce prices for consumers” in Russia, the government’s press office said on its website. The "temporary" ban, which also applies to gasoline, comes into force today, Sept. 21, and doesn’t have the final date, according to the government decree, signed by Prime Minister Mikhail Mishustin. Source: www.zerohedge.com, Bloomberg
Sector fund flows
Long-only institutional & retail investors are all-in overweight tech and meaningfully underweight energy. Will elevated tech valuations, rising long-end yields, and rising oil prices trigger a squeeze in positioning? Source: The Daily Shot, EPFR, DB
The Swiss National Bank pauses its monetary tightening, defying expectations of another interest-rate hike to avoid adding constriction on a stalled economy
- The SNB left today its key rate unchanged at 1.75%, debunking market expectations of an additional 25bp hike - The slowdown in inflation, the magnitude of the monetary policy tightening already implemented (CHF short term rates were still negative a year ago) and rising risks surrounding the global outlook underpin this decision. - Indeed, as inflation is within the SNB target (1.6%, in the 0%-to-2% target), economic activity is slowing down (0% GDP growth in Q2 2023) and the Swiss franc remains firm, the case for further tightening had turned much less compelling in the past few weeks. Unlike the ECB, forced to hike last week due to an inflation rate still much above its target, the SNB had very good reasons to pause today and adopt a cautious stance. - The SNB doesn’t rule out additional hikes in the future if warranted, but the combination of slowing growth in Europe (likely to dampen underlying price pressures) and of the strength of the currency are highly likely, in our view, to keep Swiss inflation dynamics in check in the months ahead.
Soft landing narrative is not new. It’s quite common before each recession
Source: Michel A. Arouet
Another Powell Fed Day
Incredible how closely today's action tracked the average. Source: bespoke (read "today" red line as yesterday)
This chart tells the story:
The rate priced in for the Fed’s December 2024 meeting hit a new high for this cycle at 4.7%, meaning investors have sharply trimmed their hopes of interest rate cuts in 2024. Source: HolgerZ, Bloomberg
