Daily Brief Macro: The Week Ahead – In The Eye of The Storm and more

• The Fed, Bank of England, and BOJ all left rates unchanged with their own unique perspectives
• Market volatility continues with equities bouncing and the dollar rebounding
• Fed Chair Powell emphasized keeping options open and uncertainty in the economy, with no immediate rate cuts expected

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• A resurgence in the US and UK services PMIs seems inconsistent with renewed dovish pricing that assumes activity weakness. Vibes may be throwing surveys beyond reality.
• Labour demand growth seems to be trending close to supply, signalling monetary conditions close to neutral. That is broadly the story across a broad basket of countries.
• We still believe rate pricing is too dovish for the Fed and, to a lesser extent, the BoE. Noisy survey vibes and spurious assumptions of tightness are likely to be misleading.

• How should investors react to the increase in policy uncertainty? The latest FOMC statement and subsequent press conference were full of references to “uncertainty”. 
• In the short run, stock prices are rebounding from an oversold condition in response to the sanguine reaction of the credit markets to policy uncertainty.
• Longer term, equity investors have to be prepared for a deterioration in the growth outlook, which is bearish for equities.

• OPEC’s output decision is seen as the most influential factor for the oil market, with prices tumbling and Brent crude trading just above $70
• OPEC shows tolerance to potential economic fallout from tariffs and plans to increase crude oil output starting in April 2025
• Uncertainty remains in the market as geopolitical tensions escalate in the Middle East and President Trump proposes a new Iranian nuclear deal with a two-month deadline, putting pressure on Iran and other countries subject to sanctions

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• Market is seeing an uptick in CNY fixing, potentially halting the DXY bear trend temporarily
• Investors are focused on upcoming tariff event risk on April 2, leading to de-risking behavior
• Various potential scenarios for tariff implementation and FX response, with uncertainty around delivery and impact of tariffs on different sectors and countries

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• For the week ending 21/Mar, U.S. natural gas prices fell by 3% due to milder weather forecasts and larger-than-expected build in the U.S. natural gas inventories.
• Henry Hub dropped by 6.4% on 20/Mar (Thu) after the EIA reported a 9 Bcf build in U.S. inventories. Prices ended the week below the 9-day and 21-day moving averages.
• Henry Hub OI PCR increased to 1.05 on 21/Mar from 1.03 on 14/Mar. Call OI rose by 3.6% WoW, while put OI grew by 5%.

• Recent fall in US inflation breakevens driven by change in growth expectations and trade policy developments
• US breakevens appear somewhat cheap versus fair value framework, with near term inflation risks still skewed to the upside
• European breakevens have outperformed due to seismic shift in German fiscal policy, leading to a backup in intermediate yields on the German curve.

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• Private markets are evolving and becoming a mainstream part of investment portfolios
• Access to private market investments is no longer limited to just institutional investors
• Growth in private market universe is driven by demand for private capital and innovative structures for investor access

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• The Indonesian market has seen a sharp sell-off with a confluence of concerns centred around the execution and implementation of government policy but the fall was mainly driven by retail.
• The sell-off does not reflect an underlying deterioration of growth prospects for the economy or indeed earnings, although 4Q2024 results saw a slower performance for some sectors. 
• The government has already taken note and has determined to take action to reassure investors through policy measures. Valuations have already reached a historically attractive level.

• Prices crosses the magical level of INR 200/kg after five months  
• Supply short but farmers who stock and didn’t rainguard benefit  
•  Rubber Board starts geo-mapping of rubber plantations