Equities are back to winning ways, while USD rates traders agree on 0 cuts this year being a probable scenario. Meanwhile, China is likely preparing for a devaluation of the CNY, and the intervention risks in JPY pairs increases, and the next macro battle in 2024 will likely be found in EM.
Steno Signals
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.
The week at a glance: Time for the BoJ to step up, while soft PCE numbers may fool some..
Focus on European PMIs, the Bank of Japan meeting and PCE numbers this week! Our short and sweet take is found here!
Steno Signals #96 – A major devaluation of the CNY could be imminent
China is preparing for something major. That seems increasingly obvious judging from the stockpiling of important resources. Could it be that they are preparing a major one-off devaluation of the CNY?
5 Things We Watch – Rates pricing, Bond positioning, Equities setback, USD Wrecking Ball & Inflation markets
Everything will be about central bank divergences going forward, as the Fed is looking to hold rates steady while ECB prepares to cut. How will it affect allocations, and what should you look out for in markets the next couple of weeks? Find out here.
The week at a glance: Soft CPI in UK and a BIG positive surprise from China?
Each Monday, we will go through the main events of the upcoming week in a short- and sweet format. Follow along to get our takes on the data surprise of the week!
Steno Signals #95 – Is the next move a hike?
The market keeps lagging in this re-inflation cycle and while forward pricing and economists are backpaddling on 2024 expectations, the next battlefield is 2025. Could the Fed hike after the election?
5 Things We Watch – Rates Pricing, Liquidity turning, Labor Market, Commodities & China
The hawkish US CPI report today has the potential to wreak havoc with market narratives and place the Fed in a difficult position, while commodities are in a prime position to continue their run. Read about the 5 things we watch in global macro here.
The week at a glance: US CPI to surprise hawkishly paired with a surprise rate cut?
CPI numbers from the US, Norway and Sweden paired with ECB and BoC action. Here is what to expect in a short and sweet format.
Steno Signals #94 – Trading the FAKE business cycle
The fake business cycle keeps surprising markets and central banks and the volatility in the cyclical components of the economy will likely keep markets trading from one extreme to another in coming years.
5 Things We Watch – EUR-Inflation, Central Banks, The Business Cycle, Positioning & Commodities
Markets find themselves at a crossroads as the US economy is doing better than feared, while inflation is not acting the way the Fed hoped for. Meanwhile, European disinflation continues, which paves the way for larger divergences between central banks.
Steno Signals #93 – Material stealth QT upcoming during a war economy
The US is effectively running a war economy and the ultimate headache is typically not seen until the production pace is slowed. Meanwhile, Yellen allows for stealth QT in upcoming weeks and months.
5 Things We Watch – Cyclicals, Baltimore Bridge, ECB, USDJPY & Sentiment
Markets continue to celebrate what looks to be a perfect landing, while BoJ is seemingly preparing an answer to the post-hike weakness in JPY. Read about the other 3 things we watch this week here.
Steno Signals #92 – The head fake reflation?
After having traveled to London last week, I am left with a vibe of a head fake reflation narrative. We are truly late in the cycle, which opens the door for super interesting bets.
Macro Nugget: China is booming!
The Li Keqiang Index posted its biggest monthly increase since 2005 in February, and multiple indicators are now blinking green for Chinese momentum.
5 Things We Watch: BoJ, Germany, Commodities, Canada, Inflation
Welcome to another edition of 5 things we watch where we take your through the 5 most important things that we have on the radar.
Steno Signals #91 – No more recessions ever!?
Recession chasing is getting increasingly weak as an investment strategy with fewer and fewer recessions around. Is the business cycle still alive and is it big enough to matter for markets?
5 Things We Watch – US CPI, Japan, China, Germany & Central Banks
The US CPI report came in hotter than expected yesterday, and today’s news on Japanese wage negotiations give the BoJ another reason to tweak the policy rate. Read about the 5 things that we watch this week here.
Steno Signals #90 – More liquidity to the most hated rally in recent history
It feels reminiscent of early 2021 in many ways with a very hated rally that keeps getting liquidity fuel. Central banks remain biased towards easing and will allow the economy to reflate with liquidity.
5 Things We Watch – Natural Gas, ECB, Crypto, Liquidity & Positioning
Equities have been leading the way in the new year return-wise, but things are starting to indicate that other asset classes might also join the battle. We provide our take here.
Steno Signals #89: Major Twist to QE upcoming?
Chris Waller hinted of a twist to the QE operations, which will likely impact the yield curve in the US. Will the Twist operation support the procyclical trends already seen?
Macro Nugget: Trillions of USDs waiting to be unleashed
Money growth has improved lately in the US, while there are trillions parked on the time deposit / MMF side-lines. If the Fed cuts rates into the current rally, we may see another 2021/2022 melt-up.
5 Things We Watch: US & Europe inflation, OPEC, Shipping, Bitcoin boom
This week “5 Things We Watch” dives into the divergence between US and Europe inflation, OPEC continuing its cutting cycle, focus on shipping distortions in energy and Bitcoin boom.
Macro Nugget: Diverging US and Europe inflation outlook
One of our high conviction macro bets for this year is the major divergence between US and Euro inflation
Steno Signals #88: Anyone left willing to bet on rate cuts in H1?
Fed and ECB doves have ultimately killed the last market hopes of rate cuts during the spring from the big three central banks. What does it take to bring back the receiver case and the hopes of April/May cutting action?
Macro Nugget: Focus on German weapons backlog
***EU Finance Chiefs Seek More Defense Funding, But Question How** While policy makers in Europe are worried about financing in terms of fighting Russian aggression maybe they should start to look at production capacity as well. The backlogs ratio in German weapons and ammunition manufacturing are up by 20 last year alone.
5 Things We Watch – Meeting Minutes, Cyclical Momentum, Natural Gas, Excess Retirements & China
A possible return of cyclical momentum paired with inflation has caught the attention of macro enthusiasts, but markets continue to celebrate the promised cuts from the Fed. Will sentiment change with tonight’s meeting minutes? We elaborate on the 5 things we look at this week!
Steno Signals #87 – Inflation is BACK! Position accordingly..
Both input- and output prices have flared up in the US and the 2024 consensus on rates and inflation is blown into smithereens. What’s next?
5 Things We Watch: UK & US CPI, Gaza, JPY, and Banks
The US CPI dealt a harsh blow to risk assets and those betting on disinflation, yet the trend of easing price pressures persists globally, as highlighted by the latest UK inflation report out this morning. Discover more in our “5 Things We Watch” below!
Steno Signals #86 – Trading the relative Fed and ECB balance sheet development
With an increasingly tricky timing of the first rate cut, we look for tradable trends in balance sheets instead. Balance sheet trends are easier to predict, which makes them very tradeable. Here is why!
5 Things We Watch – Inflation updates, Labor Market, Oil, Chinese equities & Growth
The BLS will update inflation weights and seasonal adjustment factors on Friday, the labor market is still strong but weaknesses are emerging, oil dropped back below 80 despite solid fundamentals, Chinese equities look cheap and the US is nowhere near a recession (for now). We will cover it all today.