**Week Ahead Analysis (May 5 – May 11, 2025)**
### **Baseline: Market Expectations**
- **Tariffs & Fed Policy:** Trump's tariff announcement has heightened concerns about economic slowing, prompting bond markets to price in up to four Federal Reserve rate cuts this year.
- **Trade Talks & Sentiment Shift:** Reports suggest China may restart trade...
Trading Plan for ECB Rate Decision
1. BASELINE 📊
- Market Expectations for Interest Rates: The market is anticipating a rate cut by the ECB, with a forecasted main refinancing rate of **2.90%** down from **3.15%**. The STIR markets have priced in a 50 bps cut, suggesting strong expectations for a reduction.
- Upcoming Event Predictions: Consensus is that the...
Trading Plan
Baseline
Short-Term Sentiment Bias:
- Euro under pressure, trading below $1.05 due to ECB rate cuts and political uncertainty in France and Germany.
- Markets expect an additional 50 basis points cut by February.
Upcoming Risk Events :
- German Manufacturing PMI (Dec): Previous: 43.0, Consensus: 43.1.
- German Services PMI (Dec): Previous:...
Trading Plan for GBP
BASELINE 🎯
Current short term sentiment bias and upcoming risk events (previous # & consensus expectations) that can impact said sentiment
Current Short-Term Sentiment Bias :
- The British pound is trading around $1.276, near a one-month high, driven by expectations of a cautious BoE.
- Investors are focused on upcoming UK economic...
Trading Plan
BASELINE
C urrent Short-Term Sentiment Bias :
- The market is currently focused on the upcoming US inflation report and its implications for Federal Reserve policy.
- There is an 86% probability priced in for a 25-basis-point rate cut by the Fed later this month⁵.
- The dollar index is steady around 106.3, reflecting cautious sentiment ahead of...
Trading Plan
1. Baseline Scenario:
- Macro-Fundamental Bias: Neutral to Dovish . The RBA is expected to maintain a cautious stance on interest rates, with markets anticipating a quarter-point rate cut by May 2025 and rates ending 2025 at 3.85%. This expectation is based on the need for more progress in reducing core inflation to the 2-3% target range.
-...
Trading Plan
1. Baseline Scenario :
- Macro-Fundamental Bias Dovish. The market expects the Federal Reserve to continue lowering interest rates, with a 66.5% chance of a 25 basis point rate cut in December. This expectation is driven by the Fed's recent decision to lower the federal funds rate to 4.50% - 4.75% and ongoing efforts to support maximum...
Here's the revised trading plan with the requested adjustments:
1 . Baseline Scenario :
- Macro-Fundamental Bias: Neutral to Slightly Dovish . The Federal Reserve has recently lowered the federal funds rate to 4.50% - 4.75%, reflecting a cautious approach to monetary easing. While inflation remains somewhat elevated, the Fed is balancing its dual mandate of...
1. Baseline Scenario
- Macro-Fundamental Bias Dovish. The Bank of England has cut rates by 25bps to 4.75%, with expectations of further cuts due to slowing inflation. Markets are pricing in two 25bps cuts by the end of 2025 with a 92% chance of a third 25bps cut, dispite the Labour Government's fiscal policy expected to be reflationary. There is also a...
