January 2024 Global Market FICC Summary Report

In our latest financial report, the team delves into the significant movements within the UK sovereign bonds and currencies landscape during January 2024, alongside a broader analysis of European, US, Chinese, and Japanese markets. This comprehensive review not only highlights the major economic developments but also provides a forward-looking perspective on market trends.

UK Sovereign Bonds: Navigating a Recession and Market Reactions

Our analysis reveals that the latter half of 2023 saw the UK economy enter a technical recession, marked by two consecutive quarters of negative GDP growth. This downturn triggered a notable shift in market expectations, leading to a drop in 10-year Gilt yields by 107 basis points, as investors anticipated potential rate cuts. However, as early 2024 unfolds, the UK economy shows signs of narrowly escaping this recession, with a modest GDP growth forecasted and a slight rise in Gilt yields. Our team closely examines these dynamics, exploring how the market's predictions of "higher for longer" interest rates could shape the bond market in the near future.

Currency Movements: Stability Amid Economic Challenges

Our report also scrutinizes the performance of the British Pound (GBP) against major currencies, particularly the USD and EUR. The GBP exhibited stability, with notable appreciation during Q4 2023, driven by improving macroeconomic conditions. This resilience is significant, especially as markets anticipate interest rate cuts later in 2024. The implications of this currency stability, set against a backdrop of stagnation and upcoming fiscal policies, are thoroughly analyzed in our coverage.

Broader European and Global Perspectives

Expanding beyond the UK, our report provides an in-depth analysis of the broader European sovereign bonds and currencies, with a particular focus on the European Central Bank's stance on interest rates amidst fluctuating inflation rates. Additionally, we explore the dynamics of the US treasury yields, which faced volatility due to shifting market expectations and economic resilience, and the Chinese economy's struggle with deflationary pressures and a turbulent real estate sector. Lastly, the report touches on Japan's economic scenario, where mixed economic indicators and foreign investor confidence have created a unique market environment.

In this January 2024 edition, our team has examined these diverse financial landscapes, providing insights that are crucial for understanding the current and future state of global markets. For further information, please sign up to our newsletter where we publish reports across various sectors on a regular basis.

A big thanks to our team that worked together to produce this report:

Head: Emem Jones

VP: Harry Yeung

Analysts: Heison Chan, Tyler Holt, Jingxuan Niu, Aryana Rahman, Aman Dugar, Joshua Fung, Jocelyn Sim, Sam Ho, Scott Chan, Tony Tang, Rhydian Williams