Final Trading Day of 2024
With Christmas Eve now upon us, markets will be expecting a quieter day than they received four years ago. On this day in 2020, having locked down the UK and ‘cancelled Christmas’, Boris Johnson announced the completion of a post-Brexit trade deal with just a handful of days until the end of the transition period. As much as incoming President Trump may be trying to keep With the final trading day of 2024 underway, a brief look back at the year behind us in markets. Two often mutually exclusive characteristics of US markets have competed this year and ultimately proved to be capable of coexisting. Rising (relative) treasury yields plus a strengthening US Dollar are usually the antidote to equity market performance. Despite this fundamental relationship, 2024 has been characterised by both a colossal rise in the value of the Dollar and stock rallies beyond the wildest forecasts of equity analysts.
USD Spot indices have shown approximately 7% gains in 2024. A weak Euro has contributed heavily to such calculations. Expectations of US exceptionalism with respect to growth and wider economic conditions has allowed rate cutting expectations to be curtailed, supporting Dollar demand. Other major G10 losers measured against the Dollar include the JPY, NZD and NOK which have each lost in excess of 10%. AUD shaves in at a 9.91% decline versus the Dollar as of market open today. GBP is near flat on the year versus the Dollar (-1.45% as of market open) but severely weakened versus its mid-year peak (1.3433).
Whilst 2024 has played havoc with the swaps market as benchmark rates and rate expectations have rapidly evolved, year-end points have been surprisingly orderly. Portfolio and position balancing requirements often cause funding stresses in at least the US Dollar but often more currencies between the 31st December and the next trading day in that market. To date those stresses have been relatively imperceptible in today’s overnight markets.
Lastly, may we wish you a Happy New Year from all at SGM-FX.
Discussion and Analysis by Charles Porter
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