Sunset Market Commentary

Economic

Summary:

More dollar strength pulled EUR/USD to a first 1.05-quote since October 2023, but that level triggered some rebound action higher.

Markets

More dollar strength pulled EUR/USD to a first 1.05-quote since October 2023, but that level triggered some rebound action higher. It’s only a matter of time though for a test (and potential) break of the 1.0448 range bottom in place since 2023. Next support levels stand at 1.0406 and 1.0201 which are respectively 50% and 62% retracement on EUR/USD’s bounce from 0.9536 to 1.1276 in 2022-2023. The trade-weighted dollar touched 107 with the 2023-top at 107.35 being the near-term technical reference. USD/JPY changes hands at 156, making way to the 160 potential intervention area. The Ministry of Finance conducted FX purchases both in April and in July after passing this threshold.

Fed governor Kugler – labelled amongst the most dovish FOMC members together with governor Cook, Chicago Fed Goolsbee and Philly Fed Harker on Bloomberg’s hawk-dove spectrometer – said that the Fed must focus on both inflation and jobs goals. “If any risks arise that stall progress or reaccelerate inflation, it would be appropriate to pause our policy rate cuts,” she said. “But if the labor market slows down suddenly, it would be appropriate to continue to gradually reduce the policy rate.” Kugler’s comments seem to be skewing to the upside inflation risks (stubborn housing inflation and high inflation in certain goods and services) which obviously carries some weight given her more dovish status.

US eco data played second fiddle with weekly jobless claims and producer prices squeezed in between yesterday’s CPI data and tomorrow’s retail sales. Weekly claims continue to hover at low levels (217k from 221k). Headline PPI rose by 0.2% M/M as expected, following an upwardly revised 0.1% in September. Core PPI excluding volatile food and energy categories climbed 0.3% M/M and 3.1% Y/Y (vs consensus of +0.2% M/M and 3% Y/Y). Both services costs and goods prices rose by 0.3% in October. The data triggered a tick lower in US Treasuries, but the magnitude was smaller than the past days’ declines and like in the dollar was met with a countermove following one-way traffic.

Daily changes on the US yield curve currently range between -5.9 bps and -3.6 bps with the wings of the curve outperforming the belly. German Bunds outperformed again, especially at the front end of the curve (2-yr yield -5.6 bps). We retain some interesting comments coming from Minutes of the October ECB meeting, pointing out that the disinflationary process was gathering steam with initials improvements in services as well. The ECB stance might approach neutral levels earlier than thought, cementing at least another 25 bps rate cut in December.

News & Views

In its November monthly report the International Energy Agency (IEA) forecasts world oil demand to rise by 920k b/d this year and just shy of an additional 1m b/d in 2025 (2024 102.8 mb/d, 2025 103.8 mb/d). The slowdown in growth from recent years reflects the end of the post-pandemic pent-up demand and below-par underlying global economic conditions, as well as clean energy technology deployment, the IEA assesses. This slowdown in growth compares to a growth of close to 2m b/d last year and 1.2 m b/d on average over the 2000-2019 period.

Regarding the demand-supply balance, the IEA expects ongoing healthy supply growth. It expects non-OPEC supply growth at 1.5m b/d this year and next year, mainly driven by US production alongside higher output from Canada, Gyana and Argentina. OPEC+ postponed a scheduled increase of 180k b/d earlier this month and will reassess its policy at a meeting early December. However, even in a scenario where OPEC+ cuts remain in place, IEA expects global supply to exceed demand by more than 1m b/d next year.

Polish GDP growth unexpectedly contracted by 0.2% Q/Q in Q3, bringing the Y/Y-growth to 2.7%. Q2 growth was strong at 1.2% Q/Q and 3.2% Y/Y. The consensus expected Q3 growth at 0.3% Q/Q. The office didn’t release any details yet. A more in depth/detail release will be published on November 28. Poor retail sales data suggest a weak performance of private consumption. The National Bank of Poland recently indicated that uncertainty on the path of inflation probably will provide little to no room to cut the policy rate before March next year. MPC member Wnorowski today reconfirmed that the NBP could start to discuss rate cuts in Q1. Even so, the Polish 2-y yield today declined slightly more than regional peers (- 8 bps to 4.98%). The zloty held strong as EUR/PLN eased from near 4.3325.

