Thursday, March 30, 2023

Bidens Draws A Hawkish Line On Globalization


The Wall Street Journal’s take on President-elect Joseph Biden’s likely attitude towards global policy ergo the new administration will be a lot more hawkish than one might have expected. President Trump will leave a legacy that globalization has been “hard on many Americans,” as the WSJ puts it. There might be differences in approach, but the aim is much the same—to push the domestic market further up the agenda. The WSJ’s Jon Hilsenrath and Nick Timiraos report that Biden’s picks for economic posts “have grown circumspect about the pitfalls of globalization that Trump highlighted.”

Where is the rinse and repeat on Cable?

I think Brexit yo-yo exhaustion is setting in.

There has been a lack of sterling participation this morning with nothing significant on dip buying as Brexit fatigue is likely setting in again. There was a quick re-pricing lower on headlines from EU negotiator Michel Barnier, and has stalled. It seems the market is still quite relaxed on ‘no deal’ risk. Interestingly, the knee-jerk sterling reaction was quite muted, given how negative these headlines sound. I suspect the reason for this is that the market is likely convinced that there will be a deal and that this type of EU noise needs to occur to get to the UK to play ball.

It seems the market’s base case is still a deal, but it is probably fair to say the market is underpricing ‘no deal’ risk and GBP is increasingly tough to trade. Given consensus longs, the risk is for another correction lower if talks appear to stall further. A deal will likely be met with profit-taking, and the focus will quickly shift to the transition challenges ahead on a basic FTA, so topside should be limited medium-term. I suspect the next swing to 1.35 will get hammered.

Lots of market base cases are still ” deals will happen.”I wonder how the markets will be left if both Brexit and OPEC deals pancake. It’s never easy.


‘s seasonality flip from a typically negative November to positive December/January seems to have turned fashionable pretty quickly, with the 2.5% move higher in December already locked in the books. Please do not chase it higher strictly on that argument. As I tell everyone, it is not what happened in the past, but what the future holds in store. However, it is worth keeping in mind the macro picture of fiscal and monetary stimulus that should be supportive, as any potential pick-up in inflation stemming from that next year and a possible second US fiscal stimulus package should also prove beneficial for gold.


The ongoing OPEC+ meeting is proving to be one of the more difficult in recent memory. I still expect the producers club to recognize what is at stake: i.e., a 10 % slash in prices and that Thursday’s meeting will achieve the outcome necessary to support prices. Still, the tensions that have come to the fore this week show how difficult it will be to balance the competing interests within OPEC+ in the future.

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