Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Access both platforms from your single Saxo account.
Key Stories from the past week: Powell cancels Christmas, Crypto stalls, and Novo pukes
Saxo
Christmas may be around the corner, but markets never sleep, and the action just keeps coming. Bitcoin hit a record high on Monday before reversing later in the week. The greenback, sterling and yen were all active as the Fed, BoE and BoJ met for policy decisions. The dot plot and Powell’s comments were the more significant market movers. There were big waves in the auto space as merger talks were sparked between Japan listed Nissan and Honda. Saxo clients remain active in headline names like Nvidia, Tesla, Rigetti, and Palantir. More below on this week’s key stories.
The Grinch who stole the Xmas rally
With recent market froth, investors were quick to react to the hawkish cut by the Federal Reserve on Wednesday. The new median dot plot for 2025 and 2026 shifted to reveal less cuts. Equities sold off, yields surged, and the greenback strengthened. Risk appetite certainly waned with tech absorbing a lot of the risk-off moves. Saxo client trades in Nasdaq 100 index trackers and Nasdaq 100 Futures spiked with a slight skew to profit taking. Although some took the opportunity to buy a potential dip. Sentiment wasn’t helped by the US government shutdown risk but the glimmer of light for bulls was Fridays PCE data which showed inflation at a lower pace than expected.
FOMC: A hawkish cut wraps up 2024 for the Fed
Novo crashes on drug trial disappointment
Novo Nordisk share price plunged -20% and temporarily paused on the exchange after the release of Cagrisema trial data. The next generation weight loss drug treatment achieved a superior weight loss of 22.7% in the trial patients, short of their 25% target goal. Trading spiked amongst Saxo clients on Friday with most buying the dip.
Novo Nordisk Shares Plunge
Crypto loses momentum in ‘risk off’ week
Buying momentum in Bitcoin and other major cryptocurrencies seems to have stalled, market sentiment remains cautious, further dampened by Fed Chair Powell’s dismissal of a Strategic Bitcoin Reserve initiative. US Bitcoin ETFs saw record outflows of $680m on Thursday 19th Dec, according to data compiled by Bloomberg and crypto exposed shares also experienced steep losses.
Bitcoin's 2025 outlook suddenly looks uncertain
Expect markets to be pretty quiet next week with Saint Nick disrupting trading across most markets. Liquidity may be thin which can incite some volatility. We wish everyone a happy silly-season and look forward to the New Year.
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