Andreas Steno

Is it really feasible to expect the EM rates cycle to tighten while the DM cycle is clearly moving in the opposite direction? If history is any guide, such a scenario is highly unlikely, and any window for this would be short.

This week’s job report will likely decide whether 25 or 50 bp is most likely in September.. Is the crowd of wall street economists getting too worried or too upbeat? The entire crowd of economists agree that July was a fluke.

In a relatively quiet data week, we are on revisions watch. The second release of the US GDP report from the second quarter is out, and with the cat out of the bag the revisions will be heavily scrutinized.

Will Powell use the labor market as an excuse to cut rates quickly, while Ueda discusses raising rates in Japan? The QCEW-based revisions could give the Fed enough justification if they decide to move swiftly, even though the quality of QCEW data has been mixed lately.

Chinese monetary authorities are fighting against gravitational forces when pushing for higher bond yields. Meanwhile, investors keep piling into bonds, while they are selling stocks. Credit growth is too weak to do otherwise!

The coming week is all about determining whether this is truly a recessionary meltdown or not, with the credit cycle and the ISM survey providing some much-needed clues. The credit cycle does NOT look recessionary as of now, but liquidity could turn abruptly worse.

Recessions differ in their impact depending on whether they are real or nominal, with the latter obviously being worse. Markets keep forgetting the nominal vs. real discussion this cycle, while the liquidity outlook is becoming increasingly mysterious.