Trader TV: This Week March 13, 2023

Published on 13 March 2023

A global forecast of trading activity and liquidity for the week ahead.

North America

  • Positioning ahead of FOMC meeting w/c 20 March
  • Primary market: IPOs low compared to last year and bond issuance high
  • Secondary: Liquidity has been good in equities and fixed income


  • ECB decision 16 March
  • Primary: IPOs low compared to last year and bond issuance high
  • Secondary: Liquidity has been good in equities and fixed income


  • Will China’s data match the 5% growth forecast?
  • Primary: Equities quiet compared to last year, bond issuance is low
  • Month-on-month trading activity has been very variable on Chinese exchanges

Transcript of interview:

Jo Gallagher: Welcome to Trader TV this week.

In North America, liquidity has been good. Trading activity will be tense.

In Europe, liquidity has been strong and markets will be busy.

In Asia-Pacific, liquidity has been moderate and markets potentially busy with data expected from China.

Let’s take a closer look at North America. Trading volumes and beta spreads indicate strong liquidity in equities and fixed income markets. Bond issuance has been record breaking this year. IPOs are down compared to last year.

After Jerome Powells testimony and the strong employment data last week, we can expect investors and dealers to be positioning ahead of the Fed’s meeting on the week of March 20th.

Traders are paying close attention to the ECB’s interest rate decision on March 16th. This could make for a busy market and liquidity has been positive.

Asia Pacific will have eyes on China’s economic growth as policymakers forecasted a low 5% for this year with more data coming out on March 15th on industrial production. IPO volumes are quiet compared to last year. Bond issuance has been low. Equity volumes on secondary markets have varied considerably on Chinese exchanges, month on month, which could potentially impact liquidity.

I’m Jo Gallagher and joining me to discuss the week ahead, we have Jonas Thulin of Eric Penser Bank, and we also have Bill Cunningham, market commentator who is also formerly at Nationwide Insurance. Welcome to the show, guys.

Bill Cunningham: Thank you. Thank you for having me here.

Jonas Thulin: Thank you. Happy to be here.

Jo Gallagher: Looking at the US, what are the scenarios that traders need to be thinking about in the week ahead, given that we just had Jerome Powells testimony and we’re also thinking about what the Fed is deciding on their interest rate decisions in the week ahead.

Bill Cunningham: Following a stronger than expected employment report that, underlying it, the details were actually a little bit weaker, the market is focused on the debate between whether the Fed in its upcoming meeting will move 25 basis points or 50 basis points.

The inflation data expected to come out this week will not really clarify that picture because it’s expected to be right in the middle of a range that was problematic but improving. So what we’re expecting out of the markets is a lot of activity in the front end of the curve as the debate goes on about how far the Fed will need to move up, and at the long end of the curve will stay in the range.

Overall, both equities and rates is in a broad range right now as we transition from the hyper growth, hyper inflation period into something that the Fed is trying to moderate down into more sustainable, lower inflation. And as a result, we’re going to see a lot of debate about what the Fed will do, and that should lead to a fair amount of activity, but in terms of liquidity, it will be choppy, but okay.

Jo Gallagher: Jonas, looking at Europe, the ECB’s decision on interest rates are coming up. What do traders need to think about this week?

Jonas Thulin: The interesting part here is really that the market has been more stubborn in the pricing of 50 basis points hikes from the ECB compared to the Fed. People are also looking at the acceleration of their quantitative tightening and what that would mean for liquidity. There are few regions now in Europe, amongst those Sweden where I’m actually situated, where we start to see liquidity again be a bit of an issue. So I would recommend viewers to look at the ECB’s Financial Stress Index that pinpoints which markets are actually pushing out this stress index.

We are also obviously following what’s happened in terms of the US, the Fed and CPI, etc.. The other aspect that I think could sort of dictate the markets also is the increasing argument within the top management of the ECB, where you have public speakers going out against each other. So there seems to be a little bit less of a smooth operating facility and that could certainly also increase the insecurity amongst market players.

Jo Gallagher: In APAC, traders will be reacting to data coming out of China on its economic growth. What do they need to be thinking about for the week ahead and what might affect liquidity?

Bill Cunningham: I think relative to what we’ve seen earlier this year, the market activity is going to be softer, it’s going to be slower. The news coming out of China and its People’s Congress meeting was disappointing to the market. No real strong stimulative efforts and some more crackdown by the government in terms of taking control of the economy. It’s all been disappointing to market participants.

That being said, there’s still an expectation that the post COVID opening up will be very positive for the Chinese economy, but we’re not seeing it yet. So not unlike Europe and the US, we’re kind of seeing these cross-currents of economic activity, some weak, some strong. And in terms of what I would expect in APAC, that’s going to lead to some caution over the next couple of weeks as we see the shake out from the Chinese policy announcements and some of the economic data coming out of the Fed and then Europe. So I do expect it to be softer and a little bit weaker than what we’ve seen earlier in the year.

Jonas Thulin: The Japanese equity market and its competitiveness in the short term is quite interesting to take a look at and I think their whole view of monetary policy on how to beat inflation or how to just stay away from trying to beat inflation is quite interesting for the equity markets.

When we look at China, we are completely focusing on high frequency data, everything from traffic congestion to movie tickets to cement use, electricity, steam usage, etc., and what we are quite amazed of is the rapid increase in growth that that would imply. If that works or not, we would have to see, but actually I have a small position in Chinese equities as well. On top of that we are some way away in terms of statistics on high frequency data and I think that’s quite interesting to see if that was to work out.

Jo Gallagher: Thank you, Bill and Jonas for joining us this week. Thank you to Dealogic and MarketAxess for supplying the data, and thank you for watching.

This is Trader TV this week.