Source: KBC Bank

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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FxPro

Economic

Cryptocurrency

Market Picture

Cryptocurrencies continued to surge, pushing the total capitalisation of this market to a new high of $3 trillion. It was just $2.2 trillion on November 5th. In other words, over 10 days, the increase was more than 35%.

Bitcoin has gained nearly 20% since the start of the week, barely slowing at the $80K mark. It wasn’t until it approached $90K that we saw any significant shakeout of positions. On Wednesday, Bitcoin stormed to $93K, but after 4 hours, it was at $88K. We also saw a similar intraday range of over 5% on Tuesday.

At these levels, more and more crypto enthusiasts are switching to looking for interesting altcoins as they lock in profits in the first cryptocurrency. The easiest choice is Dogecoin, which has gained over 200% from the lows of November 3rd to the present. Given bitcoin’s 60% share of the total crypto market capitalisation, which we last saw in 2021, the altcoin season has yet to begin.

Elon Musk has joined forces with former presidential candidate Vivek Ramaswamy to lead the US government’s new Department of Government Efficiency (DOGE). The idea for DOGE was first floated in August during Musk’s interview with Donald Trump. While it has nothing to do with the cryptocurrency itself, mentions of the word are supporting the rise in price of Dogecoin, which became the first major meme coin and was created as a joke.

News Background

Glassnode notes that realised profits for both short—and long-term holders of Bitcoin remain below previous peaks at the all-time high (ATH). In such circumstances, many investors are willing to wait for higher prices to lock in profits.

According to Bitwise CIO Matt Hougan, the first cryptocurrency will remain in the “early stages” and will only enter the maturity phase when it reaches $500K. Until Bitcoin equals gold and becomes a familiar asset for central banks and institutional investors, it will remain in the “early stage.”

ConsenSys CEO Joseph Lubin said Ethereum “stands to gain more than any other cryptocurrency” from Donald Trump’s victory in the US presidential election. He attributed this to ETH’s greater ‘maturity’ compared to its competitors.

The Italian government will increase the capital gains tax on cryptocurrencies to 28%, down from the previously proposed 42%. From 2023, the country’s citizens will be obliged to pay 26% to the state if the profit from cryptocurrencies exceeds €2,000.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Cryptocurrency

Bitcoin traded near $90,000 on Nov. 14 as BTC price action digested yet another all-time high. Bitcoin Analysts Brace for 6 Figures as BTC Price Seals $93.5K Record_1

Bitcoin Analysts Brace for 6 Figures as BTC Price Seals $93.5K Record_1

BTC/USD 1-hour chart. Source: TradingView

New Bitcoin all-time high follows US CPI

Data from Cointelegraph Markets Pro and TradingView showed volatility still present after BTC/USD notched a $93,483 record on Bitstamp the day prior.

This came during the Wall Street trading session on the back of the latest United States inflation data. The October print of the Consumer Price Index (CPI) fell in-line with expectations of 2.6%, while nonetheless still increasing, the Bureau of Labor Statistics (BLS) confirmed. Bitcoin Analysts Brace for 6 Figures as BTC Price Seals $93.5K Record_2

Bitcoin Analysts Brace for 6 Figures as BTC Price Seals $93.5K Record_2

US CPI 12-month % change. Source: BLS

Despite the implications for financial policy as a result, Bitcoin held steady, even managing a brief thrust above the $90,000 mark.

Markets likewise continued to bet on another interest rate cut by the Federal Reserve in December, with the odds at over 80% at the time of writing, per data from CME Group’s FedWatch Tool. Bitcoin Analysts Brace for 6 Figures as BTC Price Seals $93.5K Record_3

Bitcoin Analysts Brace for 6 Figures as BTC Price Seals $93.5K Record_3

Fed target rate probabilities. Source: CME Group

Reacting, crypto market commentators saw little macroeconomic hurdles standing in the way of further BTC price upside.

