Spanish and French inflation numbers are out, which will guide Euro zone inflation numbers later this week. Markets are currently rebounding, but not in an impressive way.
Seasonality Watch: Four charts that will make you go hmm…
Our working hypothesis continues to center around the current inflation pick-up resembling the September report from 2022 (released in October). Here are four charts that will make you go hmm…
Something for your Espresso: Important growth- and inflation gauges are out
Watch ISM Manufacturing and European inflation this week. Another test of the January/February narrative of higher activity and higher prices.
Steno Signals #37: Revisiting the macro regime indicators considering recent developments
February did not play out fully as expected by our Macro regime indicator. We will assess why in the weekly editorial and update projections for March.
Spending Watch – The consumer is back
After an outright terrible end to 2022 for consumer spending, 2023 has started off on a better note. Is the consumer spending back? And what are the driving forces behind the consumption comeback in case?
Something for your Espresso: Nothing Burger Ueda
We have been up early to watch the hearings in Japan, but very little new was brought to the table. Here are the take-aways from the hearings in Japan.
Something for your Espresso: No food for 50bp in meeting minutes
A few participants favoured a 50 bp hike at the last meeting, but the overwhelming majority backs a strategy where a slowing pace allows the Fed to gauge the extent of hikes needed. Forget about 50bps in March.
5 things we watch: Higher(er) for longer(er), the consumer, core price pressures, energy prices and cyclicals
If this truly is a rebound in activity with consumption back in the service sector, then there is no reason to sell equities. This is the big schism currently. Why sell both fixed income and equities if the economy is doing better? Current market trends are not sustainable. Something will HAVE to give.
Something for your Espresso: Good news is bad news?
A big bounce in ISM Services and suddenly the higher for longer spills-over to equities. The current rebound has higher rates tattooed all over it but is it sensible?
The Energy Cable #8: How China uses the SPR to counter energy trends
China actively uses its reserves to fight price trends and currently BOTH the US and China release reserves simultaneously. This is more than enough to counter Russian production cuts. Here is why!
Something for your Espresso: Will the cyclical rebound be confirmed?
Will the cyclical upswing be confirmed in European PMIs and German IFO numbers? Markets clearly lean that way, while bets are being removed on a more hawkish BoJ.
USD’O’Meter #3 – Continued USD weakening ahead based on our probability weighted models
What is the USD outlook given current liquidity gauges and economic conditions around the globe, you ask? Well that is why we have the Dollar O’Meter where we’ll look at the USD through different lenses.
Something for your Espresso: On PBoC liquidity alert..
PBoC injected almost “war-like” liquidity on Friday. Is this another sign of Chinese authorities really trying to pump liquidity into the system? This week we watch RBNZ, PCE prices and Japanese inflation.
Steno Signals #36 – Why 50% of the current rebound is manufactured in a spreadsheet
We experience seasonal adjustments to an extent NEVER seen in time series history for CPI, Retail Sales and ISM numbers in January. Are we amidst a spreadsheet rebound or an actual economic rebound? We lean towards the former. Here is why…
Positioning Watch: Investors are yet again short bonds..
We have looked at fund flows now that CFTC data on positioning remains unavailable due to a data-issue. Bond speculation is getting short again, while investors are not buying the rebounds in the USD and Tech/Discretionary stocks
Commodities Watch – What commodity super cycle?
The Chinese reopening has possibly been the most covered topic since its announcement in late 2022 – at least in financial circles. The awaited lifebuoy for the global economy, which the reopening consensually was thought to be, has yet to truly show up in prices of commodities essential in manufacturing. We prefer to stay long Industrial Metals (mainly Copper) relative to Energy.
Something for your Espresso: The 50bp chatter is back, but it is nonsense..
Mester and Bullard have brought back the 50bp chatter and the market is now slowly opening the door for more than 25bps in March. We continue to find the bar to be VERY high for a 50bp hike and no important members have so far mentioned such a hike.
Something for your Espresso: What if it is not bad inflation..
Equity markets keep performing despite a front-end repricing of interest rates. If the consumer is really doing better than feared, then we are in for a different type of inflation compared to 2021/2022. And this time it is not as bad..
5 things we watch – Fed policy, positive carry, oil markets, the USD, and implications of the newly appointed BoJ Governor
Midweek has arrived and that calls for a rundown of the five things we watch the closest. As is the custom every Wednesday, we will take you through these most important themes (and charts) in macro and summarize how we interpret them. Dig in!
Japan Watch – The YCC time bomb for Western Fixed Income
Japan is a MUST watch as a risk taker in the West as the potential scrapping of the YCC policy holds true time bomb potential for Western markets. Here is what is currently priced in and how to position for it.
Something for your Espresso: An uppercut to disinflationistas, but not a heavy one..
Markets ultimately ended up repricing front-end rates higher after the inflation report backed by comments from FOMC-member Barkin, but we are not ready to throw in the disinflationary towel (yet)
Good Morning, America: Not a disinflationary biggie
The disinflationary vibes are not tattooed all over this inflation report despite a cooling yearly inflation pace for the seventh consecutive month. BUT.. do note that Powells target variable keeps cooling!
The Energy Cable #7: Is Russia back in the driver’s seat in energy markets?
Is Russia back in the driver’s seat after the supply cut announced late last week? If China adds demand, while Russia cuts supply, it may be a bullish cocktail for energy.. But so far the truly bullish price action remains to be seen.
Something for your Espresso: Ueda- and inflation day!
Will the new BoJ governor rock the boat? Quotes from a source close to Amamiya would suggest as much, while we look forward to the US CPI report today.
Valuation watch – Are equities worth the risk? A look at risk premia
As the tides have turned on global liquidity (at least for now), we decided to look at equity risk premia in a historical context. Do you get adequate compensation for equity risk? Probably not.
Something for your Espresso: Inflation crossroads
We are standing at cross-roads. Will waning inflation allow the market to speculate in a soft landing after Tuesdays numbers again?
Steno Signals #35 – Has global liquidity bottomed already?
We have been spending countless hours discussing the liquidity outlook in the US, but developments elsewhere are equally as interesting. JPY and CNY liquidity is on the RISE, which has turned the tide on “global liquidity”. Position accordingly?
US inflation watch – Charts, charts, charts
With the recent almost farcical economic data coming out of the US, we bet economists and traders are on the edge of their seats awaiting the coming CPI-print. In this ‘preview’ we’ll turn to our charts trying to align expectations to select indicators.
Good morning, America: Kazuo Ueda – who?
Is Kazuo Ueda another trial balloon from the Japanese government or is this a confirmation that politicians seek a break-up with the ultra-loose policy of Kuroda?
Something for your Espresso: How strong is the Chinese rebound really?
Chinese inflation is re-increasing, which rhymes with our APAC inflation story for H1-2023. The question is just how strong the Chinese momentum really is.