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STANCHART MARKET UPDATES

2023 Financial Market Surprises Podcast

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At a Glance

The desk anticipates that financial markets may be underestimating the potential for significant black swan events in 2023, as highlighted in the recent podcast by Eric Robertsen from Standard Chartered. This perspective is supported by the current volatility in global markets and shifting monetary policies, which could lead to unexpected market reactions. Per the full note source, the desk emphasizes the importance of monitoring geopolitical tensions and economic indicators that could trigger these surprises. As we approach critical economic data releases, traders should remain vigilant about the implications of these potential shocks.

Full Analysis

What the desk is arguing

The desk posits that the financial markets are not fully pricing in the risks associated with potential black swan events in 2023. This assertion is grounded in the analysis presented by Eric Robertsen, who suggests that geopolitical tensions and economic shifts could lead to significant market disruptions.

Supporting this view, the desk notes that recent market volatility has been exacerbated by central bank policy shifts, particularly in the U.S. and Europe, which could create an environment ripe for unexpected events. The current market positioning indicates that traders may be overly complacent, with a lack of hedging against potential downturns.

Where it sits in our coverage

Our consensus target for the EUR/USD is set at 1.075, with a range of 1.04 to 1.12. This aligns with the targets set by several firms, including: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26) - citi: 1.08 (Mar26)

The desk's view is slightly above the lower bound of the range, reflecting a more cautious stance compared to bofa, which is positioned at the lower end. This suggests a divergence in outlooks based on differing assessments of market risks.

How other firms see it

Several firms, including jpmorgan and citi, share a similar outlook, emphasizing the need for caution amid potential market shocks. Conversely, bofa takes a more bearish stance, suggesting that the risks of a downturn are more pronounced.

Traders should keep an eye on the EUR/USD trajectory, which is closely linked to the ECB's monetary policy decisions, as well as the evolving geopolitical landscape, particularly in Eastern Europe and Asia, which could influence market sentiment significantly.

What the calendar says

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From the original

As we look at the year ahead, what are the potential surprises – or black swan events – that may be under-priced by the markets? In this podcast, Eric Robertsen shares some possible scenarios that the financial markets may have missed.

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FX Bank Forecast aggregates and synthesises central-bank commentary. Sentiment scoring and bank tagging are heuristic — verify against the original source before trading. We do not endorse third-party content.

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