“CPI in line,” Quinn Thompson, founder and CIO of hedge fund Lekker Capital, told followers on X, having previously called the data release a “nothingburger.”

“See you at $100k Bitcoin next week.”

Trader, analyst and entrepreneur Michaël van de Poppe agreed on the six-figure target, noting that Nov. 14 would see more data, this time the Producer Price Index (PPI).

$200,000 top joins BTC price predictions

In his latest market analysis, meanwhile, popular trader Skew highlighted $95,000 as a “key supply zone” based on exchange order book liquidity.

“Flow is pretty slow & declining volume during asia session, typically lines up with a move in EU/US session,” he noted. Bitcoin Analysts Brace for 6 Figures as BTC Price Seals $93.5K Record_4

Bitcoin Analysts Brace for 6 Figures as BTC Price Seals $93.5K Record_4

BTC/USDT 15-minute chart with liquidity (Binance). Source: Skew/X

In one of its Quicktake blog posts on Nov. 13, Onchained, a contributor to onchain analytics platform CryptoQuant, joined voices calling for even more gains to come.

“Notably, the 0nchained Top/Bottom Index had declined to the levels it registered during the $73,000 price point back in March, signaling significant room for potential upside,” it wrote, referring to one of its proprietary trading indicators.

The result, it revealed, was that BTC/USD “could potentially rise from its current level of $93,000 to reach a peak between $180,000 and $200,000.”

“Again, and again, we’re not at the peak yet! The index suggests that the top will be reached when the indicator falls within the 0 to 0.09 range—currently, it’s still at 0.27,” the post concluded. Bitcoin Analysts Brace for 6 Figures as BTC Price Seals $93.5K Record_5

Bitcoin Analysts Brace for 6 Figures as BTC Price Seals $93.5K Record_5

Onchained Top/Bottom Index (screenshot). Source: CryptoQuant

Source: Cointelegraph

Risk Warnings and Disclaimers

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UBS

Economic

Soft landing, now almost a consensus

“The battle against inflation is almost won,” were the opening remarks of the Annual IMF-World Bank Meetings in Washington DC. With inflation (nearly) at target, the Federal Reserve can now do its utmost to prevent a recession or significant slowdown. Most likely this will mean a more aggressive easing cycle than the market is currently pricing, easing the pressure on emerging market (EM) countries as the dollar is likely to weaken and encourage renewed capital inflows to EM.

Trump 2.0, market consensus?

EM investors and policymakers exchanged views on implied fiscal expansion from the proposals discussed during the US election campaign – on the inflationary effect from fiscal, trade and immigration policies under Trump or Harris. It was conjectured that a Red Sweep with high tariffs and retaliation regime could potentially lead to a global recession and an inflation spike.

A turning point in EM sovereign debt

We were reminded that exactly a year ago, the IMF-World Bank Annual Meetings of 2023 focused on issues surrounding the ability of countries like Kenya and El Salvador to meet repayment schedules, as well as what Egypt and Nigeria would do to address deteriorating external imbalances. These countries have had remarkable turnaround stories since then: in addition to having successfully refinanced their debt obligations and devalued their currencies, as needed, they embarked on ambitious reforms which led to compression of risk premium.

We also recalled that in the Spring Meetings earlier this year investors discussed when to expect the completion of debt restructuring process for Zambia, Ghana and Sri Lanka. The former two exited restructuring and their new bonds are freely trading while it appears increasingly likely that the latter would emerge from default before the end of the year. With no EM default expected in the near term, we see a turning point for EM external debt and sense investor sentiment towards EM debt has improved.

Debt risks are shifting to DM

The IMF warned against continued expansionary deficits and rising debt-to-GDP ratios, especially in the US. While investors continue to believe in US exceptionalism in terms of growth and private investments, we sensed a widespread concern about US fiscal sustainability and potential fiscal expansion under the next government. Fiscal slippages in DM in relation to consolidation plans are substantial compared to EM (see Chart). In stark contrast, the IMF attributed the overall resilience in EM to improved monetary policy credibility and more effective management of fiscal risks.

