SocGen

"Sell In May"... And Buy Bonds?

SocGen's cross-asset strategist Andrew Lapthrone has found a curious seasonally-driven pair trade which may be suitable for the next four months: sell stocks and buy bonds, as "June to September are among the weakest months for equities but the strongest for bonds."

SocGen: Beware The Ghost Of 1993

"The comparison with 1993 is worthwhile too - it ended badly for asset markets, after all. Whether the Fed should worry about over-frequent excursions to the zero lower bound, or focus on financial sector stability, the risk is plain – super-easy monetary policy is creating artificially low volatility and driving money into trades and investments that are mispriced as a result."

April Payrolls Preview: "It Better Be Good"

After the abysmal March labor report, all we - and the Fed - can say is that April better be good, or else Yellen's claim of "transitory weakness" will simply be the latest nail in the coffin of Fed credibility. Here is the consensus for the key numbers the BLS will report at 8:30am ET on Friday morning.

Key Events In The Coming Busy Week: FOMC, Payrolls, 131 S&P Companies Report

Besides the upcoming FOMC meeting on May 2-3, and French & Italian politics - the decisive runoff round of the French election takes place this Sunday - this week's releases are dominated by US payrolls expected to come around 170k. The busy release calendar continues with Norges bank and RBA meetings as well as global manufacturing PMIs.

SocGen: "The Pound Short Covering May Just Be Starting"

"The possibility of a hard Brexit has already been discounted by the market, but the larger parliamentary majority currently implied by the polls would strengthen the UK government's negotiating position domestically. The market is now assigning better odds to a post-Brexit EU-UK trade agreement, and thus the worst may be behind us and cable short covering may just be starting."

Key Events In The Coming Week: French Election, Earnings, Manufacturing, Housing

This week will be dominated by the first round of the French presidential election on Sunday. On the data side, following China's strong economic report, attention will focus on US industrial production growth on Tuesday. In the euro area, flash PMIs for April due on Friday could point to moderation. This is also the first full corporate earnings week.

SocGen: "A Final Purge Of All Bearish Bond Sentiment May Cleanse The Market"

"I see no reason for USD/JPY to stop this side of 108. 2.29% this morning on nominal US 10s sees them below their recent range and real yields are 37bp now. Only a fall in US nominal yields to 1bp is avoiding the relative picture being even uglier but that just highlights the BOJs impotence in the face of lower global (US) yields."

As Stocks Sink, This Is What RBC Is Looking For

"...reticence from the buyside to take-down ‘net length’ is beginning to sting as recent ‘hiding-places’ are now dragging and generally very ‘high beta’ long portfolios (crowded ‘market’ factor) means increasingly painful drawdowns."

SocGen: "The Upcoming Central Bank Reversal Can't Be Helpful For Stocks"

"The wider Fed debate is about the impact on risk assets of shrinking the balance sheet. If near-zero rates and central bank buying of bonds have been the fundamental driver of global capital towards higher-yielding assets, then reversing both parts of this can't be helpful. Which is how markets have reacted overnight."

SocGen: Markets Are Losing Their Fear Of Inflation (Again)

The scorching ADP print may have brought another life into the reflation trade this morning, with TSYs dropping and the dollar rising, pushing S&P futures higher, but that may not be sufficient according to SocGen's Kit Juckes.