Daily Post

The US economy is not slowing down, and several central banks in the G10 are leaning towards hikes rather than cuts as we approach autumn. Is forward pricing in rates getting ahead of itself once again?

The JPY is on the move ahead of the BoJ/FOMC policy meetings by month-end supported by rebalancing flows, softening real-rate spreads and a fading bid for debasement hedges. Will it impact cross-asset markets?

The Philly Fed survey was the strongest seen in quarters, indicating that the manufacturing cycle in the U.S. is now gaining some momentum beneath the surface. Meanwhile, Japan reported a moderately high inflation rate, and the ECB appears to be on a mental vacation.

The market is really turning against momentum strategies, which is a self-feeding loop until challenged by an exogenous input. There is nothing fundamentally sound around the rotation yet.

A surprising index-weighted sell-off occurred on the back of a “home-run” inflation report for doves. Will markets cheer on the disinflation or are the wheels coming off now?

Soft inflation news paired with dovish central bank vibes from the morning. The only major positive surprises arrive from countries that have already cut rates.

Fair values are no longer moving up for USDJPY, which in turn may lead to spill-overs to commodity space. Is the tide turning on a few important macro trends? And will Powell confirm the turning tide?

The weak ISM Services printout in the US raises the question of whether we can compare the current US cycle to developments seen in higher-beta countries in 2023 due to lags in the interest rate cycle.

Powell sounded dovish in Sintra, but there are no imminent rate cuts on the horizon. Meanwhile, the oil market continues to send mixed signals, and freight rates are skyrocketing. Are you paying attention?

The first strong hints of the economic performance in June will be out already on Monday, but the Chicago PMI later today will offer important clues.

Hawkish surprises from Sweden, Canada and Australia. Is this something to worry about for the bond bulls in G3 markets as well? We tend to think so. Meanwhile, liquidity proxies rebound despite quarter-turn drains.

While Nvidia is suddenly selling off due to liquidity (and idiosyncratic reasons), there are signs of re-inflation outside of the US, which could impact the USD market versus RoW currencies.

Another smoking hot UK services report has emerged, presenting a renewed headache for the BoE. Without the deflation in goods, the BoE would be in a significant mess. Meanwhile, metals markets are heating up again.

The balance of risks move in the direction of a goldilocksly environment into July, which is at odds with our medium term goods re-inflation narrative. Liquidity and growth will likely improve in July, while commodities could suffer further.

Despite a hawkish revision of the FOMC projections, the market can take comfort in a solidified cutting bias despite these changes. There is now even a feasible path to dovish surprises relative to the inflation base case.

We expect a hawkish CPI report before the Fed meeting potentially pouring oil on troubled waters in the immediate aftermath of the release. Here is our go-to plan for the day ahead!

We are approaching a make or break job report from the BLS later this Friday. In this morning’s analysis, we provide you with the full assessment of the current situation in the US labour market.