The narratives around distressed sovereigns remain idiosyncratic

Investors were enthusiastic about the higher likelihood of capital controls being lifted in Argentina, potentially with IMF support, while becoming more cautious in the short term on Ecuador as severe droughts and blackouts were thought likely to affect the February election outcomes (although market-friendly President Noboa still has a strong chance to win). Middle East volatility has renewed investor interests in Lebanon, as investors presume a likelihood that, with a weakened Hezbollah, the country would be finally able to form a government and eventually begin a restructuring process. Emerging Market Debt Reflections Following IMF-World Bank Meetings_1

Emerging Market Debt Reflections Following IMF-World Bank Meetings_1

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Economic

European defence stocks are soaring in the wake of Donald Trump’s 2024 US election victory and the Republican party’s near-total control of Congress.

Investors seem to have read between the lines of Trump’s past rhetoric: more NATO burden-sharing, less US military aid, and a potential for European defence firms to capitalise on bolstered security budgets in Europe.

Italian defence contractor Leonardo SpA’s stock has jumped 17% since Trump’s election, with German arms manufacturer Rheinmetall AG climbing an impressive 22%, and Hensoldt AG, a German defence sensor specialist, rallying 18%.

For these companies, a potential European defence funding surge spells opportunity. In sharp contrast, European carmakers have seen their stock prices tumble as Trump’s protectionist stance on trade has re-emerged, raising fears of new tariffs.

‘America first’ and NATO’s ‘wallet first’: Time for Europe to pay up?

During his previous term, Trump made no secret of his belief that the US bore an unfair burden for NATO’s defence costs and even flirted with pulling the US out of the alliance.

Some believe this wasn’t just election bluster. Analysts now expect Europe will have to dig deeper into its coffers.

"The European Union does not speak collectively with one voice and member states are very far from having the same objectives on defence," Brussel-based economic think tank Bruegel wrote in a report.

On Monday, German Foreign Minister Annalena Baerbock stated, “We must think big about investments in European security and make them big,” advocating a shift away from NATO's 2% GDP defence target toward a more substantial commitment.

In September, German Defence Minister Boris Pistorius proposed increasing defence spending to between 3% and 3.5% of Germany’s gross domestic product (GDP). The sentiment appears to have backing, with a new Koerber-Stiftung Institute poll revealing that 73% of Germans believe Germany should increase spending on European security.

“The election result in the USA and the breakdown of the traffic light coalition are a real stress test for Europe,” said Nora Müller, Head of International Politics at the Körber Foundation. “The fact that a majority of the German population is of the opinion that Germany should invest more money in European security should be understood as a vote to consistently implement the ‘turning point,’ regardless of who forms the federal government in the future.”

Statistics from NATO show that in 2023, only nine European countries—Denmark, Hungary, Slovakia, Finland, Latvia, Lithuania, Estonia, Greece, and Poland—met the 2% GDP defence spending target.

In contrast, the three largest European economies—Germany, France, and Italy—fell short of this benchmark, while the U.S. allocated 3.2% of its GDP to defence, surpassed only by Poland. Why Are European Defence Stocks Skyrocketing After Trump's Victory?_1

Why Are European Defence Stocks Skyrocketing After Trump's Victory?_1

Analysts see defence budgets rising for Europe

Goldman Sachs analysts have weighed in, suggesting that Trump’s re-election could translate to renewed defence spending demands on Europe.

According to the investment bank’s analysis, meeting NATO’s 2% GDP target and offsetting any potential decrease in U.S. military aid to Ukraine could cost the European Union an additional 0.5% of its GDP annually.

In fact, the US currently provides approximately €40 billion per year (around 0.25% of EU GDP) in military support to Ukraine—a commitment Trump has indicated he would roll back. Any reduction in US support would likely require European countries to increase their spending to fill the void, adding yet another fiscal responsibility onto European shoulders.

