Why the Fed Might Not Be Out of the Woods Yet—And How Deregulation Could Lower Yields Instead

Why the Fed Might Not Be Out of the Woods Yet—And How Deregulation Could Lower Yields Instead
One demands cuts, the other preaches patience—will Powell dodge the pressure, or will Trump land the ultimate rate-cut knockout?
Similarly to launching his meme coin, Trump’s focus remains fixated on short-term wins at the expense of long-term stability. Why should ballooning debt be any different when immediate gratification is the priority?
With inflation cooling and markets teetering, the BoE might just trade in its tea for maple syrup. Meanwhile, across the pond, the US CPI is brewing a hawkish storm, reminding everyone that taming inflation is no walk in the park.
From whisper numbers and payroll predictions to revisions, wage growth, and unemployment trends—here’s why this could shape market sentiment amidst rising rates and a resilient labor market.
Altcoins, Liquidity, and the Business Cycle: Brace for the Q1 Squeeze
As the Fed and ECB navigate different paths, markets wrestle with rate cuts, QT, and shifting inflation dynamics.
China’s Yuan slides as stimulus whispers grow louder, the Fed hints at a December rate cut despite its September reaction function misaligning with current data, and Germany struggles with rising wages amid industrial decline
China’s growth engine is sputtering, Japan’s finally waking up with inflation, and the USD is wobbling under bond seasonality and Fed liquidity magic. Throw in an oil-yield breakup and slowing U.S. services, and you’ve got a market cocktail worth watching!
The Chinese issuance of USD-denominated bonds in Saudi Arabia may seem negligible on the surface, but it holds significant signal value for the direction of the USD. If China feared a strong USD – or planned a devaluation – this would be an odd move. It could also signal a farewell to gold as a key strategic asset.
The meeting minutes from the Fed supported the US Treasury investment case, and we continue to see signs of lower bond yields in the US, which also spills-over to the USD despite tariffs threats.
Another weak month for Europe, with the EUR taking a significant hit as markets price in a 50bps cut from the ECB. Meanwhile, profits remain elusive in China, leaving the US as the “cleanest shirt in the laundry.”
Could the Trump administration prove to be less brutal on trade now that Musk and Vivek have fully endorsed the Milei policy mix? We take a closer look at Elon Musk’s supply chains and how they might influence the Trump administration’s stance.
Markets are front-running an anticipated U.S. liquidity surge, yet in Europe, the ECB’s slower response to liquidity challenges is adding pressure. Meanwhile, in China, growth appears artificially propped up by official targets rather than driven by real demand, with domestic consumption remaining weak.
“We’re in no rush to cut rates”—think of us as the cautious turtle, not the reckless hare.
The Fed is not returning to 2% inflation this cycle, as we’ve suggested for some time. The question now is how this will shape returns in USD, fixed income, Crypto and equities heading into 2025, given that the Fed will ease regardless.
This week’s market update reflects a cautious yet pivotal moment as investors digest the U.S. election outcome, with Donald Trump’s win and a likely Republican sweep. While market volatility has eased, positioning flows in equities, bonds, and FX suggest a mix of profit-taking and strategic rebalancing that sets the stage for what could be a transformative period ahead.
While everyone is focused on major central bank decisions expected today, significant stress is building up in liquidity. The Fed and the Bank of England both are about to deliver 25 bps decreases.
Probably the most deciding week this year for guiding the US and worldwide economies with the US election on Tuesday as well as a Fed decision on Thursday expected, with the ever more possibility of ending QT early
It’s been an eventful 24 hours in the bond space, likely offering a first glimpse of the volatility we can expect with next week’s election. The term premia scare remains very much intact, but underlying supply and inflation fundamentals suggest it should fade as risks subside.
The Trump bet is driving everything in the markets, with bond yields rising while oil prices are plummeting. It seems likely that this disconnect could continue into next week, paired with upcoming softness in European inflation numbers.
Term premiums are rising, but spending will likely be reigned in short-term both in the US and in the UK. The question is how precious metals respond to a fading term premium in November and December?
Chinese GDP trends are being masked by a significant inventory build-up, as electric vehicles pile up in parking lots across China, and to some extent, in the West. China urgently needs a weaker USD to continue its easing efforts.
The ECB is expected to be the most dovish central bank in the G3 space, but there is also light at the end of the tunnel for those hoping to see a comeback of strong returns in USD fixed income.
We saw the worst day in the Hang Seng since Lehman yesterday, but China used the opportunity to “feed the rally” with something to look forward to—a briefing on fiscal stimulus on Oct 12. Here is a comprehensive overview of the far-from-impressive stimulus announced thus far.
China’s upcoming fiscal policy briefing follows market disappointment over the lack of major stimulus, triggering a sell-off in Chinese assets. Confidence remains low despite cheap credit, and the PBoC’s limited measures offer little relief. The real solution lies in significant fiscal action to restore demand and stabilize the market.
One weak NFP report and rates could drop significantly, but a >200k report will likely challenge the front-end anchoring of the dot plot. There’s a lot at stake today, and we’ll guide you through how markets are positioned.
We’ve seen a significant spike in SOFR-EFFR spreads over the past 48 hours, which feels reminiscent of September 2019, though on a smaller scale. The Fed may be facing a liquidity problem and could feel tempted to address it.
How tight is the liquidity outlook for the month- and year-end? 2024 will bring a tight September quarter-end, but a much more benign year-end. Here’s why and how to manage it.
China is coming through with stimulus proposal after stimulus proposal, which has fueled the China rebound story once again. When is the turning point where stimulus is actually helping the economy? Few of their initiatives have worked previously, so it’s difficult to expect a different outcome this time around.