Manic price action across the board this week and everything looks up in the air. We are still alive and kicking despite the volatility
Watch Series
The “Watch Series” is a collection of individual series such as Europolitics Watch, Inflation Watch, Real Estate watch and much more. Stay tuned for in-depth coverage of your favourite subjects.
Suez Watch: Is the peak in freight rates in?
The weekly freight rate print just landed with the first negative weekly change in almost two months. Let’s delve into the data.
G3 Watch: Timing the first rate cut
The first rate cut is a timing question from both the Fed, the ECB and the BoE now. How do we trade the first cut and why are seasonality issues important to bear in mind? Read along here.
US Liquidity & Debt Watch: Yellen to decide the QT tapering timing tomorrow
Yellen holds the keys to an early end to QT. At the surface, she holds all the incentives to get the QT tapering process started sooner rather than later. Will it be reflected in the QRA details tomorrow?
Inflation Watch – How are markets pricing inflation in 1 year?
Option premiums allow one to derive risk-neutral probabilities for the underlying security at expiry. How are these probabilities looking for USD, EUR- and GBP inflation?
Energy Cable #55: Red Sea troubles leading to breakout in oil!
The Red Sea crisis contagion is spreading to the energy space. With signs of stress emerging in Energy Markets, we have entered a timely long as positioning remains light despite the ongoing Red Sea debacles.
Positioning Watch – Markets betting on lower rates and higher oil prices
Troubles in the Red Sea have started to drag oil prices and freight rate futures higher with a lag, while rate cut expectations stay firm. Are markets too late on the oil story, or is there more upside to catch?
Trade alert: Back into the energy trade and long EZ govies
The potential for a soft EUR-flation week paired with spill-overs in the Red Sea leads us to implement a few new trades in the portfolio.
Evergrande Nugget: Popping the World’s Largest Asset Bubble
Evergrande has now formally transitioned from a state of de facto default to a legal liquidation. How will the markets and Beijing act to the latest ruling?
EUR HICP Forecast: HUGE vol in Germany. A deflation shock?
Germany is the biggest inflation battleground in January. Volatility in forecasts is enormous. Will Germany deliver a deflationary shock compared to expectations?
Demographics Watch: Biden’s voter base grows ahead of 2024 election
With Trump looking as a sure-fire bet to take the Republican nomination, how is the voter demographics poised for the eventual Biden-Trump rematch?
Portfolio Watch: Aboard the train but starring at the emergency exit
Sticky prices and high growth appears to be the winning combination to bet on, and this week’s data undoubtedly reaffirmed that. Read below for our full take!
Ifo Nugget: Smells like disinflation
If it quacks and walks like a duck, it probably is a duck. The same can be said about the disinflationary wave in Europe, which got more confirmation with today’s full Ifo report.
ECB Watch: The ECB is likely wrong on all major parameters
We see downside risks to the ECBs growth-, wage and inflation forecast for Q1. Is a March cut in play? Or is the market right that they will have to take another dovish step in March before cutting in April?
Shipping Watch: Consider buying your Christmas presents now!
Over the last month, we have covered the shipping troubles in the Red Sea along with the potential consequences for markets. As we are of the opinion that this topic is very important we thought that we would post a piece recapping where we are and what to expect going forward.
EUR-flation Nugget: A brief nowcast update..
We remain below early consensus expectations in Germany. Here is our latest set of forecasts for January HICP numbers ahead of the release next week.
Trade Alert: Stopped out of utilities but strong overall portfolio performance
Stopped out of utilities, but the rest of the portfolio performs nicely
Equity Watch: Japan – Board or abort Nikkei 225?
The Japanese Nikkei 225 has, apart from yesterday’s move lower, been on a streak of strength since the turn of the calendar. So, with its Asian peer on the ropes and the toned down remarks from members of the BoJ regarding inflation, is the index a buy from here?
ECB Watch: Trading the January lull
The ECB is unlikely to rock the boat on Thursday but we still find strong risk/reward in betting on substantial forecast errors by the staff in Frankfurt in the coming months. Here is why!
China Watch: From a controlled demolition to another round of damage control?
The drivers of the recent sell-off in Chinese equities mirror the weakness of the Real Estate sector and the two are inherently interlinked. The question is whether the leadership will respond to the sell-off in the same way they did during the Real Estate crisis last year. In such case, fundamentals will remain unadressed. Read our takeaway below
Energy Cable: The Suez Troubles are WORSENING
The situation in the Red Sea is worsening and it wouldn’t surprise us to see spill-overs to the energy space by now. Here is an update on the situation!
Positioning Watch – How are markets positioned in inflation?
The path to 2% has proven to be more difficult than anticipated, and the disinflation-trend is now potentially starting to turn in the US. Are markets positioned accordingly?
PMI Watch: Time for the much awaited rebound?
Expectations for a rebound in EUR PMIs are building ahead of Wednesday, but we would like to remind you that January PMIs received historically large positive seasonal revisions last year. It does not bode well for January PMIs this year.
Portfolio Watch: The Yellen Put
Powell had his fun in December and now Yellen is preparing her next move. Here is how we play it
US Inflation Watch: Methodology Matters – Upside surprise in PCE according to CPI?
CPI, PPI, HICP, or PCE? The inflation measures are plenty and each best serves different purposes. However, the varying methodologies and emphases on components prompt clearly deviating prints – AND allow for logical predictions.
Suez and EIA Watch – Demand / Supply getting out of balance?
The shipping situation keeps worsening with some early spill-overs to the energy space. It remains to be seen whether tankers will be redirected to the extent seen with containers, but the risk remains elevated.
Join our Premium Q&A on Tuesday January 23rd
Don’t forget to join our Premium Q&A on Tuesday – either 9AM CET or 9AM EST depending on your time zone and calendar. We’ll give you all the latest on inflation, the Red Sea, liquidity and everything else you’d expect from us. Join us via these links: Americas (9AM EST): https://us06web.zoom.us/j/84469410952 Asia/Europe (9AM CET): https://us06web.zoom.us/j/85493369343
USD Liquidity Watch: Treasury selling due to bank reserves influx?
The liquidity conditions will likely worsen in US Treasury markets, and it is now a topic that is being addressed continuously by Fed members. Will the Fed opt to “suspend” the supplementary leverage ratio again?
EUR-flation watch: Why the ECB is off by miles in the Q1 forecast
We have updated our HICP models for all of the four major Eurozone economies and find both the ECB and the HICP inflation fixing to be too hawkish. January looks particularly soft.
Out of the Box #26: OPEC is dead in it current form
Free article on the issues surrounding OPEC and global crude oil markets!