Defence contractors across Europe are already positioning themselves for potential upticks in orders, with giants like Rheinmetall and Leonardo preparing for increased demand.

Armin Papperger, CEO of Rheinmetall, noted that Trump’s stance “will prep the Europeans to be more independent,” with pressure mounting from the US for European NATO allies to increase their defence budgets well beyond the established 2% threshold. European Defence CEOs Eye Opportunity Amid New Financial Pressures European defence leaders appear ready to meet the challenge—and reap the potential rewards.

Roberto Cingolani, CEO of Leonardo, recently told the Financial Times that Europe must be prepared to act independently. “As Europeans we are fully aware, without Trump having to tell us, that we need to step up contributions [to NATO],” he said. “After all, it is not in our interest to be the minority partners.”

Yet the reality is clear: Europeans are being called on to shoulder more of the continent’s security burden, a shift that could alter defence funding priorities and shape European military alliances for the foreseeable future.

As Trump's return to power shakes up transatlantic relations, European nations and defence firms alike are bracing for a new era in defence spending—one where Europe pays, but also stands on its own two feet.

Source: Euronews

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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SAXO

Economic

Bond

Sovereign Yields Surge as Trump Victory Signals a New Economic Chapter

With Trump’s re-election igniting fresh momentum into the U.S. economy, sovereign yields have surged, bringing the 10-year Treasury yield to a critical test of its descending trendline—an important resistance level. A decisive break above this point could signal a shift in market sentiment, prompting investors to recalibrate their expectations for the economic outlook and the trajectory of interest rates. Bond Bull Rally Delayed: What You Need to Know as Yields Rise_1

Bond Bull Rally Delayed: What You Need to Know as Yields Rise_1

Market sentiment is shifting due to the absence of a recession in 2024, which has set the stage for a more resilient economic landscape in 2025. With consensus forecasts pointing to modest growth without a dramatic slowdown, the potential for stronger-than-expected economic performance could keep long-term rates elevated and volatile, moving within a broad range as investors weigh competing signals. Long-term investors should prepare for a scenario where rates settle around 4% unless a pronounced economic slowdown occurs.

Key Economic Indicators to Watch:

Economic Growth and Inflation: Consensus estimates project U.S. real GDP growth at 1.9% for 2025, with consumer prices expected to rise by 2.3% at the headline level and 2.1% at the core level. If growth and inflation end up to be stronger than expected, yields may remain high, impacting long-duration bonds.

Employment data: The Fed may slow or skip rate cuts, as payroll growth remains stable, suggesting fewer rate cuts are likely unless job growth slows significantly.

High Carry Remains a Preferred Strategy for Long-Term Fixed-Income Investors

Given the current economic backdrop, long-term investors can benefit from a balanced approach that combines high-yield instruments with low duration risk. While the market may be volatile, careful selection of high-yield corporate bonds, emerging market debt, and short-duration Treasuries can provide income stability. This strategy aligns with the economic outlook, which points to a soft landing but acknowledges potential surprises that could influence inflation and Fed policy. Long-term investors can explore several fixed-income strategies to enhance portfolio resilience and generate returns:

1. High-Yield Corporate Bonds:

Despite tightening spreads in the U.S., high-yield corporate bonds continue to offer attractive income. Companies have successfully extended their debt maturities, reducing refinancing risks and creating stable cash flow. High-yield corporate bonds are suitable for investors looking to balance income generation with moderate credit risk.

2. Emerging Market Bonds:

With global economic resilience and high-carry potential, emerging market bonds present a viable option for income-focused investors. These bonds provide higher yields relative to U.S. Treasuries and may benefit from a weaker U.S. dollar environment if the Fed continues to ease.

3. Sovereign Bonds in Europe:

In Europe, government bonds from countries like Italy offer yields above the EU average, providing a cushion against inflation. Italy’s BTPs, for example, offer competitive yields and can serve as a hedge against both inflationary and deflationary risks in the eurozone.

