Steno Signals is our weekly editorial on everything macro. The byline of the editorial is Andreas Steno Larsen, former chief strategist at Nordea Bank and CEO of Steno Research.
While markets broadly agree that some sort of re-acceleration in inflation will happen over the summer, the ongoing liquidity boom—driven by the fiscal deficit and private credit creation—has gone under the radar, and it will likely lead to new cycle highs in risk assets sooner rather than later.
The situation in Ukraine and Russia demands attention, and it’s likely that Trump will need to shake things up to force a resolution. This may include imposing draconian measures on Russia. However, don’t be misled by these risks—a weak USD is set to drive a major macro comeback.
The move in the USD is probably only getting started and a continuation of the trend aligns well with Trump’s strategic initiatives on all fronts. The big elephant in the room is whether China is willing to accept it.
After the third major rating house downgraded the US on Friday, the long end of the yield curve is reaching into uncharted territory. The mood is accordingly weak in the Fiat, but a weak USD is good news for the non-fiats.
With all reciprocal tariffs now “paused” at lower levels, the next major battleground is inflation. Will inflation move lower, and will that allow for a further easing of financial conditions? Most likely, yes.
Large parts of the Mar’o’Lago Accord are actually progressing according to plan, despite poor implementation and widespread global outrage. China is now buying U.S. Treasuries due to the weaker dollar—precisely the intended endgame.
As the supply chain has been nuked by the liberation day tariffs, while most signs point towards an “easing” of tensions during May, we see more and more analogies pointing to the lockdown/reopening playbook from Covid. Here is why!
Part of the logic behind the Trump administration’s policy is to weaken the USD—but is the project spiraling out of control? Is there a viable path toward a less USD-dependent global system? Let’s take a closer look.
We’ve been all over the short USD trade this year, but the full scope of potential debasement still feels elusive. Trump is now openly floating the idea of firing the Fed Chair, while Waller seems to be holding his job interviews in public. Position accordingly.
Gold is ripping, copper’s crumbling, and oil’s caught in a geopolitical crossfire — with policy chaos from D.C. to Tehran shaping every tick. The manufacturing hangover is just beginning, and the market’s favorite safe haven is now a political statement.
Powell’s potential heir may be found in Waller, who surprised markets with a dovish pivot yesterday. The ECB and BoC now face the tariffs shock, and risk reacting too late as disinflation gathers pace.
Last week was one of the most challenging periods for the USD market in quite some time. Extreme policy uncertainty, combined with early signs that the US may pursue deals involving FX policy considerations, has made the USD appear increasingly vulnerable.
The slowdown in U.S. growth has so far been fairly isolated to trade and services data, which is why soft data has been weak while hard data hasn’t budged. When looking at domestic activity, the U.S. economy is still doing fine—for now. But is that something to cheer for?
The price action on Friday started to resemble the lockdown-driven liquidity event of March 2020. Here’s your guide to assessing whether we’ve entered a similar liquidity event in the week ahead — a must-read.
With Liberation day approaching, Trump is in the middle of imposing growth-harming tariffs in an economy that is already cooling, leaving nowhere to hide at the moment. Will this week be any different, or will economic data continue to roll over? We are unfortunately not quite there yet..
While Trump is barking, Vitalik is meowing, and markets remain skeptical of US assets versus the rest of the world. But Liberation Day may turn the tide on many of Q1’s dominant trends. Here’s why!
Europe and China have so far been the safe havens in macro, but we are seeing signs that the light is starting to shut here as well, which begs the question if you can even hide from the slowdown in growth by now? As per usual, we lay out our approach and trade recommendations here.
The gap between surveyed/anticipated inflation and measured inflation has been widening rapidly in recent weeks. Are surveys accurately predicting what’s ahead, or is inflation actually trending lower? Let’s take a closer look.
Everyone is certain that inflation is coming back in force due to tariffs, and while that is admittedly the straightforward conclusion, current live observations suggest a different picture. Could inflation surprise to the downside?
The price action and macro trends are starting to resemble those of early autumn 2024, which ultimately led to a material rate-cutting cycle. Could the Fed be stepping in sooner rather than later once again?
The tariffs are largely priced in, and there are early signs of a “race to the bottom” as Trump’s reciprocal approach prompts countermeasures. Meanwhile, US macro surprises are weaker than those in Europe.
I have the contrarian take that reciprocal tariffs will ultimately be good news, and global trade may actually end up flourishing. This would leave the tariff trades running on fumes!
Reciprocal tariffs will put markets on the back foot right from the start of the week, leaving certain EMs highly vulnerable, while Europe remains well-positioned. Setting the noise aside, the 2025 cycle looks very promising.
“How would you go long the USD at the Wellington open?” is a clear hint of the current sentiment. Could the USD peak already today, and where is the money to be found in this environment? Trade suggestions for this week are attached!
There are (and will be) Trump headlines right, left and centre over the coming weeks. Trading macro is therefore all about being right on the core underlying macro trends and cutting out the policy noise!
We present our best charts on gorwth from around the globe!
What a weekend in Trump-land, set against a macroeconomic environment that, as far as I can tell, looks more like 2021 than 2017. If we cut through all the noise, it seems we’re still early in the business cycle—and things are accelerating once again.
On the back of an uber-bullish Philly Fed Manufacturing print, we take a look at the sensitivities of assets to a boom in the manufacturing economy.
Reflation is roaring across global economies, and higher inflation on a trend basis is the last thing markets need – but it might be what they get. While that’s not overly bearish for risk assets in the medium term, it might be the final nail in the coffin for equities short-term.
Consensus is being torn apart from every direction—right, left, and center. This is typical in the early stages of a new trading year. So, what’s the current consensus, and how might it be wrongfooted? Let’s take a closer look!
