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Fundamental outlook for the coming week: Presentation from our weekly webinar

By BDSwiss 28/06/2021

Japan: the outlier

Manufacturing barely recovered, is turning down

Service sector hasn’t recovered yet

Tokyo CPI = 0% yoy

Japan will be the last country to raise rates

Japanese investors can buy other countries’ bonds & hedge the currency at a pickup to JGBs

Japanese outflows + use of JPY as a funding currency = weaker JPY

Tankan (Thu) to show improving sentiment

But service sector is still far below pre-pandemic levels

NFP: “progress” but not “substantial”

Decent rise expected, but not +1mn

Unemployment still high, participation rate low

Fed wants to see “broad” and “inclusive” recovery in employment

Employment is the deciding factor as inflation is already well over their target

EU: Inflation expected to slow

May keep ECB policy loose = EUR-

Last undistorted inflation data for some time

Jobless claims: watch continuing

26 states (over half) will stop $300/week federal unemployment benefits early to force people to take jobs

So far no impact

Job site Indeed found that in states that have abandoned the federal benefits, clicks on job postings were below the national average.

Positioning: reducing USD shorts

Specs cut long currency positions after FOMC
Mostly EUR but also GBP, increased short JPY
Increased long CHF, cut short AUD

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