4. U.S. Treasuries with Shorter Durations:

Given the uncertainty around the Fed’s rate path, shorter-duration Treasuries can help investors manage interest rate risk. A focus on 2- to 5-year Treasuries could provide stability, offering yields with lower price sensitivity to rising rates.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Stocks

London stocks were steady in early trade on Thursday as investors sifted through a raft of corporate news and looked ahead to another US inflation reading.

At 0905 GMT, the FTSE 100 was flat at 8,029.02.

On the macro front, the US producer price index for October is due for release at 1330 GMT.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The figures are expected to point at an uptick in factory-gate prices in October. The headline PPI is seen rebounding from 1.8% to 2.3% in October, and core PPI from 2.8% to 3%. And don’t forget that there are components in these figures that feed into the Fed’s PCE index.

"Therefore, even if these numbers are in line with expectations, they should be warning that a 25bp cut from the Fed is probably not the right thing to do. I am not saying that the Fed won’t do it. I am just saying that it’s probably not the right thing to do."

Market participants were also looking ahead to the release of third-quarter UK GDP data on Friday.

In equity markets, Spirax was a high riser as it left its full-year outlook unchanged after increasing organic sales across all three of its businesses in the third quarter, but warned of a slight impact on results from currency movements.

B&M European Value Retail also gained as it reiterated its full-year outlook after half-year sales ticked higher.

Aviva rose as it hailed a "very strong" performance in the third quarter, with double-digit gains in general insurance premiums, life insurance and retirement sales, and wealth net flows.

3i Group pushed higher as it highlighted a "good" financial performance in the first half, with a total return of £2.05bn, or 10% on opening shareholders' funds.

Burberry surged as the luxury goods brand suspended its dividend and launched a strategic review of the business in an "urgent" effort to turnaround its struggling fortunes after slumping to a £80m half-year loss.

The company said "Burberry forward" would focus on "reconnecting our brand with its original purpose and leveraging our strengths...to attract a broad base of luxury customers".

The loss compares with a £223m profit a year earlier. Revenues plunged 22% to £1.08bn.

Burberry said with the key Christmas period ahead and an uncertain macroeconomic environment it was "too early to determine whether our second-half results will fully offset the first-half adjusted operating loss".

Mr Kipling owner Premier Foods advanced as it reported higher first-half revenues and profits as easing inflation allowed consumers to "treat themselves more" to its range of products.

On the downside, WH Smith fell even as the retailer reported a jump in full-year profit and revenue, hailing a particularly strong performance from the UK travel business and over the summer.

Lancashire Holdings, Sainsbury’s and Bunzl were all in the red as they traded without entitlement to the dividend.

Source: Sharecast

Risk Warnings and Disclaimers

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Source: KBC Bank

Crypto: Tug-of-war At New Altitude

Market Picture

News Background

Bitcoin Analysts Brace for 6 Figures as BTC Price Seals $93.5K Record

BTC/USD 1-hour chart. Source: TradingView

New Bitcoin all-time high follows US CPI

US CPI 12-month % change. Source: BLS

Fed target rate probabilities. Source: CME Group

$200,000 top joins BTC price predictions

BTC/USDT 15-minute chart with liquidity (Binance). Source: Skew/X

Onchained Top/Bottom Index (screenshot). Source: CryptoQuant

Source: Cointelegraph

Emerging Market Debt Reflections Following IMF-World Bank Meetings

Soft landing, now almost a consensus

Trump 2.0, market consensus?

A turning point in EM sovereign debt

Debt risks are shifting to DM

The narratives around distressed sovereigns remain idiosyncratic

Why Are European Defence Stocks Skyrocketing After Trump's Victory?

‘America first’ and NATO’s ‘wallet first’: Time for Europe to pay up?

Analysts see defence budgets rising for Europe

Source: Euronews

Bond Bull Rally Delayed: What You Need to Know as Yields Rise

Sovereign Yields Surge as Trump Victory Signals a New Economic Chapter

Key Economic Indicators to Watch:

High Carry Remains a Preferred Strategy for Long-Term Fixed-Income Investors

London Open: Stocks Flat Ahead of US PPI; Burberry Surges

Source: Sharecast

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