{"id":33589,"date":"2023-07-10T07:25:19","date_gmt":"2023-07-10T11:25:19","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/either-economy-is-about-to-break-or-more-tightening-will-be-needed-strategist-says\/"},"modified":"2023-07-10T07:25:21","modified_gmt":"2023-07-10T11:25:21","slug":"either-economy-is-about-to-break-or-more-tightening-will-be-needed-strategist-says","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=33589","title":{"rendered":"Either economy is about to break, or more tightening will be needed, strategist says"},"content":{"rendered":"
\n

Global liquidity is drying up.<\/p>\n

That\u2019s the assessment of strategists at BNP Paribas led by William Marshall, head of U.S. rates strategy, who are looking not just at Federal Reserve balances but also what\u2019s happening at the European Central Bank and Bank of Japan.<\/p>\n

Most of that is stemming from Europe, where banks had to repay nearly \u20ac500 billion ($548 billion) of targeted longer-term refinancing operations, or TLTROs.<\/p>\n

\n

\u201cThe transition towards increased pressure on reserves in the U.S. from the middle of last month, coupled with TLTRO repayments in the eurozone have seen a sharp contraction in global excess liquidity in recent weeks,\u201d said the strategists. \u201cWe think the continuation of this process at a minimum points to a more balanced (if not challenging) risk backdrop, and accordingly prefer a defensive approach to engaging with the FX carry theme.\u201d<\/p>\n

<\/p>\n
<\/p>\n<\/figure><\/div>\n

They noted popular longs including the Hungarian forint
\n USDHUF,
\n -0.20%<\/bg-quote>,<\/span>
\n the Brazilian real
\n USDBRL,
\n -0.01%<\/bg-quote>
\n and the Mexican peso
\n USDMXN,
\n -0.17%<\/bg-quote>
\n have struggled of late. Over the last five days, the dollar has climbed 3% vs. the forint, 1% on the real and 0.3% on the peso.<\/p>\n

The BNP strategists said not only are markets pricing in a \u201chigher for longer\u201d rate environment, but there are factors supporting a higher r-star this cycle than last. R-star is the real neutral rate of interest, and the subject of intense debate. The New York Fed\u2019s estimate of r-star in the first quarter, by one model, was 1.14%.<\/p>\n

\u201cContinued (or resumed) momentum in economic data at a point where policy is seen as already restrictive should carry information that supports markets embracing that notion. Admittedly, the evidence has been somewhat mixed between regions, however, with signs of resilience more apparent in the U.S. (in labor market and service-related releases in particular) than in Europe. Nonetheless, in the absence of something \u2018going wrong\u2019, the path of least resistance may be to price current policy as de-facto less restrictive by resetting yields higher further out the curve,\u201d they said.<\/p>\n

Their conclusion is that either policy tightening is nearly enough and a more evident deterioration in the data is just around the corner, or even more restriction is needed. \u201cRecent price action has seen a shift in this direction, with higher yields seemingly presenting a greater challenge to risk,\u201d they said.<\/p>\n

The benchmark 10-year Treasury
\n TMUBMUSD10Y,
\n 4.057%<\/bg-quote>
\n rose 22 basis points last week.<\/p>\n

