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Steno Signals #180 – Some men just want to see the world burn (but not Trump)

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!
2025-01-12

Happy Sunday, and welcome to my weekly editorial on all things Macro after a tumultuous week!

I must admit, I’ve been surprised by the resilience of inflation and the growth momentum in the U.S. economy. Both indicators continue to deliver results above median/trend values, suggesting that the U.S. economy is growing in both nominal and real terms at levels typically exceeding historical norms.

This is precisely why we’ve developed incredibly robust nowcasting models. These models ensure that we’re not wrongfooted by trends or momentum for long. As a result, we’ve had to adjust our stance on USD bond yields. Our models now indicate semi-bearish expected returns for risk assets and bonds, while expected returns for commodities have been on the rise.

When it comes to trends in the USD and USD bond yields, being early isn’t necessarily rewarded. For now, we’ll need to see a reversal lower in the model before flipping our views back.

Chart of the week #1 – The US macro model keeps delivering on the high side

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!

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