Inflation from the US and UK take center stage. May back in play for both?
Daily Post
Something for your Espresso is the Daily morning research letter from Steno Research. Occasional morning letters for the US based audience is also send out under the name Good Morning America
Something for your Espresso: A day of revisions and reckonings
We are approaching make or break territory for early spring cuts from the ECB and the Fed. Revisions to CPI numbers will play a crucial role in the coming days.
Something for your Espresso: Chinese DEFLATION
Chinese deflation is no longer as big an issue for the Western economy, while regional economies surrounding China will likely feel the consequences.
Something for your Espresso: Walking the last mile
Central bankers accept that the next move is a cut, but they are continuously talking about “walking the last mile” on inflation. How long does it take to walk a mile?
Something for your Espresso: Wen recession?
The US economy is accelerating, and various indicators have clearly bottomed out already. The question is if prices will accelerate alongside the rebound in activity and whether the rates market is still wrong.
Something for your Espresso: Food for hawks or doves?
The NFP spooked rates markets, but there are reasons to believe that technicalities were behind the spike in job creation and wage growth. Time to receive again?
Something for your Espresso: Is Powell right?
The US economy is probably accelerating. The ISM PMI defied weak seasonality and the orders to inventories. Will the NFP defy seasonality gravity today as well?
Something for your Espresso: March 23 PTSD
The NYCB scare made for an almost PTSD like reaction in cross-asset markets. So far, we consider the story a non-event and put more emphasis on the guidance from Powell.
Something for your Espresso: Disinflation going down under
Morning from Europe ahead of a big inflation day. Disinflation has reached Australia, which is good news for our AUD duration bet. The January FOMC meeting will be all about QT.
Something for your Espresso: No issuance bomb from Yellen
The risk of another supply-driven sell-off in USTs has diminished as the fiscal trajectory in the US is improving slightly due to an improving income side. Meanwhile, we have a big day ahead for the Euro area.
Something for your Espresso: Ever Grande, Ever Given, Ever Everything
Tensions are rising between the US and Iran as the Red Sea troubles are widening. Meanwhile, Evergrande is liquidated in China but with limited spill-overs.
Something for your Espresso: March or April?
Markets are betting on an April cut from the ECB, but the January HICP may lead to a larger repricing of the March probabilities as well. Meanwhile, the US economy appears to be in a temporary goldilocks phase.
Something for your Espresso: The one on Lagarde, Xi and their ilks
Chinese equities with another strong session. Is it time to jump the bandwagon? Meanwhile, an expected non-event ECB meeting may not be completely sleepy.
Something for your Espresso: Consumer strength deciding the magnitude of the inflation rebound
The lack of a strong consumer rebound in Europe will make the rising freight rates less prone to impact CPI indices, while it looks much more likely in the US.
Something for your Espresso: No hike if you cut!
The Bank of Japan is unlikely to move the needle, if the Fed cuts rates. It is now a relative game between Ueda and Powell. Meanwhile markets are pricing a growing inflation divergence in G10 space.
Something for your Espresso: Inflation or not?
Inflation evidence based on price trends in January remains soft in Europe, but the danger from freight rates looms large. Will the ECB choose the half glass full or empty approach on Thursday?
Something for your Espresso: The economy is running on COLA
Inflation math is important in times of price pressures and the embedded math works to underpin the economy via deficit spending.
Something for your Espresso: Davos pushing back!
Central bankers across the G10 space currently push back against market pricing. The market will likely eventually force their hands but chubby markets will be seen until.
Something for your Espresso: Waller’s Way
Waller’s speech yesterday underlines the hawkish risk to current market pricing and we are not surprised by it. Read our Morning reflections below!
Something for your Espresso: Peak dovishness (in the USD)?
The USD strikes back again in a sharp move against the 2024 consensus expectations. We still struggle with the relative Fed versus ECB/BOE pricing after another stinker from the UK this morning.
Something for your Espresso: USD back in the limelight
The USD opened firmer against Asian FX after the Taiwanese elections, while China refrained from cutting the MLF rate. This week, the UK CPI report will be important.
Something for your Espresso: US strikes back!
The US strikes back, both in growth- and war terms. The attacks on the Houthis overnight risk accelerating the energy prices again, while inflation already prints above expectations in the US.
Something for your Espresso: A big inflation day!
Is US inflation going to surprise on the upside in the US? Relative liquidity developments continue to support the idea of higher USD-flation compared to EUR-flation.
Something for your Espresso: Powell and the unrelenting labour market
What caused Powell to pivot in late 2023 and what will the impact be in 2024 as inflation risks running hotter? Read our morning post below
Something for your Espresso: Yellen now decides the QT pace
The liquidity tailwinds paired with fading Red Sea fears lead equities higher again. The mini positioning wash-out leaves a good entry-point for Q1 risk-on trade here.
Something for your Espresso: Rising liquidity and inflation?
This week’s inflation numbers are unlikely to fuel receiver bets in USD fixed income, while freight rates remain the center of attention. Meanwhile, liquidity is improving fast.
Something for your Espresso: Whispers of a strong job market report
The market seems to be chasing the narrative of higher rates for now and the whisper clearly leans in the direction of a stronger job report. Meanwhile, freight rates continue up.
Something for your Espresso: EUR-flation to print below consensus again
Inflation evidence keeps coming in soft in Europe and early evidence from Germany and France support another dovish surprise. Meanwhile, rates are coming down again.
Something for your Espresso: A mini duration washout
A relatively nasty start to the year with an according mini wash-out in positioning. Will liquidity be sufficient to keep risk assets bid through the month?
Something for your Espresso: Balancing soft inflation and Houthis
The Red Sea tensions are growing amidst very soft inflation numbers. Is the duration rally at risk of being derailed?