The S&P 500
\n SPX,
\n -0.29%<\/bg-quote>
\n dropped 1.2% last week, and has fallen two of the last three weeks.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Global liquidity is drying up. That\u2019s the assessment of strategists at BNP Paribas led by William Marshall, head of U.S. rates strategy, who are looking not just at Federal Reserve balances but also what\u2019s happening at the European Central Bank and Bank of Japan. Most of that is stemming from Europe, where banks had to […]<\/p>\n","protected":false},"author":1,"featured_media":33590,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-33589","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nEither economy is about to break, or more tightening will be needed, strategist says | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Global liquidity is drying up. That\u2019s the assessment of strategists at BNP Paribas led by William Marshall, head of U.S. rates strategy, who are looking\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=33589\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Either economy is about to break, or more tightening will be needed, strategist says | iFintechWorld\" \/>\n<meta property=\"og:description\" content=\"Global liquidity is drying up. That\u2019s the assessment of strategists at BNP Paribas led by William Marshall, head of U.S. rates strategy, who are looking\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ifintechworld.com\/?p=33589\" \/>\n<meta property=\"og:site_name\" content=\"iFintechWorld\" \/>\n<meta property=\"article:published_time\" content=\"2023-07-10T11:25:19+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-07-10T11:25:21+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/07\/1688988320_social.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"1279\" \/>\n\t<meta property=\"og:image:height\" content=\"640\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/ifintechworld.com\/?p=33589#article\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=33589\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\"},\"headline\":\"Either economy is about to break, or more tightening will be needed, strategist says\",\"datePublished\":\"2023-07-10T11:25:19+00:00\",\"dateModified\":\"2023-07-10T11:25:21+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=33589\"},\"wordCount\":432,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"keywords\":[\"Featured\"],\"articleSection\":[\"Markets\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/ifintechworld.com\/?p=33589#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/ifintechworld.com\/?p=33589\",\"url\":\"https:\/\/ifintechworld.com\/?p=33589\",\"name\":\"Either economy is about to break, or more tightening will be needed, strategist says | iFintechWorld\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/#website\"},\"datePublished\":\"2023-07-10T11:25:19+00:00\",\"dateModified\":\"2023-07-10T11:25:21+00:00\",\"description\":\"Global liquidity is drying up. That\u2019s the assessment of strategists at BNP Paribas led by William Marshall, head of U.S. rates strategy, who are looking\",\"breadcrumb\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=33589#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/ifintechworld.com\/?p=33589\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/ifintechworld.com\/?p=33589#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/ifintechworld.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Either economy is about to break, or more tightening will be needed, strategist says\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/ifintechworld.com\/#website\",\"url\":\"https:\/\/ifintechworld.com\/\",\"name\":\"Repay Down\",\"description\":\"Latest Personal Finance News, Tips and Updates\",\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/ifintechworld.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/ifintechworld.com\/#organization\",\"name\":\"Repay Down\",\"url\":\"https:\/\/ifintechworld.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"width\":558,\"height\":90,\"caption\":\"Repay Down\"},\"image\":{\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/ifintechworld.com\"],\"url\":\"https:\/\/ifintechworld.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Either economy is about to break, or more tightening will be needed, strategist says | iFintechWorld","description":"Global liquidity is drying up. That\u2019s the assessment of strategists at BNP Paribas led by William Marshall, head of U.S. rates strategy, who are looking","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/ifintechworld.com\/?p=33589","og_locale":"en_US","og_type":"article","og_title":"Either economy is about to break, or more tightening will be needed, strategist says | iFintechWorld","og_description":"Global liquidity is drying up. That\u2019s the assessment of strategists at BNP Paribas led by William Marshall, head of U.S. rates strategy, who are looking","og_url":"https:\/\/ifintechworld.com\/?p=33589","og_site_name":"iFintechWorld","article_published_time":"2023-07-10T11:25:19+00:00","article_modified_time":"2023-07-10T11:25:21+00:00","og_image":[{"width":1279,"height":640,"url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/07\/1688988320_social.jpeg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/ifintechworld.com\/?p=33589#article","isPartOf":{"@id":"https:\/\/ifintechworld.com\/?p=33589"},"author":{"name":"News Room","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61"},"headline":"Either economy is about to break, or more tightening will be needed, strategist says","datePublished":"2023-07-10T11:25:19+00:00","dateModified":"2023-07-10T11:25:21+00:00","mainEntityOfPage":{"@id":"https:\/\/ifintechworld.com\/?p=33589"},"wordCount":432,"commentCount":0,"publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"keywords":["Featured"],"articleSection":["Markets"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/ifintechworld.com\/?p=33589#respond"]}]},{"@type":"WebPage","@id":"https:\/\/ifintechworld.com\/?p=33589","url":"https:\/\/ifintechworld.com\/?p=33589","name":"Either economy is about to break, or more tightening will be needed, strategist says | iFintechWorld","isPartOf":{"@id":"https:\/\/ifintechworld.com\/#website"},"datePublished":"2023-07-10T11:25:19+00:00","dateModified":"2023-07-10T11:25:21+00:00","description":"Global liquidity is drying up. That\u2019s the assessment of strategists at BNP Paribas led by William Marshall, head of U.S. rates strategy, who are looking","breadcrumb":{"@id":"https:\/\/ifintechworld.com\/?p=33589#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ifintechworld.com\/?p=33589"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/ifintechworld.com\/?p=33589#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/ifintechworld.com\/"},{"@type":"ListItem","position":2,"name":"Either economy is about to break, or more tightening will be needed, strategist says"}]},{"@type":"WebSite","@id":"https:\/\/ifintechworld.com\/#website","url":"https:\/\/ifintechworld.com\/","name":"Repay Down","description":"Latest Personal Finance News, Tips and Updates","publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ifintechworld.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/ifintechworld.com\/#organization","name":"Repay Down","url":"https:\/\/ifintechworld.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","width":558,"height":90,"caption":"Repay Down"},"image":{"@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","caption":"News Room"},"sameAs":["https:\/\/ifintechworld.com"],"url":"https:\/\/ifintechworld.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/33589","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=33589"}],"version-history":[{"count":1,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/33589\/revisions"}],"predecessor-version":[{"id":33591,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/33589\/revisions\/33591"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/media\/33590"}],"wp:attachment":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=33589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=33589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=33589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}